What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-12 compared with 2025-03-12 · 323 added, 280 removed, 856 unchanged (41% of the section changed)

12 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2025, expressed an adverse opinion on the Company's internal control over financial reporting because of a material weakness.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

17 unchanged sentences

As of December 31, 2025, the Company’s inventories balance was $48.0 million.

We identified the provision for obsolete and excess inventories as a critical audit matter because of the significant judgment required by management in developing its assumptions about future demand, selling prices and market conditions.

Testing management’s assumptions and estimates used in calculating the provision required a high degree of auditor judgment and the use of more experienced audit professionals.

1 unchanged sentence

Our audit procedures related to testing the provision for obsolete and excess inventories included the following, among others:

• We tested the operating effectiveness of internal controls over management's review of the provision for obsolete and excess inventories.

• We observed the physical condition of inventories during physical inventory counts.

2 unchanged sentences

• For a sample of inventory products, we estimated the future demand based on historical usage, and compared the projected sell through to the quantity on hand, including consideration of expiration dates, if applicable.

• We corroborated the assumptions with individuals outside of the accounting department to identify whether any changes in the business would impact the future demand, selling prices, market conditions and technological obsolescence.

• We corroborated the assumptions with individuals outside of the accounting department to identify whether any changes in the business would impact the future demand, based on economic trends and technological obsolescence.

/s/ Deloitte & Touche LLP

24 unchanged sentences

Current liabilities:

Current portion of convertible senior notes, net $ 123,959 $ —

Accounts payable 15,631 21,941

2 unchanged sentences

Income tax payable 1,226 3,426

Syndeo Program reserves

Other accrued expenses 15,384 20,002

2 unchanged sentences

Deferred income tax liabilities, net 393 396

Warrant liabilities 488 3,555

Convertible senior notes, net 240,431 552,198

2 unchanged sentences

438,747 633,880

Commitments (Note 8)

Commitments and Contingencies (Note 8)

Stockholders’ equity:

25 unchanged sentences

Interest income ( 8,954 ) ( 16,644 ) ( 23,173 )

Other (income) expense, net ( 33,563 ) ( 5,200 ) 1,650

Other income, net ( 18,931 ) ( 33,563 ) ( 5,200 )

Change in fair value of warrant liabilities ( 487 ) ( 3,067 ) ( 11,919 )

Foreign currency transaction loss (gain), net 4,638 ( 2,385 ) 1,296

(Loss) income before provision for income taxes ( 29,550 ) ( 101,889 ) 45,339

Income tax (benefit) expense ( 452 ) ( 1,773 ) 1,115

Net (loss) income ( 29,098 ) ( 100,116 ) 44,224

Comprehensive (loss) income, net of tax:

Foreign currency transaction (gain) loss, net ( 5,819 ) 4,638 ( 2,385 )

Loss before provision for income taxes ( 5,938 ) ( 29,550 ) ( 101,889 )

Income tax expense (benefit) 3,581 ( 452 ) ( 1,773 )

Net loss ( 9,519 ) ( 29,098 ) ( 100,116 )

Comprehensive loss, net of tax:

Foreign currency translation adjustments 5,519 ( 3,917 ) 1,494

Comprehensive (loss) income $ ( 33,015 ) $ ( 98,622 ) $ 40,951

Net (loss) income per share

Comprehensive loss $ ( 4,000 ) $ ( 33,015 ) $ ( 98,622 )

Net loss per share

$ ( 0.08 ) $ ( 0.23 ) $ ( 0.76 )

11 unchanged sentences

BALANCE, December 31, 2022 132,214,695 $ 14 $ 550,320 $ ( 4,530 ) $ ( 378,751 ) $ 167,053

Net income — — — — 44,224 44,224

Net loss — — — — ( 100,116 ) ( 100,116 )

Repurchase and retirement of common stock ( 10,350,749 ) ( 2 ) ( 30,455 ) — — ( 30,457 )

Equity forward contract in connection with accelerated share repurchase — — ( 40,000 ) — — ( 40,000 )

Accelerated share repurchase payment — — ( 2,240 ) — — ( 2,240 )

Issuance of common stock in connection with asset acquisition 109,625 — 1,310 — — 1,310

Issuance of common stock pursuant to equity compensation plan 1,039,176 — — — — —

Issuance of common stock relating to employee stock purchase plan 241,342 — 3,036 — — 3,036

Shares withheld for tax withholdings on vested stock awards ( 355,087 ) — ( 3,234 ) — — ( 3,234 )

3 unchanged sentences

Net loss — — — — ( 29,098 ) ( 29,098 )

Repurchase and retirement of common stock ( 10,350,749 ) ( 2 ) ( 30,455 ) — — ( 30,457 )

Accelerated share repurchase payment

— — ( 2,240 ) — — ( 2,240 )

Issuance of common stock in connection with asset acquisition 109,625 — 1,310 — — 1,310

Issuance of common stock pursuant to equity compensation plan 2,407,671 — — — — —

6 unchanged sentences

Issuance of common stock pursuant to equity compensation plan 3,658,904 — — — — —

