What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-12 compared with 2023-03-01 · 61 added, 54 removed, 130 unchanged (47% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of December 31, 2022 to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Inherent Limitations over Internal Controls

The Company’s management, including our principal executive officer and principal financial officer , does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud.

A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.

Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Projections of any evaluation of the effectiveness of controls to future periods are subject to risks.

Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control Over Financial Reporting

1 unchanged sentence

Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on the Company’s assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2022 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Based on the Company’s assessment, management has identified a material weakness in our internal control over financial reporting, due to the Company’s lack of sufficient resources within inventory operations with an appropriate level of accounting knowledge, training, and experience which resulted in the ineffective design and operating effectiveness of controls over the accounting for inventory.

As a result, the Company’s accounting department was not provided with complete and adequate support, documentation, and information to effectively analyze and record accounting matters timely and account for the financial statement effects of the areas impacted.

This resulted in inadequate controls over 1) physical existence of inventory, 2) excess and obsolete inventory, and 3) inventory pricing and purchase arrangements, including non-trade vendor receivables and potential disputes with vendors.

The material weakness did not result in any material misstatements to our consolidated financial statements as of December 31, 2023 or in previous periods.

The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report on the Company’s internal control over financial reporting, which is included herein.

Remediation Plan for Material Weakness

The Company, with oversight from our Audit Committee, is in the process of developing and implementing its remediation plan specific to the material weakness, which is expected to include the addition of personnel within inventory operations and the enhancement of certain inventory processes and use of information systems.

However, the material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period of time, and management has concluded, through testing, that the related controls are operating effectively.

Changes in Internal Control over Financial Reporting

Other than the material weakness described above, there were no changes in our internal control over financial reporting (as such term is defined in the Exchange Act) that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1 unchanged sentence

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of The Beauty Health Company and its consolidated subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have audited the internal control over financial reporting of The Beauty Health Company and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2023, of the Company and our report dated March 12, 2024, expressed an unqualified opinion on those financial statements.

15 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management's assessment:

The Company lacks sufficient resources within inventory operations, with an appropriate level of accounting knowledge, training and experience which resulted in the ineffective design and operating effectiveness of controls over the accounting for inventory.

As a result, the accounting department was not provided with complete and adequate support, documentation, and information to effectively analyze and record accounting matters timely and account for the financial statement effects of the areas impacted.

This resulted in inadequate controls over 1) physical existence of inventory 2) excess and obsolete inventory and 3) inventory pricing and purchase arrangements, including non-trade vendor receivables and potential disputes with vendors.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2023, of the Company, and this report does not affect our report on such financial statements.

/s/ Deloitte & Touche LLP

5 unchanged sentences

Directors, Executive Officers and Corporate Governance.

The information required by this Item will be included in the Company’s definitive proxy statement to be filed with the SEC Securities and Exchange Commission within 120 days after our fiscal year end December 31, 2022, in connection with the solicitation of proxies for the Company’s 2023 Annual Meeting of Stockholders (the “2023 Proxy Statement”), under the captions “Proposal 1:

Election of Three Directors — Directors and Nominees,” and “Corporate Governance — Board Committees — Audit Committee,” and is incorporated herein by reference.

The information required by this Item will be included in the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after our fiscal year end December 31, 2023, in connection with the solicitation of proxies for the Company’s 2024 Annual Meeting of Stockholders (the “2024 Proxy Statement”), under the captions “Proposal 1:

Election of Three Class III Directors”, “Directors and Nominees”, “Corporate Governance — Board Committees — Audit Committee,”, and “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference.

Executive Compensation.

The information required by this Item will be included in the 2023 Proxy Statement under the captions “Compensation Discussion and Analysis,” “Executive Compensation,” “2022 Director Compensation,” “Corporate Governance - Compensation committee interlocks and insider participation,” “Compensation Committee Report,” “Compensation Risk Assessment” and “CEO Pay Ratio – 2022” and is incorporated herein by reference.

The information required by this Item will be included in the 2024 Proxy Statement under the captions “Compensation Discussion and Analysis”, “Executive Compensation”, “Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table”, “2023 Director Compensation”, “Corporate Governance - Compensation committee interlocks and insider participation,”, “Compensation Committee Report”, and “CEO Pay Ratio Disclosure”, and is incorporated herein by reference.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

4 unchanged sentences

The information required by this Item will be included in the 2024 Proxy Statement under the caption “Proposal 3:

Ratification of Approval of Independent Registered Public Accounting Firm,” and is incorporated herein by reference.

Ratification of Appointment of Independent Registered Public Accounting Firm”, and is incorporated herein by reference.

Exhibit and Financial Statements

6 unchanged sentences

See part (b) below .

The following exhibits are filed or furnished with this Annual Report on Form 10-K.

The following exhibits listed in the accompanying index to exhibits are filed, furnished, or incorporated by reference as part of this Annual Report on Form 10-K.

Certain of the agreements filed as exhibits to this Annual Report on Form 10-K contain representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the agreement.

These representations and warranties:

• may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements;

• may apply standards of materiality that differ from those of a reasonable investor;

• were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at any other time.

Investors should not rely on them as statements of fact.

