What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-08 · 151 added, 185 removed, 448 unchanged (43% of the section changed)

3 unchanged sentences

(in thousands, except for share amounts)

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Current assets:

1 unchanged sentence

$ 212,000 $ 370,063

Accounts receivable, net of allowances for estimated credit losses of $ 9,476 and $ 9,597 at March 31, 2025 and December 31, 2024, respectively

Accounts receivable, net of allowances for estimated credit losses of $ 8,014 and $ 9,597 at June 30, 2025 and December 31, 2024, respectively

25,046 27,643

29 unchanged sentences

320,000,000 shares authorized;

125,246,286 and 124,924,185 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

126,764,562 and 124,924,185 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

Additional paid-in capital 574,535 566,709

8 unchanged sentences

(in thousands, except for share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

Net sales $ 78,187 $ 90,594 $ 147,767 $ 171,997

12 unchanged sentences

Foreign currency transaction (gain) loss, net ( 4,469 ) 1,144 ( 6,349 ) 2,441

Loss before provision for income taxes ( 9,204 ) ( 1,338 )

Income tax expense (benefit) 892 ( 659 )

Net loss ( 10,096 ) ( 679 )

Comprehensive loss, net of tax:

Income (loss) before provision for income taxes 18,719 ( 151 ) 9,515 ( 1,489 )

Income tax benefit ( 993 ) ( 353 ) ( 101 ) ( 1,012 )

Net income (loss) 19,712 202 9,616 ( 477 )

Comprehensive income (loss), net of tax:

Foreign currency translation adjustments 3,629 ( 816 ) 4,757 ( 1,863 )

Comprehensive loss $ ( 8,968 ) $ ( 1,726 )

Net loss per share

Comprehensive income (loss) $ 23,341 $ ( 614 ) $ 14,373 $ ( 2,340 )

Net income (loss) per share

$ 0.16 $ 0.00 $ 0.08 $ 0.00

14 unchanged sentences

Share-based compensation — — 6,636 — — 6,636

Foreign currency translation adjustment — — — ( 1,047 ) — ( 1,047 )

Foreign currency translation adjustments — — — ( 1,047 ) — ( 1,047 )

BALANCE, March 31, 2024 123,453,419 $ 12 $ 546,912 $ ( 4,083 ) $ ( 479,546 ) $ 63,295

Net income — — — — 202 202

Issuance of common stock pursuant to equity compensation plan 454,362 — — — — —

Shares withheld for tax withholdings on vested stock awards ( 104,120 ) — ( 368 ) — — ( 368 )

Issuance of common stock relating to employee stock purchase plan 190,124 — 378 — — 378

Share-based compensation — — 6,498 — — 6,498

Foreign currency translation adjustments — — — ( 816 ) — ( 816 )

BALANCE, June 30, 2024 123,993,785 $ 12 $ 553,420 $ ( 4,899 ) $ ( 479,344 ) $ 69,189

BALANCE, December 31, 2024 124,924,185 $ 12 $ 566,709 $ ( 6,953 ) $ ( 507,965 ) $ 51,803

3 unchanged sentences

Share-based compensation — — 3,476 — — 3,476

Foreign currency translation adjustment — — — 1,128 — 1,128

Foreign currency translation adjustments — — — 1,128 — 1,128

BALANCE, March 31, 2025 125,246,286 $ 13 $ 569,935 $ ( 5,825 ) $ ( 518,061 ) $ 46,062

Net income — — — — 19,712 19,712

Issuance of common stock pursuant to equity compensation plan 2,091,026 — — — — —

Shares withheld for tax withholdings on vested stock awards ( 572,750 ) — ( 708 ) — — ( 708 )

Share-based compensation — — 5,308 — — 5,308

Foreign currency translation adjustments — — — 3,629 — 3,629

BALANCE, June 30, 2025 126,764,562 $ 13 $ 574,535 $ ( 2,196 ) $ ( 498,349 ) $ 74,003

The accompanying notes are an integral part of these unaudited financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net loss $ ( 10,096 ) $ ( 679 )

Adjustments to reconcile net loss to net cash from operating activities

Net income (loss) $ 9,616 $ ( 477 )

Adjustments to reconcile net income (loss) to net cash from operating activities

Share-based compensation 8,784 13,134

6 unchanged sentences

Change in fair value of warrant liabilities ( 139 ) ( 2,579 )

Gain on repurchase of convertible senior notes, net — ( 16,087 )

Gain on exchange and repurchases of convertible senior notes, net ( 18,089 ) ( 33,411 )

Deferred income taxes 818 ( 2,144 )

12 unchanged sentences

Cash flows from financing activities:

Repurchase of convertible senior notes — ( 57,750 )

Repurchase of 2026 Notes in connection with exchange ( 392,583 ) —

Issuance of 2028 Notes in connection with exchange, net 238,302 —

Repurchase of 2026 Notes ( 18,372 ) ( 156,082 )

Payment of tax withholdings on vested stock awards ( 958 ) ( 1,285 )

33 unchanged sentences

Inventories consist of the following as of the periods indicated:

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Raw materials $ 22,958 $ 26,019

2 unchanged sentences

Accrued payroll-related expenses consist of the following as of the periods indicated:

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Accrued compensation and payroll taxes

4 unchanged sentences

Other accrued expenses consist of the following as of the periods indicated:

(in thousands) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Sales and VAT tax payables $ 3,322 $ 5,244

4 unchanged sentences

Total other accrued expenses $ 13,643 $ 20,002

As of March 31, 2025 and December 31, 2024, total warranty reserve was approximately $ 3 million and $ 4 million, respectively, which was included in other accrued expenses on the Condensed Consolidated Balance Sheets.

