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Item 7. Management’s Discussion and Analysis

2026-03-03 compared with 2025-03-04 · 174 added, 214 removed, 121 unchanged (76% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion contains management’s discussion and analysis of our financial condition and consolidated results of operations and should be read together with the consolidated financial statements and the notes thereto included in Item 8 “Consolidated Financial Statements and Supplementary Data” and included elsewhere in this Annual Report on Form 10-K.

The following discussion contains management’s discussion and analysis of our financial condition and consolidated results of operations and should be read together with the audited consolidated financial statements and the related notes thereto included in Item 8 “Financial Statements and Supplementary Data” and included elsewhere in this Annual Report on Form 10-K.

This discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in the Item 1A “Risk Factors” section of this Annual Report on Form 10-K.

Actual results may differ materially from those contained in any forward-looking statements.

You should carefully read “Special Note Regarding Forward-Looking Statements” and Item 1A “Risk Factors.”

We are a global performance beauty company with a customer-centric approach to delivering breakthrough products in the cash-pay aesthetic market.

Our first product, Jeuveau ® (prabotulinumtoxinA-xvfs), is currently sold in the United States, Canada, certain European countries and Australia.

We have commercial launch plans in additional countries which we expect to implement in the next few years.

We are also actively pursuing the commercialization and further regulatory approvals of Evolysse™, a collection of injectable hyaluronic acid gels that includes mid face, nasolabial folds, lips and eyes.

In October 2024, regulatory approval was received in the European Union for four products in the Evolysse™ line:

Evolysse™ Form, Evolysse™ Smooth, Evolysse™ Sculpt and Evolysse™ Lips.

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

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

We anticipate launching Evolysse™ Form and Evolysse™ Smooth in the United States in the second quarter of 2025.

We also anticipate launching all four approved Evolysse™ products in Europe in the second half of 2025.

You should carefully read “Special Note Regarding Forward-Looking Statements” and Item 1A “Risk Factors” in this Annual Report on Form 10-K.

This section of the Form 10-K generally discusses the years ended December 31, 2025 and 2024 and year-to-year comparisons of 2025 to 2024.

Discussions of the year ended December 31, 2023 and year-to-year comparisons of 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 4, 2025.

We are a global performance beauty company delivering breakthrough products with a customer-centric approach in the cash-pay aesthetic market.

Our current commercial product portfolio includes Jeuveau ® (prabotulinumtoxinA-xvfs) and Evolysse™, a collection of injectable hyaluronic acid (“HA”) gels.

We currently sell Jeuveau ® in the United States, Canada, certain European countries and Australia, and, in April 2025, we launched Evolysse™ Form and Evolysse™ Smooth in the United States, which are indicated for wrinkles and folds, such as nasolabial folds, in adults.

We expect to launch all four Evolysse™ products in Europe in the second quarter of 2026 and anticipate two additional Evolysse™ products, Evolysse™ Sculpt and Evolysse™ Lips, to be approved in the United States in 2026 and 2027, respectively.

Our primary market is the cash-pay aesthetic market, which consists of medical products that consumers pay for directly out of pocket.

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By avoiding the regulatory burdens that accompany reimbursed products and pursuing an aesthetic-only non-reimbursed product strategy, we create flexibility to deliver a unique value proposition to our customers.

We utilize this flexibility to drive customer adoption through programs such as our consumer loyalty program, co-branded marketing programs, promotional events and pricing strategies.

We utilize this flexibility to drive customer adoption through programs such as our consumer loyalty program, co-branded marketing programs, portfolio bundles, promotional events and pricing strategies.

Market Trends and Uncertainties

The global economy, including the financial and credit markets, has recently experienced volatility and disruptions, increases in inflation rates, rising interest rates, new and threatened tariffs, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, and uncertainty about economic stability.

We expect elevated levels of cost inflation to continue, potentially impacting consumer discretionary spending for aesthetic medical procedures.

Markets experiencing uncertainty could have substantial high rates of inflation.

We cannot reasonably estimate the financial impact of increased inflation on our financial condition, results of operations or cash flows in the future.

The global economy has experienced heightened volatility and disruptions, including enacted and threatened tariffs.

While inflation in the United States is moderating, job growth has been muted, and consumer confidence has generally been weakening.

Recently enacted tariffs by the United States have adversely affected and potentially will continue to adversely affect overall consumer sentiment and discretionary spending.

As a result, lower consumer sentiment and discretionary spending have negatively impacted aesthetic procedures and our sales and may negatively impact our sales in the future if consumer discretionary spending does not improve.

We cannot reasonably estimate the financial impact of current and threatened tariffs by the United States on our future financial condition, results of operations or cash flows.

As of December 31, 2025, the majority of our debt outstanding represents a long-term loan bearing variable rates of interest (see Note 7.

Term Loans in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information).

Changes in market interest rates will affect the interest expense incurred from this outstanding debt instrument, increasing or decreasing our interest expense in future periods.

Additionally, changes in market interest rates may affect the interest rate and corresponding interest expense on any new issuance of short-term and long-term debt securities.

See Item 7A “Quantitative and Qualitative Disclosure About Market Risk” of this Annual Report for more information.

Recent Key Developments

On March 3, 2026, we entered into a Loan and Security Agreement (the “Revolving Credit Facility”) with Eclipse Business Capital LLC, providing for a $30.0 million asset-based revolving credit facility with an accordion feature of up to $10.0 million.

The Revolving Credit Facility matures in three years and requires a minimum utilization of $10.0 million.

Borrowings under the Revolving Credit Facility bear interest at adjusted term SOFR (subject to a floor of 2.0%) plus 4.25%, subject to potential downward adjustments.

The Revolving Credit Facility is secured by a first priority lien on substantially

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all of our assets and is guaranteed by us and our subsidiaries.

See “Liquidity and Capital Resources - The Revolving Credit Facility ” and Note 15.

Subsequent Events in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

In the third quarter of 2025, we performed a strategic cost structure optimization, and, in connection with the restructuring initiative, $1.4 million of restructuring related costs were incurred.

In August 2025, we announced the submission of Premarket Approval Application (“PMA”) to the U.S.

Food and Drug Administration (“FDA”) for Evolysse™ Sculpt.

We anticipate that the FDA’s review will follow the standard PMA process, with approval expected in the second half of 2026.

In May 2025, we entered into an Amended and Restated Loan Agreement (the “A&R Loan Agreement”) with Pharmakon (as defined below), which amends and restates the Prior Pharmakon Loan Agreement.