EXHIBIT INDEX

7 unchanged sentences

8-K 001-39565 2.1 February 28, 2023

EXHIBIT INDEX

Description of Exhibit Form

Filed Herewith

Second Amended and Restated Certificate of Incorporation of The Beauty Health Company

11 unchanged sentences

001-39565 4.4 March 1, 2022

EXHIBIT INDEX

Description of Exhibit Form

Filed Herewith

Amended and Restated Registration Rights Agreement dated as of May 4, 2021, by and among the Company, BLS Investor Group LLC and the stockholders of LCP Edge Intermediate, Inc.

6 unchanged sentences

8-K 001-39565 10.2 April 30, 2021

Employment Agreement, dated as of January 20.

2022 , between Andrew Stanleick, Ed ge Systems LLC d/b/a The Hydrafacial Company and The Beauty Health Company

8-K 001-39565 10.1 January 20, 2022

Employment Agreement, dated as of May 4, 2021, between Liyuan Woo, Edge Systems LLC d/b/a The Hydrafacial Company and The Beauty Health Company

8-K 001-39565 10.7 May 10, 2021

Offer Letter dated as of April 29, 2021, between Daniel Watson, Edge Systems LLC d/b/a The Hydrafacial Company and The Beauty Health Company

8-K 001-39565 10.8 May 10, 2021

Form of Stock Option Award Agreement (CEO and CFO)

8-K 001-39565 10.9 May 10, 2021

Form of Stock Option Award Agreement Form (Non-CEO and CFO)

8-K 001-39565 10.10 May 10, 2021

Form of Performance-Based Restricted Stock Unit Agreement

8-K 001-39565 10.11 May 10, 2021

The Beauty Health Company Executive Severance Plan

8-K 001-39565 10.12 May 10, 2021

Form of Indemnity Agreement.

8-K 001-39565 10.13 May 10, 2021

Amended and Restated Management Services Agreement dated as of May 4, 2021, by and among Linden Manager III LP, Edge Systems LLC d/b/a The Hydrafacial Company and The Beauty Health Company

8-K 001-39565 10.14 May 10, 2021

F irst Amendment to The Beauty Health Company Executive Severanc e Plan

001-39565 10.1 April 14, 2023

Form of Confirmation for Capped Call Transactions

8-K 001-39565 10.1 September 14, 2021

Credit Agreement, dated as of December 30, 2021, among Edge Systems LLC, as borrower, the other loan parties thereto, the other lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent

8-K 001-39565 10.1 January 4, 2022

Amended and Restated Credit Agreement, dates as of November 14, 2022, among The Beauty Health Company, as borrower, the other loan parties thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent

2 unchanged sentences

8-K 001-39565 10.1 September 27, 2022

Retention Agreement, dated May 7, 2022, between Daniel Watson and The Beauty Health Company

10-Q 001-39565 10.2 August 9, 2022

Separation Agreement, dates as of August 3, 2022, between HydraFacial LLC and Indra Pamamull

10-Q 001-39565 10.2 November 9, 2022

Subsidiaries of registrant

O ffer Letter , dated November 13, 2023, by and between The Beauty Health Company and Marla Beck

001-39565 10.1 November 13, 2023

E mployment Agreement, dated August 10, 2023, by and among The Beauty Health Company, HydraFacial LLC, and Michael Mon ahan

10.1 August 9, 2023

P romotion Offer Letter with Brad Hauser, dated April 7, 2023

10.1 April 19, 2023

F orm of Restricted Stock Unit Agreement

10.1 December 1, 2023

Separation Agreement , dated December 8, 2023, by and between The Beauty Health Company and Andrew Sta nleick

10.1 December 14, 2023

EXHIBIT INDEX

1 unchanged sentence

Filed Herewith

S eparation Agreement , dated August 10, 2023, by and between The Beauty Health Company and Liyuan Woo

10.2 August 9, 2023

Subsidiaries of The Beauty Health Company

Consent of Deloitte & Touche LLP

5 unchanged sentences

Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

T he Beauty Health Company Amended and Restated Clawback Policy

Inline XBRL Instance Document

17 unchanged sentences

March 12, 2024

/s/ Andrew Stanleick

Andrew Stanleick

/s/ Marla Beck

Chief Executive Officer

(Principal Executive Officer)

Power of Attorney

Each person whose individual signature appears below hereby authorizes, constitutes, and appoints Marla Beck and Michael Monahan, and each of them, with full power of substitution and re-substitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place, and stead, in any and all capacities, to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this annual report on Form 10‑K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, ratifying and confirming that all said attorneys-in-fact and agents, or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name Title Date

/s/ Marla Beck Chief Executive Officer and Director March 12, 2024

(Principal Executive Officer)

/s/ Michael Monahan Chief Financial Officer

March 12, 2024

Michael Monahan

(Principal Financial and Accounting Officer)

/s/ Brenton L.

Saunders Executive Chairman March 1, 2023

/s/ Andrew Stanleick President, Chief Executive Officer and Director March 1, 2023

Andrew Stanleick (Principal Executive Officer)

/s/ Liyuan Woo Chief Financial Officer March 1, 2023

Liyuan Woo (Principal Financial and Accounting Officer)

/s/ Marla Beck Director March 1, 2023

Chairman March 12, 2024

/s/ Michael D.

9 unchanged sentences

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 9A. Controls and Procedures