As of March 31, 2025 and December 31, 2024, the Company has approximately $ 2 million in restricted cash held as collateral for the Company’s credit cards, which was included in cash, cash equivalents and restricted cash on the Condensed Consolidated Balance Sheets.

The Company evaluated its global distribution strategy to align its go-to-market strategy with in-market partner capabilities and market opportunity.

The Company expects to transition sales in the China market to a distributor partner during the second quarter of 2025, and as a result, the Company intends to discontinue its direct sales presence in China.

As of March 31, 2025, the Company has accrued approximately $ 3 million of severance expense associated with these actions, which was included in accrued payroll-related expenses on the Condensed Consolidated Balance Sheets.

As of June 30, 2025 and December 31, 2024, total warranty reserve was approximately $ 2 million and $ 4 million, respectively, which was included in other accrued expenses on the Condensed Consolidated Balance Sheets.

As of June 30, 2025 and December 31, 2024, the Company has approximately $ 2 million in restricted cash held as collateral for the Company’s credit cards, which was included in cash, cash equivalents and restricted cash on the Condensed Consolidated Balance Sheets.

Note 3 — Property and Equipment, net

1 unchanged sentence

(in thousands) Useful life

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

Leasehold improvements Shorter of remaining lease

10 unchanged sentences

Note 4 — Goodwill and Intangible Assets, net

The changes in the carrying value of goodwill for the three months ended March 31, 2025 is as follows (in thousands):

The changes in the carrying value of goodwill for the six months ended June 30, 2025 is as follows (in thousands):

December 31, 2024 $ 123,499

Foreign currency translation impact

March 31, 2025 $ 124,260

June 30, 2025 $ 126,273

Intangible Assets, Net

The gross carrying amount and accumulated amortization of the Company’s intangible assets, net, as of March 31, 2025 were as follows:

The gross carrying amount and accumulated amortization of the Company’s intangible assets, net, as of June 30, 2025 were as follows:

(in thousands) Gross

25 unchanged sentences

The 2026 Notes were issued pursuant to, and are governed by, an indenture dated as of September 14, 2021, between the Company and U.S.

Bank National Association, as trustee (the “Indenture”).

Bank National Association, as trustee.

Pursuant to the purchase agreement between the Company and the initial purchasers of the 2026 Notes, the Company granted the initial purchasers an option to purchase, for settlement within a period of 13 days from, and including, the date the 2026 Notes were first issued, up to an additional $ 100.0 million principal amount of 2026 Notes.

The 2026 Notes issued on September 14, 2021 include the $ 100.0 million principal amount of 2026 Notes issued pursuant to the full exercise by the initial purchasers of such option.

During the three months ended March 31, 2024, the Company repurchased $ 75.0 million principal amount of the Notes for $ 57.8 million and recognized a net gain of $ 16.1 million, which is included in other income, net on the Condensed Consolidated Statements of Comprehensive Income (Loss).

During the year ended December 31, 2024, the Company repurchased $ 192.3 million principal amount of the Notes for $ 156.1 million.

During the three months ended March 31, 2025, there were no repurchases related to the Notes.

During the three months ended March 31, 2024, the Company repurchased $ 75.0 million principal amount of its 2026 Notes at a weighted-average price equal to 77 % for $ 57.8 million and recognized a net gain of $ 16.1 million, which includes $ 1.2 million of unamortized debt issuance costs.

Additionally, during the three months ended June 30, 2024, the Company repurchased $ 117.3 million principal amount of its 2026 Notes at a weighted-average price equal to 84 % for $ 98.3 million and recognized a net gain of $ 17.3 million, which includes $ 1.6 million of unamortized debt issuance costs.

The total amount paid and net gain recognized to repurchase $ 192.3 million principal amount during the six months ended June 30, 2024 was $ 156.1 million and $ 33.4 million, respectively.

During the three and six months ended June 30, 2025, the Company repurchased an additional $ 20.0 million principal amount of its 2026 Notes at a weighted-average price equal to 92 % for $ 18.4 million and recognized a net gain of $ 1.5 million, which includes $ 0.1 million of unamortized debt issuance costs.

Convertible Senior Secured Notes - 2028

On May 21, 2025, the Company entered into privately negotiated exchange agreements (the “Exchange Agreements”) with certain holders (the “Exchanging Holders”) of the 2026 Notes (the “Existing Notes”).

Pursuant to the Exchange Agreements, the Company exchanged and repurchased approximately $ 413.2 million aggregate principal amount of the Existing Notes.