Under the A&R Loan Agreement, Pharmakon agreed to make a senior secured term loan to us in an aggregate principal amount of up to $250.0 million to be funded in three tranches, comprised of an initial $150.0 million tranche funded upon the execution of the A&R Loan Agreement and two additional tranches of up to $50.0 million each, available at our election (collectively, the “New Pharmakon Term Loans”) with a scheduled expiration date of December 31, 2026.

In April 2025, we launched Evolysse™ Form and Evolysse™ Smooth in the United States.

Results of Operations

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Year Ended December 31,

(in millions) 2024 2023 Change

(in thousands) 2025 2024

Product revenue, net $ 294,956 $ 264,306

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Gross profit 197,107 182,304

Operating expenses:

Selling, general and administrative 198.0 164.9 33.1 20 %

Research and development 9.2 6.6 2.6 39 %

In-process research and development — 8.9 (8.9) (100) %

Revaluation of contingent royalty obligation payable to Evolus Founders 7.2 4.3 2.9 67 %

Depreciation and amortization 2.3 2.2 0.1 5 %

Total operating expenses 216.7 186.8 29.9 16 %

Loss from operations (34.4) (49.2) 14.8 (30) %

Non-operating expense, net (15.3) (12.3) (3.0) 24 %

Loss before income taxes:

(49.7) (61.5) 11.8 (19) %

Income tax expense 0.7 0.2 0.5 250 %

Net loss $ (50.4) $ (61.7) $ 11.3 (18) %

Unrealized loss, net of tax (0.5) (0.1) (0.4) 400 %

Comprehensive loss $ (50.9) $ (61.8) $ 10.9 (18) %

The following table summarizes our gross profit margin for the periods indicated:

Year Ended December 31,

(in millions) 2024 2023 Change

Total net revenues $ 266.3 $ 202.1 $ 64.2 32 %

Cost of goods sold

84.0 64.5 19.5 30 %

Gross profit $ 182.3 $ 137.6 $ 44.7 33 %

Gross profit margin 66.3 % 68.5 %

We currently operate in one reportable segment, and all of our net revenues are derived from sales of Jeuveau ® .

Net revenues consist of revenues, net of adjustments primarily for customer rebates, rewards related to the consumer loyalty program and co-branded marketing programs.

Revenues are recognized when the control of the promised goods is transferred to the customer in an amount that reflects the consideration allocated to the related performance obligations and to which we expect to be entitled in exchange for those products or services.

Net revenues of Jeuveau ® sales increased by $64.2 million, or 32%, to $266.3 million for the year ended December 31, 2024 from $202.1 million for the year ended December 31, 2023, primarily due to higher sales volumes.

Net revenues during the year ended December 31, 2024 and 2023 consisted of $2.0 million and $2.4 million of service revenue, respectively, from the sale of Jeuveau ® through a distribution partner in Canada.

We anticipate our continued sales growth will depend on our ability to grow our customer base and increase purchases by our current customers in the competitive aesthetic market as well as the success of the commercial launch of Evolysse TM Form and Evolysse TM Smooth products in the United States and the

Evolysse TM hyaluronic acid gel product collection in Europe, and on regulatory approval for the Evolysse TM Sculpt, and Lips products in the United States.

Cost of Goods Sold

Cost of goods sold, primarily consisted of the cost of inventory purchased from Daewoong and amortization of intangible asset distribution right.

In addition, cost of goods sold includes certain royalties on the sale of Jeuveau ® payable to Medytox related to the Medytox Settlement Agreements.

Our royalty obligations to Medytox are a mid-single digit percentage of net revenue through the expiration of our Medytox royalty obligation in September 2032.

Cost of goods sold, increased by $19.5 million, or 30%, to $84.0 million for the year ended December 31, 2024 from $64.5 million from the year ended December 31, 2023 primarily due to higher sales volume.

We anticipate that our cost of goods sold will fluctuate in line with changes in revenues until the expiration of our Medytox royalty obligation in September 2032.

Gross Profit Margin

Our gross profit margin was 68% and 68% for the years ended December 31, 2024 and 2023, respectively.

We also anticipate our gross profit margin will fluctuate as we implement various marketing p rograms that may affect the average selling price for Jeuveau ® and as we expand internationally.

Selling, General and Administrative

Selling, general and administrative expenses increased by $33.1 million, or 20%, to $198.0 million for the year ended December 31, 2024 from $164.9 million for the year ended December 31, 2023, primarily resulting from increasing personnel costs and related to our commercial activities.

Selling, general and administrative expenses may fluctuate in the future primarily due to potential changes in marketing strategies and international launches.

Research and Development

Research and development expenses increased by $2.6 million, or 39%, to $9.2 million for the year ended December 31, 2024 from $6.6 million for the year ended December 31, 2023.

The increase was primarily attributable to increasing our clinical operations and research and development expenses related to Evolysse TM .

We expect our research and development expenses to continue to increase if and when we develop further product candidates and as we pursue regulatory approvals in other jurisdictions.

In-process Research and Development

For the twelve months ended December 31, 2023, we recorded $8.9 million of in-process research and development expense in connection with the Symatese agreements.

Basis of Presentation and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Revaluation of Contingent Royalty Obligation Payable to Evolus Founders

The change in the fair value of the contingent royalty obligation payable to the founders of Evolus, or Evolus Founders, is recorded in operating expenses in each reporting period.

During the years ended December 31, 2024 and 2023, the revaluation charges of $7.2 million and $4.3 million, respectively, were primarily driven by changes in management assumptions relating to revenue forecasts, the discount rate used and the timing of cash flows.

Depreciation and Amortization

Depreciation and amortization increased by $0.1 million, or 5%, to $2.3 million for the year ended December 31, 2024 from $2.2 million for the year ended December 31, 2023, primarily due to an increase in amortization of internal-use software and leasehold improvements.

Non-Operating Expense, Net

Non-operating expense, net, increased by $3.0 million, or 24%, to $15.3 million for the year ended December 31, 2024 from $12.3 million for the year ended December 31, 2023, primarily due to interest expense on the Pharmakon Term Loans which

increased due to higher average outstanding borrowings during the year ended December 31, 2024.

Interest on the Pharmakon Term Loans is based on a variable interest rate, which we expect will continue to fluctuate with the market.

Income Taxes Expense

There was minimal income tax expense for the years ended December 31, 2024 and 2023.

Comparison of the Years Ended December 31, 2023 and 2022

The following table summarizes our results of operations for the periods indicated:

Year Ended December 31,

(in millions) 2023 2022 Change

Product revenue, net $ 199.7 $ 146.6 $ 53.1 36 %

Service revenue 2.4 2.0 0.4 20 %

Total net revenues 202.1 148.6 53.5 36 %

Cost of goods sold 64.5 58.8 5.7 10 %

Gross profit 137.6 89.8 47.8 53 %

Operating expenses:

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Research and development 9,576 9,172

In-process research and development 8.9 2.0 6.9 345 %

Revaluation of contingent royalty obligation payable to Evolus Founders (6,381) 7,176

Depreciation and amortization 4,345 2,342

Restructuring costs 1,443 —

Total operating expenses 229,769 216,715

Loss from operations (32,662) (34,411)

Other income (expense):

Non-operating expense, net (17,763) (15,472)

Other income (expense), net (539) 127

Loss before income taxes (50,964) (49,756)

(61.5) (74.3) 12.8 (17) %

Income tax expense (677) (664)

Net loss $ (51,641) $ (50,420)

Unrealized loss, net of tax (0.1) (0.3) 0.2 (67) %

Currency translation adjustment 749 (478)

Comprehensive loss $ (50,892) $ (50,898)

The following table summarizes our gross profit margin for the periods indicated:

Year Ended December 31,

(in millions) 2023 2022 Change

Total net revenues $ 202.1 $ 148.6 $ 53.5 36 %

Cost of goods sold 64.5 58.8 5.7 10 %

Gross profit $ 137.6 $ 89.8 $ 47.8 53 %

Gross profit margin 68 % 60 %

We currently operate in one reportable segment, and all of our net revenues are derived from sales of Jeuveau ® .

Net revenues consist of revenues, net of adjustments primarily for customer rebates, rewards related to the consumer loyalty program and co-branded marketing programs.

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We currently operate one reportable segment, and our net product revenues are derived from the sale of Jeuveau ® and, beginning in April 2025, from the sale of Evolysse™.

Net revenues consist of gross revenues net of adjustments primarily relating to customer rebates, rewards associated with consumer loyalty program, and co-branded marketing programs.

Net revenues of Jeuveau ® sales increased by $53.5 million, or 36%, to $202.1 million for the year ended December 31, 2023 from $148.6 million for the year ended December 31, 2022, primarily due to higher sales volumes.

Net revenues during the

years ended December 31, 2023 and 2022 consisted of $2.4 million and $2.0 million of service revenue, respectively, from the sale of Jeuveau ® through a distribution partner in Canada.

We anticipate our continued sales growth will depend on our ability to grow our customer base and increase purchases by our current customers in the competitive aesthetic market as well as on regulatory approval for the Evolysse TM hyaluronic acid gel product line in the United States and Europe by Symatese.

Net revenues increased by $30.9 million, or 11.6%, to $297.2 million for the year ended December 31, 2025 from $266.3 million for the year ended December 31, 2024, primarily due to the launch of Evolysse™ in the United States and an increase in revenues from sales of Jeuveau ® .

Net revenues during the year ended December 31, 2025 and 2024 contained $2.2 million and $2.0 million of service revenue, respectively, from sales of Jeuveau ® through a distribution partner in Canada.

We anticipate our continued sales growth will depend on (i) our ability to grow our customer base and to increase purchases by our current customers in the competitive aesthetic market, (ii) the continued success of Evolysse™ Form and Evolysse™ Smooth products in the United States, (iii) the success of the commercial launch of Evolysse™ injectable HA gel collection in Europe and (iv) the regulatory approval for the Evolysse™ Sculpt and Evolysse™ Lips products in the United States.

Cost of Goods Sold

Cost of goods sold, primarily consisted of the cost of inventory purchased from Daewoong and amortization of intangible asset distribution right.

In addition, during the period from December 2020 to September 2022, cost of goods sold also included certain royalties on the sale of Jeuveau ® payable to Medytox and Allergan pursuant to the Medytox Settlement Agreements, partially offset by reimbursement receivable from Daewoong pursuant to the Daewoong Arrangement with respect to such royalties.

Our royalty obligations to Allergan concluded on September 16, 2022, and beginning on September 17, 2022, our royalty obligations to Medytox were reduced to a mid-single digit percentage of net revenue through the expiration of our Medytox royalty obligation in September 2032.

Cost of goods sold, increased by $5.7 million, or 10%, to $64.5 million for the year ended December 31, 2023 from $58.8 million from the year ended December 31, 2022 primarily due to higher sales volume, offset by reduced royalty obligations to Medytox.

We anticipate that our cost of goods sold will fluctuate in line with changes in revenues until the expiration of our Medytox royalty obligation in September 2032.

Cost of goods sold primarily consists of inventory cost, amortization of intangible asset relating to distribution right and certain royalties.

Cost of goods sold increased by $16.1 million, or 19.2%, to $100.1 million for the year ended December 31, 2025 from $84.0 million for the year ended December 31, 2024 primarily due to an increase in the volume of both Jeuveau ® and Evolysse™ sold.

We anticipate that our cost of goods sold will fluctuate in line with changes in revenues and threatened tariffs.

Gross Profit Margin

Our gross profit margin was 66.3% and 68.5% for the years ended December 31, 2025 and 2024, respectively.

Our gross profit margin was impacted negatively and materially through September 2022, by our payments under the Medytox Settlement Agreements.

Our gross profit margin has been and will continue to be negatively impacted to a lesser extent from September 2022 to September 2032 as we pay royalty obligations to Medytox at a mid-single digit percentage of net revenue.

We also anticipate our gross profit margin will fluctuate as we implement various marketing p rograms that may affect the average selling price for Jeuveau ® and as we expand internationally.

We anticipate that our gross profit margin will fluctuate due to changes in product and geographic mix, as well as the impact of promotional and incentive p rograms on our average selling prices.

Selling, General and Administrative

Selling, general and administrative expenses increased by $23.1 million, or 16%, to $164.9 million for the year ended December 31, 2023 from $141.8 million for the year ended December 31, 2022, primarily resulting from increasing personnel costs and related to our commercial activities.

Selling, general and administrative expenses may fluctuate in the future primarily due to potential changes in marketing strategies and international launches.

Selling, general and administrative expenses increased by $22.8 million, or 11.5%, to $220.8 million for the year ended December 31, 2025 from $198.0 million for the year ended December 31, 2024, primarily due to higher personnel costs relating to our commercial activities and training for the launch of Evolysse™.

Selling, general and administrative expenses may fluctuate in the future primarily driven by potential changes in marketing strategies, launches of new products and international expansion.

Research and Development

Research and development expenses increased by $0.4 million, or 4.4%, to $9.6 million for the year ended December 31, 2025 from $9.2 million for the year ended December 31, 2024.