Of the $ 413.2 million aggregate principal amount of the Existing Notes, $ 263.2 million principal amount were exchanged at a weighted-average price equal to 95 % for $ 250.0 million principal amount of new 7.95 % Convertible Senior Secured Notes due November 15, 2028 (the “2028 Notes”, and together with the 2026 Notes, the “Notes”), and $ 150.1 million principal amount were repurchased at a weighted-average price equal to 95 % for $ 142.6 million.

The exchange and repurchase resulted in a net gain of $ 16.6 million, which includes $ 3.1 million of unamortized debt issuance costs and $ 0.9 million of other related fees.

On May 27, 2025, the Company issued the 2028 Notes to the Exchanging Holders.

The 2028 Notes were issued pursuant to, and are governed by, an indenture (the “2028 Indenture”), dated as of May 27, 2025, between the Company, the guarantors party thereto, and U.S.

Bank Trust Company, National Association, as trustee and collateral agent.

The 2028 Notes are the Company’s senior, secured obligations and are guaranteed by certain of the Company’s subsidiaries (including the Company’s material domestic, wholly-owned subsidiaries) and are secured on a first-priority basis by substantially all assets of the Company and such guarantors, subject to certain exceptions.

The 2028 Notes will accrue interest at a rate of 7.95 % per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2025.

The 2028 Notes will mature on November 15, 2028 (the “Maturity Date”), unless earlier repurchased, redeemed or converted.

Subject to certain restrictions, noteholders may convert their 2028 Notes at any time at their election until the close of business on the second scheduled trading day immediately before the Maturity Date.

The initial conversion rate is 349.6503 shares of Class A Common Stock per $1,000 principal amount of 2028 Notes, which represents an initial conversion price of approximately $ 2.86 per share of Class A Common Stock.

The conversion rate and conversion price is subject to adjustment upon the occurrence of certain events.

The Company will settle conversions by paying or delivering, as applicable, cash, shares of its Class A Common Stock or a combination of cash and shares of its Class A Common Stock, at the Company’s election.

In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the 2028 Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The 2028 Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after September 1, 2028, and on or before the 40th scheduled trading day immediately before the Maturity Date, but only if certain liquidity conditions are satisfied.

The redemption price will be a cash amount equal to the principal amount of the 2028 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, the calling of any 2028 Notes for redemption will constitute a Make-Whole Fundamental Change with respect to that 2028 Note, in which case the conversion rate applicable to the conversion of that 2028 Note will be increased in certain circumstances if it is converted after it is called for redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the 2028 Indenture) occur, then, subject to a limited exception, noteholders may require the Company to repurchase their 2028 Notes at a cash repurchase price equal to the principal amount of the 2028 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s Class A Common Stock.

The 2028 Indenture also contains a number of restrictive covenants and limitations, including restrictions on the Company’s ability to incur certain indebtedness and other limitations on liens, investments and restricted payments, as further described in the 2028 Indenture.

The Company incurred $ 10.8 million of debt issuance costs related to the exchange and repurchase of the Existing Notes, which was recorded as a reduction to convertible senior notes, net on the Condensed Consolidated Balance Sheets.

The debt issuance costs are being amortized over the term of the 2028 Notes using the effective interest method.

Additionally, the Company incurred $ 0.9 million of other fees related to the exchange and repurchase of the Existing Notes.

The following is a summary of the Company’s Notes for the periods indicated:

(in thousands) March 31, 2025 December 31, 2024

Notes due in 2026 $ 557,700 $ 557,700

(in thousands) June 30, 2025 December 31, 2024

2026 Notes $ 124,485 $ 557,700

2028 Notes 250,000 —

Unamortized debt issuance costs

( 11,389 ) ( 5,502 )

Net carrying value

$ 552,984 $ 552,198

As of March 31, 2025 and December 31, 2024 , the estimated fair value of the Notes were approximately $ 478 million and $ 446 million, respectively.

The estimated fair value of the Notes was determined based on the actual bid price of the Notes on March 31, 2025 and December 31, 2024, and are classified as Level 2 within the fair value hierarchy.

Convertible senior notes, net $ 363,096 $ 552,198

As of June 30, 2025 and December 31, 2024 , the estimated fair value of the Notes were $ 392.3 million (compared to a carrying amount of $ 374.5 million ) and $ 446.2 million (compared to a carrying amount of $ 557.7 million ), respectively.

The estimated fair value of the Notes was determined based on the actual bid price of the Notes on June 30, 2025 and December 31, 2024, and are classified as Level 2 within the fair value hierarchy.

The net gain recognized related to the exchange and repurchases is included in other income, net in the Condensed Consolidated Statements of Comprehensive Income (Loss).

Note 6 — Commitments and Contingencies

The Company is a party to various lawsuits, claims, and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to commercial disputes, product liability, and employment related matters.

In addition, the Company may bring claims or initiate lawsuits from time to time against various third parties with respect to matters arising out of the ordinary course of the Company’s business, including but not limited to commercial and intellectual property related matters.