The increase was primarily attributable to increasing our clinical operations and research and development expenses related to Evolysse TM .

We expect our research and development expenses to continue to increase if and when we develop further product candidates and as we pursue regulatory approvals in other jurisdictions.

In-process Research and Development

In-process research and development increased by $6.9 million, or 345%, to $8.9 million for the year ended December 31, 2023 from $2.0 million for the year ended December 31, 2022.

In 2022, we recorded an upfront payment of $2.0 million in connection with the License and Research Collaboration Agreement (the “Collaboration Agreement”) we entered into with a 3D printing company with biomaterial capabilities.

In 2023, we recorded the upfront payment of $4.4 million and the issuance of shares of $4.4 million in connection with the Symatese U.S.

Agreement and Symatese Europe Agreement, respectively.

The increase was primarily attributable to increased clinical operations.

We expect our research and development expenses to continue to increase if and when we develop further product candidates and as we pursue regulatory approvals.

Revaluation of Contingent Royalty Obligation Payable to Evolus Founders

The change in the fair value of the contingent royalty obligation payable to Evolus Founders is recorded in operating expenses in each reporting period.

During the years ended December 31, 2023 and 2022, the revaluation charges of $4.3 million and $5.8 million, respectively, were primarily driven by changes in management assumptions relating to revenue forecasts, the discount rate used and the timing of cash flows.

The change in the fair value of the contingent royalty obligation payable to the Evolus Founders is recorded in operating expenses in each reporting period.

For the years ended December 31, 2025 and 2024, we recognized an unrealized gain of $6.4 million and an unrealized loss of $7.2 million, respectively.

Changes to the fair value of the contingent royalty obligation payable to Evolus Founders are driven by changes in management assumptions relating to revenue forecasts, the discount rate used, and the timing of cash flows.

Depreciation and Amortization

Depreciation and amortization increased by $1.4 million, or 175%, to $2.2 million for the year ended December 31, 2023 from $0.8 million for the year ended December 31, 2022, primarily due to an increase in amortization of internal-use software and leasehold improvements.

Depreciation and amortization increased by $2.0 million, or 85.5%, to $4.3 million for the year ended December 31, 2025 from $2.3 million for the year ended December 31, 2024, primarily due to an increase in amortization of internal-use software and depreciation of leasehold improvements.

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Restructuring Costs

Restructuring costs were $1.4 million for the year ended December 31, 2025.

No restructuring costs were incurred in the same period of the prior year.

Restructuring costs were primarily related to one-time separation benefits incurred in connection with our strategic cost structure optimization.

Non-Operating Expense, Net

Non-operating expense, net, increased by $3.3 million, or 37%, to $12.3 million for the year ended December 31, 2023 from $9.0 million for the year ended December 31, 2022, primarily due the advancement of the $50.0 million second tranche of the Pharmakon Term Loans in 2023.

Interest on the Pharmakon Term Loans is based on a variable interest rate, which we expect will continue to fluctuate with the market.

Non-operating expense, net, increased by $2.3 million, or 14.8%, to $17.8 million for the year ended December 31, 2025 from $15.5 million for the year ended December 31, 2024, primarily due to higher outstanding indebtedness, higher amortization of debt discount and issuance costs, and lower interest income from the Company’s cash and cash equivalents, partially offset by lower average interest rates of our outstanding indebtedness.

Interest on the New Pharmakon Term Loans is based on a variable interest rate, which we expect will continue to fluctuate with the market.

See “Liquidity and Capital Resources - The Pharmakon Term Loans ” for further information.

Income Taxes Expense

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Liquidity and Capital Resources

As of December 31, 2024, we had cash and cash equivalents of $87.0 million, positive working capital of $88.4 million and stockholders’ equity of $5.5 million.

We began selling Jeuveau ® in May 2019 and have a relatively limited history of generating revenues.

Since inception, we have incurred recurring net operating losses and have an accumulated deficit of $609.4 million as of December 31, 2024 as a result of ongoing efforts to develop and commercialize Jeuveau ® , including providing selling, general and administrative support for our operations.

We had net loss of $50.4 million and $61.7 million in the years ended December 31, 2024 and 2023, respectively.

We had a loss from operations of $34.4 million and $49.2 million in the years ended December 31, 2024 and 2023, respectively.

Liquidity is the ability to meet present and future financial obligations through operating cash flows, the sale or maturity of investments or the acquisition of additional funds through capital management.

Our financial position and liquidity are, and will continue to be, influenced by a variety of factors, including the level of our outstanding indebtedness and the related principal and interest we are obligated to pay on our indebtedness;

the amount and timing of any additional debt or equity financing we may pursue;

our capital expenditure requirements;

any merger, divestiture or acquisition activity;

and our ability to generate cash flows from our operations.

We expect cash provided by our operating activities to fluctuate as a result of a number of factors, including the amount and timing of our billing, collections and liability payments and our operating results and the factors that affect these results, including the amount and timing of our product sales;

promotions, rebates and incentives;

unfavorable macroeconomic events, including inflationary pressures;

enacted and threatened tariffs;

and decreases in consumer discretionary spending.

As of December 31, 2025, we had cash and cash equivalents of $53.8 million, positive working capital of $67.6 million and stockholders’ deficit of $23.1 million.

Since inception, we have incurred recurring net operating losses and have an accumulated deficit of $661.0 million as of December 31, 2025 as a result of ongoing efforts to develop and commercialize our products, including providing selling, general and administrative support for our operations.

We had net loss of $51.6 million and $50.4 million for the years ended December 31, 2025 and 2024, respectively.

We had a loss from operations of $32.7 million and $34.4 million for the years ended December 31, 2025 and 2024, respectively.

We used net cash of $42.3 million and $18.0 million in operating activities for the years ended December 31, 2025 and 2024, respectively.

We expect to continue to incur significant expenses for the foreseeable future as we increase marketing efforts for Jeuveau ® in the U.S., Europe, and Australia, pursue regulatory approvals in other jurisdictions and ready for commercial launch of the Evolysse™ Form, Smooth, Sculpt and Eye hyaluronic acid gel product line.

Impact of Inflation

The markets in which we operate are currently experiencing increased inflation.

While we do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented, a prolonged inflationary environment could impact consumer discretionary spending for aesthetic medical procedures, increase our cash required for operations and impact our liquidity position.

We expect to continue to incur significant expenses for the foreseeable future as we continue the commercialization efforts for our products, prepare for commercial launch of Evolysse™ Form, Evolysse™ Smooth, Evolysse™ Sculpt and Evolysse™ Lips injectable HA gel products in Europe, and pursue regulatory approvals of Evolysse™ Sculpt and Evolysse™ Lips.