With respect to all such lawsuits, claims, and proceedings, if the Company determines a loss is probable and its amount can be reasonably estimated, the Company accrues an amount equal to the estimated loss.

The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events.

In all instances, management has assessed the matter based on current information and made a judgment concerning its potential outcome, giving due consideration to the nature of the claim, the amount and nature of damages sought and the probability of success, and taking into account, among other things, negotiations with claimants, discovery, settlements and payments, judicial rulings, arbitration and mediation decisions, advice of internal and external legal counsel, and other information and events pertaining to a particular matter.

Costs incurred for litigation are expensed as incurred.

For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies.

Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

Except for the matters discussed below, we do not believe that any of our pending litigation, claims, and other proceedings are material to our business:

Cartessa Aesthetics, LLC

On December 14, 2020, Hydrafacial filed a complaint (the “Cartessa Complaint”) against Cartessa Aesthetics, LLC (“Cartessa”) in the United States District Court for the Eastern District of New York (the “New York Court”), captioned Edge Systems LLC v.

Cartessa Aesthetics, LLC, Case No.

1:20-cv-6082 (the “Cartessa Case”), for patent infringement arising from Cartessa’s sale of Cartessa’s hydrodermabrasion system that Hydrafacial alleged has infringed five of Hydrafacial’s patents on its device.

Hydrafacial narrowed its allegation in the Cartessa Complaint to assert infringement of just four of its patents.

On September 15, 2022, the New York Court granted Hydrafacial’s Motion for Summary Judgment of No Unclean Hands and denied Cartessa’s Motion for Summary Judgment of non-infringement on three of the four patents-in-suit.

On June 6, 2023, the New York Court granted Hydrafacial’s Motion for Summary Judgment of No Invalidity of the fourth patent-in-suit and granted Cartessa’s Motion for Summary Judgment of non-infringement of that same patent.

The parties agreed to dismiss the remaining claims without prejudice so that Hydrafacial can appeal the New York Court’s grant of Cartessa’s Motion for Summary Judgment.

Final judgment was entered on October 15, 2024.

On October 8, 2024, Hydrafacial filed an appeal in the New York Court challenging the New York Court’s final judgment and summary judgment decision of Cartessa’s non-infringement regarding the fourth patent-in-suit.

On November 13, 2024, Cartessa filed a cross-appeal challenging the New York Court’s final judgment and summary judgment decision of granting Hydrafacial’s motion for summary judgment of no invalidity regarding the fourth patent-in-suit.

The appeal is in its early stages and the parties exchanged their opening briefs on March 12, 2025.

On June 11, 2024, Hydrafacial filed a complaint against Cartessa and its foreign manufacturer, Eunsung Global Corp (“Eunsung”), in the United States International Trade Commission.

A Notice of Institution of Investigation was issued on July 11, 2024, and the investigation was assigned investigation number 337-TA-1408 (the “ITC Cartessa Matter”).

In the ITC Cartessa Matter, Hydrafacial has asserted that Cartessa and Eunsung infringe Hydrafacial’s U.S.

11,865,287, which relates to hydrodermabrasion systems but was not asserted in the Cartessa Case.

Eunsung has consented to an exclusion order during the term of the Hydrafacial patent-in-suit.

In the ITC Cartessa Matter, the parties recently concluded the evidentiary hearing on April 9-15, 2025.

The parties will file post-hearing briefs in May 2025 and will await the judge’s decision in July 2025.

Hydrafacial continues to seek an exclusion order preventing importation or sale of Cartessa’s hydrodermabrasion systems within the United States.

Cartessa Aesthetics, LLC - Second Complaint

On June 14, 2024, Hydrafacial filed a complaint (the “Second Cartessa Complaint”) against Cartessa in the New York Court, captioned HydraFacial LLC v.

Cartessa Aesthetics, LLC, Case No.

2:24-cv-04253 (the “Second Cartessa Case”), for patent infringement arising from Cartessa’s sale of Cartessa’s hydrodermabrasion system that Hydrafacial alleged has infringed Hydrafacial’s U.S.

The Second Cartessa Case has been stayed pending resolution of the ITC Cartessa Matter and there will be no activity until the conclusion of the ITC Cartessa Matter.

After conclusion of the ITC Cartessa Matter, Hydrafacial plans to reopen the Second Cartessa Case to seek monetary damages and plans to vigorously pursue its claims against Cartessa.

Eunsung Global Corp (and Sinclair Pharma Ltd)

On September 30, 2024, Eunsung filed a Petition for inter partes review (“IPR”), IPR2024-01491, challenging the validity of Hydrafacial’s U.S.

11,865, 287 (the “’287 Patent”).

On November 25, 2024, Sinclair Pharma Ltd filed a similar IPR Petition, IPR2025-00145, challenging the same patent and relying on the same arguments.

On January 10, 2025, Eunsung filed an IPR Petition, IPR2025-00445, challenging the validity of Hydrafacial’s U.S.

On January 13, 2025, Eunsung filed an IPR Petition, IPR2025-00452, challenging the validity of Hydrafacial’s U.S.