Follow-On Offering

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“At-the-market” Offerings of Common Stock

On March 8, 2023, we 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.

We have not sold any shares under the ATM Sales Agreement.

Stockholders’ Equity for additional information.

The registration statement became effective on June 8, 2023.

We have not sold any shares under the ATM Sales

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Stock-Based Compensation and Stockholders’ Equity in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

The Revolving Credit Facility

On March 3, 2026, we entered into a Loan and Security Agreement dated as of March 3, 2026 (the “Revolving Credit Facility”) with Eclipse Business Capital LLC as administrative agent the lenders thereto.

The Revolving Credit Facility is comprised of an asset-based revolving credit facility with a $30.0 million commitment and an uncommitted accordion feature of up to $10.0 million (the “Accordion Facility”), which is exercisable, subject to lender consent and other conditions, in $5.0 million increments or in its entirety.

The Revolving Credit Facility has a minimum utilization requirement of $10.0 million and a stated maturity three years from the date of closing with outstanding principal and interest fully due and payable at such time.

Borrowings under the Revolving Credit Facility bear interest at a rate equal to adjusted term SOFR (subject to a floor of 2.0%) plus an applicable margin of 4.25%, which is subject to downward adjustments based on certain coverage ratio and excess availability.

The Revolving Facility and the Accordion Facility are subject to a closing fee equal to 1.0% and prepayment fees equal to 3.0% during the first year, 2.0% during the second year, and zero percent thereafter, subject to certain exceptions.

Obligations under the Revolving Credit Facility are secured by a first priority lien on substantially all of our assets, including accounts receivable, inventory, cash and intellectual property and are guaranteed by us and our subsidiaries.

The Revolving Credit Facility includes customary affirmative and negative covenants, including limitations on capital expenditures, indebtedness, liens, investments, asset dispositions, dividends and other restricted payments, as well as a minimum excess availability covenant and a change of control provision.

The Pharmakon Term Loans

On December 14, 2021, we entered into a loan agreement with Pharmakon.

Pursuant to the terms of the agreement, Pharmakon agreed to make term loans to us in two tranches.

The first tranche of $75.0 million was funded on December 29,

We received net proceeds of approximately $68.7 million from Pharmakon, after issuance costs and debt discounts.

On December 5, 2022, we entered into a Second Amendment to the loan agreement to extend our option to draw down the second tranche of $50.0 million until December 31, 2023.

On May 9, 2023, we entered into a Third Amendment to the loan agreement, which provided for the advancement of the second tranche of $50.0 million in two installments:

(i) $25.0 million advanced on May 31, 2023 and (ii) $25.0 million advanced on December 15, 2023, which amounts were advanced on such dates subject to the terms and conditions of the Pharmakon Term Loans.

We are required to pay interest only under the loan agreement until March 2026, after which we make seven equal quarterly payments, each in an amount equal to 1/12th of the outstanding principal amount of the loan.

We pay the remaining principal of the loan on the maturity date.

The Pharmakon Term Loans will mature on the sixth year anniversary of the closing date of the first tranche.

The term loan bears an annual interest rate equal to the 3-month secured overnight financing rate (“SOFR”) (subject to a SOFR rate floor of 1.0%) plus 8.5% per annum.

The proceeds of the Pharmakon Term Loans are used to fund our general corporate and working capital requirements.

On May 5, 2025, we entered into the A&R Loan Agreement with Pharmakon, which amends and restates the Prior Pharmakon Loan Agreement.

Under the A&R Loan Agreement, Pharmakon agreed to make a senior secured term loan to us of an aggregate principal amount of up to $250.0 million to be funded in three tranches, comprised of an initial $150.0 million tranche funded upon the execution of the A&R Loan Agreement and two additional tranches of up to $50.0 million each, available at our election until December 31, 2026 (collectively, the “New Pharmakon Term Loans”).

The initial tranche of $150.0 million was released on May 5, 2025, which includes the $125.0 million of outstanding principal amount related to the Prior Pharmakon Term Loans and $25.0 million of incremental borrowings.

Total net proceeds of $23.4 million were received by us, net of discounts and fees paid to the lender, from the funding of the initial tranche.

The New Pharmakon Term Loans accrue interest at a per annum rate equal to the 3-month SOFR (subject to a SOFR floor of 3.5%) plus 5.0% per annum.

In addition, under the terms of the A&R Loan Agreement, we are permitted to incur additional indebtedness in the form of a working capital or revolving loan facility with a maximum credit line of no more than $40.0 million at any time, subject to Pharmakon’s consent and certain terms and conditions customary for credit facilities of similar size and type.

Term Loans in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

In December 2021, we entered into a loan agreement with BPCR Limited Partnership, BioPharma Credit Investments V (Master) LP, and Biopharma Credit PLC (collectively, “Pharmakon”), which was subsequently amended in December 2022 and in May 2023 (as amended, the “Prior Pharmakon Loan Agreement”).

Pursuant to the terms of the Prior Pharmakon Loan Agreement, Pharmakon made loans to us totaling $125,000 (the “Prior Pharmakon Term Loans”).

The Prior Pharmakon Term Loans bore an annual interest rate equal to the 3-month secured overnight financing rate (“SOFR”) (subject to a SOFR floor of 1.0%) plus 8.5% per annum.

Contingent Royalties to Evolus Founders

We are obligated to make quarterly royalty payments of a low single digit percentage of net sales of Jeuveau ® to the Evolus Founders.

We are obligated to make quarterly royalty payments based on a low-single digit percentage of net sales of Jeuveau ® to the Evolus Founders.

These obligations terminate at the end of the second quarter of 2029.

The fair value of the obligations is valued quarterly and is referred to in our consolidated financial statements as the contingent royalty obligation.

As of December 31, 2024 and 2023, we recorded an aggregate balance of $44.8 million and $45.0 million, respectively, on our consolidated balance sheet for the future royalty payment obligation to Evolus Founders.

As of December 31, 2025 and 2024, we recorded an aggregate balance of $32.2 million and $44.8 million, respectively, on our consolidated balance sheet for the future royalty payment obligation to the Evolus Founders.

Litigation Settlement

On February 18, 2021, upon entering into the Medytox Settlement Agreements, we agreed to pay to Allergan and Medytox $35.0 million in multiple payments over two years, of which we paid the first payment of $15.0 million in the third quarter of 2021, the second payment of $15.0 million in the first quarter of 2022, and the final pay ment of $5.0 million in the first quarter of 2023.

We also issued 6,762,652 shares of common stock to Medytox.