On January 14, 2025, Eunsung filed an IPR Petition, IPR2025-00453, challenging the validity of Hydrafacial’s U.S.

On April 11, 2025, the U.S.P.T.O.

Board denied institution of the first IPR challenging the ’287 Patent (IPR2024-01491).

The rest of the IPR proceedings are in their early stages, with initial briefing due between April-May 2025, and Hydrafacial plans to vigorously defend its patents against each of these challenges.

Medicreations LLC

On May 6, 2024, Hydrafacial filed a complaint against Medicreations LLC (“Medicreations”) in the United States District Court for Nevada, Case Number 2:24-cv-00855 (the “Medicreations Case”), for patent infringement arising from Medicreations’ sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed twelve of Hydrafacial’s patents.

On July 26, 2024, Medicreations filed a motion to dismiss the complaint.

On March 3, 2025, the court issued an order dismissing a few of Hydrafacial’s claims to specific remedies, but the majority of the case and claims will move forward.

The Medicreations Case will now proceed to discovery and Hydrafacial plans to file a motion for preliminary injunction.

Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against Medicreations.

Sinclair Pharma US, Inc

On July 24, 2024, Hydrafacial filed a complaint against Sinclair Pharma US, Inc (“Sinclair”), and its distributor Viora, Inc (“Viora”), in the United States District Court for the Central District of California, Case No.

2:24-cv-06250 (the “Sinclair Case”), for patent infringement arising from Sinclair’s sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.

The Sinclair Case was stayed pending the resolution of the ITC Sinclair Matter, discussed below.

Now that the ITC Sinclair Matter has been terminated, the judge lifted the stay in the Sinclair Case and it will proceed to discovery.

Hydrafacial will seek monetary damages and plans to vigorously pursue its claims against Sinclair and Viora.

On August 2, 2024, Hydrafacial filed a complaint against Sinclair, Aesthetic Management Partners, Inc.

(“AMP”), their foreign manufacturer, EMA Aesthetics, Ltd.

(“EMA Aesthetics”), and H.R.

Meditech (“H.R.

Meditech”) in the United States International Trade Commission.

A Notice of Institution of Investigation was issued on September 10, 2024, and the investigation was assigned investigation number 337-TA-1416 (the “ITC Sinclair Matter”).

In the ITC Sinclair Matter, Hydrafacial has asserted that Sinclair, AMP, EMA Aesthetics, and H.R.

Meditech infringe Hydrafacial’s U.S.

11,865,287 and 9,550,052, which relate to hydrodermabrasion systems.

Hydrafacial is seeking an exclusion order preventing importation or sale of each of the respondents’ hydrodermabrasion systems within the United States.

On February 19, 2025, the Administrative Law Judge issued an Initial Determination granting Hydrafacial’s motion to terminate the ITC Sinclair Matter, and as a result, the ITC Sinclair Matter is now terminated.

Aesthetic Management Partners Inc.

On July 8, 2024, Hydrafacial filed a complaint against AMP in the United States District Court for the Western District of Tennessee, Case No.

2:24-cv-02480-JPM-TMP (the “AMP Case”), for patent infringement arising from Aesthetic Management Partners’ sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.

The AMP Case was stayed due to the corresponding ITC Sinclair Matter.

Now that the ITC Sinclair Matter has been terminated, Hydrafacial filed a motion to lift the stay in the AMP Case.

After the judge lifts the stay, Hydrafacial plans to file a motion for preliminary injunction, will seek monetary damages, and plans to vigorously pursue its claims against AMP.

Medical Purchasing Resource, LLC

On June 4, 2024, Hydrafacial filed a complaint against Medical Purchasing Resource, LLC (“Medical Purchasing Resource”) in the United States District Court for the Central District of California, Case No.

2:24-cv-4655 (the “MPR Case”), for trademark infringement, false designation of origin, unfair competition, tortious interference, and other causes of action relating to Hydrafacial’s trademark rights.

On April 3, 2025, the parties participated in a mediation and came to a tentative agreement to settle the case.

In the mediation, the parties tentatively agreed that Medical Purchasing Resource will stop using Hydrafacial’s trademarks and any marks that are confusingly similar to those marks.

Medical Purchasing Resource also tentatively agreed to stop the other activities identified by Hydrafacial in its complaint, including selling products to known Hydrafacial customers.

Medical Purchasing Resource also tentatively agreed to take additional measures to ensure that customers are aware that Medical Purchasing Resource and its products have no relation or affiliation with Hydrafacial.

Medical Purchasing Resource also tentatively agreed to pay Hydrafacial a total of $ 105,000 for past damages which will be paid to Hydrafacial in four quarterly payments of $ 26,250 upon execution of a definitive settlement agreement between the parties, and the parties agreed to file a consent judgment with the court and end the lawsuit.

All deadlines in the MPR Case have been postponed while the parties finalize the settlement agreement.

Luvo Medical Technologies Inc

On August 16, 2024, Hydrafacial filed a complaint against Luvo Medical Technologies Inc (“Luvo”), Healthcare Markets, Inc (“Healthcare Markets”), and their foreign manufacturer Eunsung in the United States District Court of Utah, Case No.

2:24-cv-00587 (the “Luvo Case”), for patent infringement arising from Healthcare Markets’ sale of Luvo’s hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.

The Luvo Case was stayed due to the corresponding ITC Luvo Matter, but pursuant to the ITC settlement agreement, the parties filed a consent judgment in the Luvo Case that terminated the case as to Luvo and Healthcare Markets.

Hydrafacial plans to reopen the Luvo Case to seek monetary damages from Eunsung and plans to vigorously pursue its claims against Eunsung who was not a party to the ITC settlement agreement.

On August 7, 2024, Hydrafacial filed a complaint against Luvo, its distributor Healthcare Markets, Medical Purchasing Resource, eMIRAmed, and its manufacturer, MIRAmedtech, in the United States International Trade Commission.

A Notice of Institution of Investigation was issued on September 16, 2024, and the investigation was assigned investigation number 337-TA-1417 (the “ITC Luvo Matter”).

In the ITC Luvo Matter, Hydrafacial has asserted that Luvo, Healthcare Markets, Medical Purchasing Resource, and eMIRAmed USA, LLC (“eMIRAmed”) infringe Hydrafacial’s U.S.

11,446,477, which is not asserted in the ITC Cartessa Matter or ITC Sinclair Matter, and relates to hydrodermabrasion systems.

After a mediation between the parties, on March 17, 2025, Hydrafacial signed a settlement agreement with Luvo and Healthcare Markets.

As a result, the ITC has terminated the investigation as to Luvo and Healthcare Markets, but Hydrafacial continues to pursue default judgment against the remaining respondents.

eMIRAmed USA, LLC

On August 26, 2024, Hydrafacial filed a complaint against eMIRAmed USA, LLC (“eMIRAmed”), and its manufacturer MIRAmedtech UG (“MIRAmedtech”), in the United States District Court for the Central District of California, Case No.

2:24-cv-01865 (the “eMIRAmed Case”), for patent infringement arising from eMIRAmed’s sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.

Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against eMIRAmed and MIRAmedtech.

On January 22, 2025, Hydrafacial moved for default judgment against eMIRAmed and MIRAmedtech.

On January 30, 2025, eMIRAmed filed notice of Chapter 7 bankruptcy.

On March 21, 2025, the court granted default judgment against MIRAmedtech but denied default judgment against eMIRAmed due to its bankruptcy filing.

As a result, the eMIRAmed Case has been closed.

Med Spa Essentials, LLC

On March 6, 2025, Hydrafacial filed a complaint against Med Spa Essentials, LLC (“MS Essentials”) in the United States District Court for the Central District of California, Case No.

2:25-cv-01994 (the “MS Essentials Case”), for trademark infringement, false designation of origin, unfair competition, tortious interference, and other causes of action relating to Hydrafacial’s trademark rights.

The MS Essentials Case is still in its early stages and MS Essentials’ answer to the complaint is due in June 2025.

Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against MS Essentials.

Candela Corp.

On April 3, 2025, Hydrafacial filed a complaint against Candela Corp.

(“Candela”), and its manufacturer Termosalud S.L.

(“Termosalud”), in the United States District Court for the District of Delaware, Case No.

1:25-cv-00418-JLH (the “Candela Case”), for patent infringement arising from Candela’s sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial’s patents on its device.

The Candela Case is in its early stages and Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against Candela and Termosalud.

Except as otherwise disclosed below, we believe that none of our pending lawsuits, claims, and other proceedings are expected to have a material adverse effect on the Company’s business, consolidated financial position, results of operations, or cash flows.

However, management’s judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.

Securities Class Action

On November 16, 2023, a putative class action was filed in the United States District Court for the Central District of California against the Company, its then-current President and Chief Executive Officer, Andrew Stanleick, its former Chief Financial Officer, Liyuan Woo, and its current Chief Financial Officer, Michael Monahan.

The complaint, styled Abduladhim A.

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On May 5, 2025, the plaintiffs filed an amended complaint.

The parties will submit a proposed briefing schedule on Defendants’ anticipated motion to dismiss on May 12, 2025.

On July 11, 2025, Defendants filed a motion to dismiss the amended complaint in its entirety.

A hearing is scheduled on Defendants’ motion for September 17, 2025.

The Company believes that the claims asserted in the Securities Class Action have no merit and intends to vigorously defend them.

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On the same day, the court endorsed the joint submission and ordered Plaintiff to file an amended complaint no later than June 2, 2025, and scheduled an initial pretrial conference for July 18, 2025.

Under the court’s so-ordered May 7 endorsement, Defendants’ response to the amended complaint is due June 23, 2025.

On June 2, 2025, Plaintiff and fifteen other alleged purchasers of the Syndeo machines filed an amended complaint asserting:

(1) violations of N.Y.

G.B.L., § 349 (Count IV), the state consumer protection statute;

(2) violations of N.Y.

G.B.L., § 350 (Count V), the state’s false advertising statute;

(3) breach of the implied warranty of merchantability (Count I);

(4) breach of express and implied contract and class-wide rescission (Count II);

and (5) breach of express warranty (Count III).