In addition, during the period from December 16, 2020 through September 16, 2022, we agreed to pay to Allergan and Medytox royalties on the sal e 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.

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

The royalty payments are made quarterly.

In February 2021, we settled litigation claims through settlement agreements with Medytox, Inc.

which we refer to collectively as the “Medytox Settlement Agreements.” From September 17, 2022 to September 16, 2032, we have paid and will pay to Medytox a quarterly, mid-single digit royalty on net sales of Jeuveau ® sold in Evolus territories.

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Daewoong Agreement

The Daewoong Agreement includes certain minimum annual purchases we are required to make in order to maintain the exclusivity of the license.

Our agreement (as amended, the “Daewoong Agreement”) with Daewoong Pharmaceutical Co.

(“Daewoong”) provides us with an exclusive distribution license to Jeuveau ® for aesthetic indications in the United States, the European Union, United Kingdom, members of the European Economic Area, Switzerland, Canada, Australia, New Zealand, and South Africa, as well as co-exclusive distribution rights with Daewoong in Japan.

The Daewoong Agreement includes certain minimum annual purchases which we are required to make in order to maintain the exclusivity of the license.

We may, however, meet these minimum purchase obligations by achieving certain market share in our licensed territories.

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Symatese U.S.

Our agreement (the “Symatese U.S.

Agreement”) with Symatese Aesthetics S.A.S (“Symatese”) provides us with an exclusive right to commercialize and distribute five injectable HA gel product candidates, Form, Smooth, Sculpt, Lips and Eye in the United States for use in the aesthetics and dermatological field of use.

We also have 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 injectable HA gels.

The Symatese U.S.

Agreement includes certain milestone payments, development cost-sharing arrangements, and minimum annual purchases we are required to make in order to maintain the exclusivity of the license.

Agreement includes certain milestone payments, development cost-sharing arrangements, and minimum annual purchases that we are required to make in order to maintain the exclusivity of the license.

We may, however, meet these minimum purchase obligations by achieving certain market share in our licensed territory.

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Symatese Europe Agreement

The Symatese Europe Agreement includes certain milestone payments and minimum annual purchases we are required to make in order to maintain the exclusivity of the license.

Our agreement (the “Symatese Europe Agreement”) with Symatese provides us with an exclusive right to commercialize and distribute four injectable HA gel product candidates, Form, Smooth, Sculpt and Lips in 50 countries in Europe for use in the aesthetics and dermatological fields.

The Symatese Europe Agreement includes certain milestone payments and minimum annual purchases which we are required to make in order to maintain the exclusivity of the license.

We may, however, meet these minimum purchase obligations by achieving certain market share in our licensed territory.

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Our corporate headquarters in Newport Beach, California is under a non-cancelable operating lease, which expires on January 31, 2030 with an option to extend the term for an additional 60 months.

Lease payments increase based on an annual rent

escalation clause that occurs on each February 1 anniversary.

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 and the lease is expected to commence on or around the second half of 2025.

Lease payments increase based on an annual rent escalation clause that occurs on February 1st of each year during the lease term.

Current and Future Capital Requirements

We believe that our current capital resources, which consist of cash and cash equivalents, future cash generated from operations and sales under the ATM Sales Agreement will be sufficient to satisfy our cash requirements for at least the next twelve months for working capital to support our daily operations and meet commitments under our contractual obligations with third parties, although we may wish to access the debt and equity markets or other sources of financing to satisfy our long-term cash requirements as further discussed below.

We believe that our current capital resources, which consist of cash and cash equivalents, future cash generated from operations, availability of an additional $100.0 million in liquidity under the New Pharmakon Term Loans, and the recently closed Revolving Credit Facility, will be sufficient to satisfy our cash requirements for at least the next twelve months with respect to working capital that supports our daily operations and to meet commitments under our contractual obligations with third parties, although we may wish to access the debt and equity markets or other sources of financing to satisfy our long-term cash requirements as further discussed below.

We have based our projections of capital requirements on assumptions that may prove to be incorrect and we may use all our available capital resources, which consist of cash and cash equivalents and cash generated from operations, sooner than we expect.

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However, there can be no assurance such financing or other alternatives will be available to us on acceptable terms, or at all.

The global economy, including the financial and credit markets, has recently experienced significant volatility and disruptions, including severely diminished liquidity and credit availability and rising interest rates.

The global economy, including the financial and credit markets, has recently experienced significant volatility and disruptions, volatility in inflation and interest

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rates, new and threatened tariffs, declines in consumer confidence and uncertainty about economic stability.

These conditions may adversely impact our ability to raise additional capital on acceptable terms, or at all.

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• the rate of revenue growth for Jeuveau ® and Evolysse™ in the markets in which they are launched;

• the timing of regulatory approval for the additional Evolysse™ products in the United States and Europe by Symatese and our ability to successfully commercialize these products;

• the timing of regulatory approval for the additional Evolysse™ products in the United States and Europe and our ability to successfully commercialize these products;

• development costs and milestone payments related to the Evolysse™ products;

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• the amounts of the royalty payable to the Evolus Founders;

• the cost of commercialization activities for Jeuveau ® , the Evolysse™ hyaluronic acid gel product line or any future product candidates that are approved or cleared for sale, including marketing, sales and distribution costs;

• the cost of maintaining a sales force, the productivity of that sales force, the market acceptance of our products and the actions and product introductions of our competitors;

• the cost of commercialization activities for Jeuveau ® , the Evolysse™ injectable HA gel product line or any future product candidates that are approved or cleared for sale, including marketing, sales and distribution costs;

• the cost of maintaining or increasing a sales force in the future, the productivity of that sales force, the market acceptance of our products and the actions and product introductions of our competitors;

• our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of any such agreements that we may enter into;

• any product liability or other lawsuits related to our products;

• the cost of any current litigation, including our ongoing securities class action lawsuit and shareholder derivative lawsuit;

• the cost of any current litigation, including our ongoing shareholder derivative lawsuit;

• the expenses needed to attract and retain skilled personnel;

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• the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing intellectual property and any other future intellectual litigation we may be involved in;

• the timing, receipt and amount of sales of any future approved or cleared products, if any.

• the timing, receipt and amount of sales of any products approved or cleared in the future, if any.

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The following table summarizes our cash flows for the periods indicated:

Year Ended December 31,

2024 2023 2022

(in millions)

(in thousands)

Net cash provided by (used in):

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Effect of exchange rates on cash and cash equivalents 254 (478)

Change in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

(33,126) 24,114

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Operating Activities

For the year ended December 31, 2024, operating activities used $18.0 million of cash, which primarily resulted from our net loss of $50.4 million.