The relief sought in the amended complaint includes monetary damages allegedly suffered by Class Action Plaintiffs and other members of the putative class as a result of Class Action Defendants’ alleged violations and breaches, including a trebling of any money damages award for alleged violations of N.Y.

G.B.L., § 349 and § 350.

On June 23, 2025, Defendants moved to (i) dismiss Counts I, II, IV, and V in full;

(ii) partially dismiss Count III to the extent it alleges design defects;

(iii) dismiss all claims brought by plaintiff Jennifer Skuratov d/b/a Spa Thirsty in full;

(iv) dismiss all claims against the Company in full;

and (v) dismiss Plaintiffs’ claim for injunctive relief.

The initial pretrial conference originally scheduled for July 18, 2025 has been adjourned to August 15, 2025.

The Company believes that the claims asserted in the Consumer Class Action have no merit and Class Action Defendants intend to vigorously defend them.

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Defendants filed their opening brief in support of their Motion to Dismiss and stay on February 28, 2025.

Pursuant to a scheduling order entered by the court, Plaintiffs’ answering brief was filed on May 2, 2025, and Defendants’ reply brief is due June 3, 2025.

Pursuant to a scheduling order entered by the court, Plaintiffs’ answering brief was filed on May 2, 2025, and Defendants’ reply brief was filed on June 3, 2025.

Oral argument before the Delaware Court of Chancery on the Motion to Dismiss is scheduled for October 8, 2025.

The Company believes that the claims asserted in the Consolidated Derivative Action have no merit and intends to vigorously defend them.

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Holders of Class A Common Stock are entitled to one vote for each share.

As of March 31, 2025 and December 31, 2024, there were 125,246,286 and 124,924,185 , respectively, of Class A Common Stock issued and outstanding.

As of June 30, 2025 and December 31, 2024, there were 126,764,562 and 124,924,185 , respectively, of Class A Common Stock issued and outstanding.

The Company has not declared or paid any dividends with respect to its Class A Common Stock .

Share Repurchase Program

On September 12, 2023, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $ 100.0 million of the Company’s Class A Common Stock.

Under the share repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions, transactions structured through investment banking institutions, or a combination of the foregoing.

During the three months ended March 31, 2025, the Company did not repurchase any shares of its Class A Common Stock.

As of March 31, 2025, the Company had a remaining authorization of $ 69.8 million under the program.

Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s Board of Directors.

At March 31, 2025 and December 31, 2024 , there were no shares of preferred stock issued or outstanding.

At June 30, 2025 and December 31, 2024 , there were no shares of preferred stock issued or outstanding.

Note 9 — Fair Value Measurements

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024, and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

The three levels of the fair value hierarchy are as follows:

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Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

As of March 31, 2025

As of June 30, 2025

(in thousands) Level 1 Level 2 Level 3 Total

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In October 2020, in connection with the consummation of Vesper Healthcare’s initial public offering, the Company issued 9,333,333 warrants to purchase shares of the Company’s Class A Common Stock at $ 11.50 per share (the “Private Placement Warrants”), to BLS Investor Group LLC, which will expire five years after the Business Combination.

As of March 31, 2025 and December 31, 2024, the Company had approximately 7 million Private Placement Warrants outstanding for which the fair value was determined using a Monte Carlo simulation.

As of June 30, 2025 and December 31, 2024, the Company had approximately 7 million Private Placement Warrants outstanding for which the fair value was determined using a Monte Carlo simulation.

Note 10 — Revenue

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Net sales disaggregated by major product line were as follows for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

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Net sales by geographic region were as follows for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

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18,422 19,228 33,409 38,333

7,717 13,635 16,053 25,607

Total net sales $ 78,187 $ 90,594 $ 147,767 $ 171,997

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Share-based compensation expense was as follows for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

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Total share-based compensation $ 5,308 $ 6,498 $ 8,784 $ 13,134

As of March 31, 2025 , total unrecognized compensation expense related to unvested share-based compensation totaled $ 36.2 million and is expected to be recognized over a weighted-average period of 2.2 years.

As of June 30, 2025 , total unrecognized compensation expense related to unvested share-based compensation totaled $ 30.9 million and is expected to be recognized over a weighted-average period of 2.1 years.

Restricted Stock Units (“RSU”) and Performance-based Restricted Stock Units (“PSU”)

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Forfeited ( 957,822 ) ( 68,339 ) 4.68 10.40

Outstanding - March 31, 2025

Outstanding - June 30, 2025

13,970,137 2,845,617 $ 2.10 $ 3.58

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Expired ( 480,750 ) 14.27

Outstanding - March 31, 2025

Outstanding - June 30, 2025

2,930,820 13.50 5.12

Vested and Exercisable - March 31, 2025

Vested and Exercisable - June 30, 2025

2,915,490 13.43 5.11

Options vested and expected to vest - March 31, 2025

Options vested and expected to vest - June 30, 2025

2,930,820 $ 13.50 5.12

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jurisdiction as required by ASC 740-270-30-36(a).