Net operating assets and liabilities changed by $6.6 million, primarily driven by timing of collections from customers, payments to vendors, and the timing of inventory purchases from our supplier.

Operating activities also includes adjustments for certain non-cash charges including $22.3 million of stock-based compensation expense, $2.4 million of provision of allowance for doubtful accounts, $1.1 million of amortization of debt discount and issuance costs, $5.3 million of depreciation and amortization, and $7.2 million in revaluation of our contingent royalty obligation.

For the year ended December 31, 2023, operating activities used $34.0 million of cash, which primarily resulted from our net loss of $61.7 million.

Net operating assets and liabilities changed by $5.9 million, primarily driven by timing of receipts from customers and payments to vendors and the second cash litigation settlement payment of $5.0 million to Medytox and Allergan.

Operating activities also includes adjustments for certain non-cash charges including $16.5 million of stock-based compensation expense, $4.3 million in revaluation of our contingent royalty obligation, $1.4 million of provision of allowance for doubtful accounts, $1.1 million of amortization of debt discount and issuance costs and $5.1 million of depreciation and amortization and $4.4 million of in-process research and development expense.

For the year ended December 31, 2022, operating activities used $84.9 million of cash, which primarily resulted from our net loss of $74.4 million.

Net operating assets and liabilities changed by $34.3 million, primarily driven by timing of receipts from customers and payments to vendors and second cash litigation settlement payment of $15.0 million to Medytox and Allergan.

Operating activities also includes adjustments for certain non-cash charges including $10.8 million of stock-based compensation expense, $5.8 million in revaluation of our contingent royalty obligation, $1.6 million of provision of allowance for doubtful accounts, $1.1 million of amortization of debt discount and issuance costs and $3.7 million of depreciation and amortization.

Cash used in operating activities was $42.3 million for the year ended December 31, 2025, compared to cash used in operating activities of $18.0 million for the year ended December 31, 2024.

The increase in cash used in operating activities in 2025 when compared to that in 2024 was mostly attributable to a higher operating loss and an increase in inventory purchases to support the launch of Evolysse™ and as a response to potential U.S.

Additionally, changes in working capital resulting from the timing of cash receipts, accruals and payments of cash contributed to the increase in cash used in operating activities in 2025 when compared to 2024.

Investing Activities

Cash used in investing activities was $4.8 million for the year ended December 31, 2024, compared to $1.6 million for the year ended December 31, 2023.

For the year ended December 31, 2024, cash used in investing activities driven by the purchase of property, plant, and equipment and additions to capitalized software.

Cash used in investing activities was $1.6 million for the year ended December 31, 2023, compared to $2.9 million for the year ended December 31, 2022.

For the year ended December 31, 2023, cash used in investing activities driven by the purchase of property, plant, and equipment and additions to capitalized software.

Cash used in investing activities was $8.5 million for the year ended December 31, 2025, compared to cash used in investing activities of $4.8 million for the year ended December 31, 2024.

The increase in cash used in investing activities in 2025 was primarily due to a $3.6 million increase in expenditures on capitalized internal-use software and on property and equipment.

Financing Activities

Cash provided by financing activities was $47.4 million for the year ended December 31, 2024, compared to $44.6 million of cash provided by financing activities for the year ended December 31, 2023.

For the year ended December 31, 2024, cash provided by financing activities primarily resulted from $51.2 million net proceeds from the follow-up equity offering, net of discounts.

Cash provided by financing activities was $44.6 million for the year ended December 31, 2023, compared to $4.1 million of cash used in financing activities for the year ended December 31, 2022.

For the year ended December 31, 2023, cash provided by financing activities primarily resulted from $50.0 million net proceeds from drawing on the second tranche of the Pharmakon Term Loans as described above.

See “ —Liquidity and Capital Resources—The Pharmakon Term Loans ” for a description of our Pharmakon Term Loans.

Cash provided by financing activities was $17.3 million for the year ended December 31, 2025, compared to cash provided by financing activities of $47.4 million for the year ended December 31, 2024.

The decrease in cash provided by financing activities in 2025 was primarily attributable to $51.2 million in net proceeds received from a follow-on equity offering in 2024, partially offset by $22.4 million of net proceeds received from the modification of our long-term debt.

As of December 31, 2025, we had total indebtedness, excluding finance lease obligations, of $150.0 million in principal amount, none of which is due in 2026.

The related agreements governing our outstanding indebtedness contain certain affirmative and restrictive covenants with which we must comply.

As of December 31, 2025 we were in compliance with all of these covenants.

See “ —Liquidity and Capital Resources—The Pharmakon Term Loans ” for a description of our New Pharmakon Term Loans.

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Material Cash Requirements

Our material cash requirements from known contractual and other obligations, including commitments for capital expenditures, primarily consist of (i) principal and interest payments related to our Pharmakon Term Loans (future interest payments on our outstanding Pharmakon Term Loans total approximately $40.6 million, with $16.8 million due within twelve months), (ii) quarterly royalty payments to the Evolus Founders of a low single digit percentage of net sales of Jeuveau ® (these obligations terminate in the quarter after the 10-year anniversary of the first commercial sale of Jeuveau ® in the United States), (iii) quarterly royalty payments to Medytox of a low-double digit royalty on net sales of Jeuveau ® sold in the United States and other Evolus territories (during the period from September 17, 2022 to September 16, 2032), (iv) minimum purchase obligations under the Daewoong Agreement, (v) €12.1 milestone payments under the Symatese U.S.

Agreement consisting of €1.6 million in June 2025, €4.1 million in June 2026, €3.2 million in June 2027, and €3.2 million in June 2028, in each case subject to three of the hyaluronic acid gel products gaining approval prior to that date, (vi) €3.1 million of milestone payments under the Symatese Europe Agreement consisting of:

€1.2 million on the second anniversary of certain regulatory approvals and €1.9 million on the earlier of the third anniversary of certain regulatory approvals or following a year in which we achieves €25 million in revenue in Europe for the hyaluronic acid gel products, and (vii) obligations under operating leases related to our office space which are described in more detail in Note 8.

Operating Leases in the Notes to Consolidated Financial Statements in Part II, Item 8.

Our material cash requirements from known contractual and other obligations, including commitments for capital expenditures, primarily consist of (i) principal and interest payments related to our New Pharmakon Term Loans (future interest payments on our outstanding New Pharmakon Term Loans total approximately $59.4 million, with $13.7 million due within twelve months), (ii) quarterly royalty payments to the Evolus Founders based on a low single digit percentage of net sales of Jeuveau ® (these obligations terminate in the quarter after the 10-year anniversary of the first commercial sale of Jeuveau ® in the United States), (iii) quarterly royalty payments to Medytox based on a mid-single digit royalty on net sales of Jeuveau ® sold in the United States and other Evolus territories (during the period from September 17, 2022 to September 16, 2032), (iv) minimum purchase obligations under the Daewoong Agreement, (v) €12.1 million of milestone payments under the Symatese U.S.

Agreement, subject to FDA approval of three Evolysse™ products, consisting of €1.6 million due on the date of FDA approval, €4.1 million in June 2026, €3.2 million in June 2027, and €3.2 million in June 2028, in each case subject to and contingent on three of the injectable HA gel products gaining approval prior to the milestone payment date, (vi) €3.1 million of milestone payments under the Symatese Europe Agreement consisting of €1.2 million on the second anniversary of certain regulatory approvals (payable in October 2026) and €1.9 million on the later of the third anniversary of certain regulatory approvals or December of any year in which we achieve US$25.0 million of net revenue in Europe for the injectable HA gel products, (vii) minimum purchase and royalty obligations for the injectable HA gel products, and (viii) obligations under operating leases related to our office space, which are described in more detail in Note 8.

Operating Leases in the Notes to the Consolidated Financial Statements in Part II, Item 8.

of this Annual Report on Form 10-K.

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Management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with GAAP.

The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the consolidated financial statements as well as the expenses incurred during the reporting period.

Generally, we base our estimates on historical

experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances.

Actual results may differ materially from these estimates under different assumptions or conditions and such differences could be material to the financial position and results of operations.

Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances.

Actual results may differ materially from these estimates and such differences could be material to the financial position and results of operations.

On an ongoing basis, we evaluate our estimates and assumptions in light of changes in circumstances, facts and experience.

While our significant accounting policies are more fully described in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K, we believe the following accounting policies to be most critical for fully understanding and evaluating our financial condition and results of operations, as these policies relate to the more significant areas involving management’s judgments and estimates.

While our significant accounting policies are more fully described in the Notes to Consolidated Financial Statements in Part II, Item 8.

of this Annual Report on Form 10-K, we believe the following accounting policies to be most critical for fully understanding and evaluating our financial condition and results of operations, as these policies relate to the more significant areas involving management’s judgments and estimates.

Revenue Recognition

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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.

We generate 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, we recognize revenue when control of Jeuveau ® is transferred to a customer upon receipt.

For service revenue, we are determined to be the agent in the distribution of Jeuveau ® in Canada and record the sale as service revenue on a net basis.

We generate product revenue from the sales of Jeuveau ® and Evolysse™.

We generate service revenue from the sales of Jeuveau ® through a distribution partner in Canada.

For product revenue, we recognize revenue when control of our products is transferred to a customer, in an amount that reflects the consideration we expect to receive in exchange for those products.

The transfer of control occurs upon receipt of the products by the customer since that is when the customer has obtained control of the products’ economic benefit.

For service revenue, we are deemed to be acting in the capacity of an agent in the distribution of Jeuveau ® in Canada because we do not control the products before they are transferred to a customer;

accordingly, we record such sale as service revenue on a net basis.

Service revenue is recognized in the period the service is performed for the amount of consideration expected to be received.

Product revenues are recorded net of sales-related adjustments, wherever applicable.

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The consumer loyalty program allows participating customers to earn rewards for qualifying treatments to their patients (i.e.

consumers) using Jeuveau ® and redeem the rewards for Jeuveau ® in the future at no additional cost.

consumers) using our products and redeem the rewards for our products in the future at no additional cost.

The loyalty program represents a customer option that provides a material right and, accordingly, is a performance obligation.

At the time Jeuveau ® product is sold to customers, the invoice price is allocated between the product sold and the estimated material right reward, or Reward, that the customer might redeem in the future.

The standalone selling price of the Reward is measured based on estimated average selling price of Jeuveau ® at the time of redemption and the expected redemption rate by customers based on historical sales data.

We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to establish the liability for the Reward.

However, if the actual customer and consumer participation rates and number of qualifying treatments in any future periods materially differ from the estimates, we may be exposed to adjustments that could be material.

The portion of invoice price allocated to the Reward is initially recorded as deferred revenue, and when customers redeem the Reward and the related product is delivered, the deferred revenue is reversed and included in net revenues.

When our products are sold to participating customers, the invoice price is allocated between the product sold and the material right associated with the reward (“Reward”) that the customer might redeem in the future.

The significant estimates and assumptions used to establish the liability for the Reward are standalone selling price of the Reward and expected redemption rate by participating customers.

The standalone selling price of the Reward is measured based on estimated average selling price of our products at the time of redemption, and the expected redemption rate by participating customers is estimated based on historical data.

If the actual redemption rate by participating customers and the average selling price of our products in any future periods materially differ from the estimates, we may be exposed to adjustments that could be material.

The portion of invoice price allocated to the Reward is initially recorded as deferred revenue.

Subsequently, when participating customers redeem the Reward, the related deferred revenue is reversed and recognized in net revenues.

Contingent Royalty Obligation to the Evolus Founders

We determine the fair value of the contingent royalty obligation payable to the Evolus Founders based on significant unobservable inputs using a discounted cash flows method.

Changes in the fair value of this contingent royalty obligation are determined each period end and recorded in operating expenses in the consolidated statements of operations and comprehensive loss and in the current and non-current liabilities in the consolidated balance sheets.

The significant unobservable input assumptions that can significantly change the fair value includes (i) projected net revenues during the payment period, (ii) the discount rate and (iii) the timing of payments.

We determine the fair value of the contingent royalty obligation payable to the Evolus Founders based on significant unobservable (level 3) inputs using a discounted cash flows method.

Changes in the fair value of the contingent royalty obligation payable are determined at each reporting period end and recorded in operating expenses in the consolidated statements of operations and comprehensive loss and as an adjustment to the current and non-current liabilities in the consolidated balance sheets.

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

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

Recently Issued and Adopted Accounting Pronouncements

We describe the recently issued accounting pronouncements that apply to us in Note 2.

Basis of Presentation and Summary of Significant Accounting Policies—Recent Accounting Pronouncements in Part II, Item 8 of this Annual Report on Form 10-K .

Recently Issued Accounting Pronouncements and Recently Adopted Accounting Pronouncements

We describe the recently issued accounting pronouncements and recently adopted accounting pronouncements that apply to us in Note 2.

Basis of Presentation and Summary of Significant Accounting Policies—Recent Accounting Pronouncements in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K .

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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 7. Management’s Discussion and Analysis