For the three months ended March 31, 2025, the Company recorded U.S.

federal, state, and foreign income tax expense of $ 0.9 million.

For the three and six months ended June 30, 2025, the Company recorded income tax benefit of $ 1.0 million and $ 0.1 million, respectively.

The AETR differed from the U.S.

federal statutory tax rate of 21% due primarily to a full valuation allowance against the Company's U.S.

deferred tax assets, income in foreign jurisdictions that are taxed at varying rates, the tax effect of unrealized foreign exchange, and the tax impact of executive and share-based compensation expense.

For the three months ended March 31, 2024, the Company recorded income tax benefit of $ 0.7 million.

deferred tax assets, income in foreign jurisdictions that are taxed at varying rates, and the tax impact of executive and share-based compensation expense.

For the three and six months ended June 30, 2024, the Company recorded income tax benefit of $ 0.4 million and $ 1.0 million, respectively.

The estimated worldwide AETR differed from the U.S.

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The Company applies ASC 740, the accounting standard addressing the accounting for uncertainty in income taxes, which prescribes rules for recognition, measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return.

The Company has gross unrecognized tax benefits of $ 1.5 million and $ 1.2 million as of March 31, 2025 and December 31, 2024, respectively.

Note 13 — Net Loss Attributable to Common Stockholders

The following table sets forth the calculation of both basic and diluted net loss per share as follows for the periods indicated:

Three Months Ended March 31,

The Company has gross unrecognized tax benefits of $ 1.5 million and $ 1.2 million as of June 30, 2025 and December 31, 2024, respectively.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions.

The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The Company is currently assessing its impact on its consolidated financial statements.

Note 13 — Net Income (Loss) Attributable to Common Stockholders

The following table sets forth the calculation of both basic and diluted net income (loss) per share as follows for the periods indicated:

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except share and per share amounts) 2025 2024 2025 2024

Net loss available to common stockholders - basic $ ( 10,096 ) $ ( 679 )

Net income (loss) available to common stockholders - basic $ 19,712 $ 202 $ 9,616 $ ( 477 )

Adjustments related to the 2026 Notes (1)

Net loss available to common stockholders - diluted $ ( 10,096 ) $ ( 13,751 )

( 15,546 ) ( 14,651 ) ( 13,017 ) ( 27,722 )

Net income (loss) available to common stockholders - diluted $ 4,166 $ ( 14,449 ) $ ( 3,401 ) $ ( 28,199 )

Weighted average common stock outstanding - basic

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2026 Notes 12,490,375 18,208,953 15,011,027 19,782,868

RSUs 1,731,313 — — —

Weighted average common stock outstanding - diluted 140,294,291 141,927,750 140,589,807 143,200,221

Basic net loss per share:

Basic net income per share:

$ 0.16 $ 0.00 $ 0.08 $ 0.00

Dilutive net loss per share:

Dilutive net income (loss) per share:

$ 0.03 $ ( 0.10 ) $ ( 0.02 ) $ ( 0.20 )

(1) For the three months ended March 31, 2024, the adjustments related to the Notes include the net gain on repurchase offset by interest expense and amortization of debt issuance costs related to the Company’s Notes (net of taxes).

(1) For the three and six months ended June 30, 2025 and June 30, 2024, the adjustments related to the 2026 Notes include the net gain related to the exchange and repurchases offset by interest expense and amortization of debt issuance costs related to the 2026 Notes (net of taxes).

The following shares have been excluded from the calculation of the weighted average diluted shares outstanding as the effect would have been anti-dilutive:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2025 2024 2025 2024

2028 Notes 87,412,575 — 87,412,575 —

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PSUs 2,845,617 2,302,162 2,845,617 2,302,162

For the three months ended March 31, 2025 and 2024, income and shares related to the Private Placement Warrants were excluded from the calculation of diluted net loss per share of Class A Common Stock because their effect would be anti-dilutive.

For the three and six months ended June 30, 2025 and 2024, income and shares related to the Private Placement Warrants were excluded from the calculation of diluted net income (loss) per share of Class A Common Stock because their effect would be anti-dilutive.

Note 14 — Segment Information

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The following summarizes the components of operating expenses for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2025 2024 2025 2024

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ASU 2023-09 is effective for annual periods beginning January 1, 2025, with early adoption permitted.

The Company is currently evaluating the potential effect that the updated standard will have on its annual financial statement disclosures.

The Company is currently evaluating the potential effect that the updated standard will have on its annual consolidated financial statement disclosures.

In November 2024, the FASB issued ASU 2024-03 “Disaggregation of Income Statement Expenses” which expands interim and annual requirements to disclose about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

The guidance will be effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, which was clarified in ASU 2025-01.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, which was clarified in ASU 2025-01.

The standard allows for early adoption of these requirements.

The Company is currently evaluating the potential effect that the updated standard will have on its financial statement disclosures.

The Company is currently evaluating the potential effect that the updated standard will have on its consolidated financial statement disclosures.

In November 2024, the FASB issued ASU 2024-04 “Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments” which is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion.

ASU 2024-04 is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements and related disclosures.

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-Q

Item 1. Financial Statements