Issuance of common stock relating to employee stock purchase plan 373,245 — 629 — — 629

Shares withheld for tax withholdings on vested stock awards ( 1,062,266 ) — ( 1,572 ) — — ( 1,572 )

9 unchanged sentences

Cash flows from operating activities:

Net (loss) income $ ( 29,098 ) $ ( 100,116 ) $ 44,224

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

Net loss $ ( 9,519 ) $ ( 29,098 ) $ ( 100,116 )

Adjustments to reconcile net loss to net cash from operating activities

Share-based compensation 14,824 26,696 22,544

7 unchanged sentences

Change in fair value of warrant liabilities ( 487 ) ( 3,067 ) ( 11,919 )

Gain on repurchase of convertible senior notes, net ( 33,411 ) — —

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

Deferred income taxes 2,219 ( 3,748 ) ( 1,079 )

6 unchanged sentences

Other, net ( 6,825 ) ( 9,400 ) ( 7,597 )

Net cash provided by (used for) operating activities 16,134 21,750 ( 106,600 )

Net cash provided by operating activities 37,485 16,134 21,750

Cash flows from investing activities:

4 unchanged sentences

Cash flows from financing activities:

Repurchase of convertible senior notes ( 156,082 ) — —

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

Issuance of 2028 Notes in connection with exchange, net 237,601 — —

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

Payment of tax withholdings on vested stock awards ( 1,572 ) ( 1,957 ) ( 3,234 )

Repurchase of common stock — — ( 30,155 )

Advanced payment for equity forward contract — — ( 40,000 )

Payment of accelerated share repurchases — — ( 2,240 )

8 unchanged sentences

Cash paid for interest $ 14,440 $ 8,014 $ 9,375

Cash paid (received) for income taxes 2,801 2,269 ( 1,339 )

Class A Common Stock issued for asset acquisition — — 1,310

3 unchanged sentences

Note 1 — Description of Business

The Beauty Health Company (the “Company” or “we”) is a medtech meets beauty company that delivers skin health experiences that help consumers reinvent their relationship with their skin, bodies, and self-confidence.

The Company and its subsidiaries design, develop, manufacture, market, and sell esthetic technologies and products.

The Company’s brands are pioneers:

Hydrafacial in hydradermabrasion;

SkinStylus in nanoneedling and microneedling;

and Keravive in scalp health.

Together, with its powerful global community of estheticians, partners, and consumers, the Company is personalizing skin health for all ages, genders, skin tones, and skin types.

The Beauty Health Company (the “Company”) is a global medical aesthetics company delivering an integrated ecosystem of clinically proven solutions designed to help consumers achieve superior skin health and support the success of providers.

Anchored by Hydrafacial, a leading and widely requested professional skincare treatment, and supported by complementary offerings including SkinStylus microneedling and HydraScalp powered by Keravive, the Company combines advanced device technology, proprietary consumables, and clinical validation to deliver trusted treatment experiences through an omnichannel network of providers worldwide.

Historical Information

66 unchanged sentences

Management will use industry accepted valuation models and set criteria that are reviewed and approved by various levels of management and, in certain instances, we will engage independent third-party valuation specialists for advice.

The key estimates and factors used in the valuation models may include as applicable, revenue growth rates and profit margins based on internal forecasts, weighted-average cost of capital used to discount future cash flows, comparable market multiples for the industry segment, and historical operating trends.

The key estimates and factors used in the valuation models may include as applicable, the most recent price of our Class A common stock, fair value of our Notes, revenue growth rates and profit margins based on internal forecasts, weighted-average cost of capital used to discount future cash flows, comparable market multiples for the industry segment, and historical operating trends.

Certain future events and circumstances, including deterioration of market conditions, higher cost of capital, a decline in actual and expected consumer consumption and demands, could result in changes to these assumptions and judgments and could cause the fair value of the reporting unit to fall below its respective carrying value, resulting in a non-cash impairment charge.

4 unchanged sentences

In certain events outside of the Company’s control, the Private Placement Warrant holders are entitled to receive cash while in certain scenarios the holders of the Company’s Class A common stock are not entitled to receive cash or may receive less than 100% of any proceeds in cash, which precludes these instruments from being classified within equity pursuant to ASC 815-40.

The Private Placement Warrants are included in other long-term liabilities on the Consolidated Balance Sheets.

The Private Placement Warrants were initially measured at fair value at inception and are subsequently adjusted to fair value at each subsequent reporting date.

5 unchanged sentences

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

The Company accounts for the Notes under ASC 470-20 - Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity's Own Equity , which the Company early ad opted in the first quarter of 2021 concurrent with the issuance of the Notes.

On May 21, 2025, the Company exchanged and repurchased approximately $ 413.2 million aggregate principal amount of the 2026 Notes.

Of the $ 413.2 million aggregate principal amount of the 2026 Notes, $ 263.2 million principal amount were exchanged 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”).

The Company accounts for the Notes under ASC 470-20 - Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity's Own Equity .

The Company records the Notes as a long-term liability at face value net of issuance costs.

20 unchanged sentences

Revenue is recognized in an amount that reflects the consideration that the Company expects to be entitled to in exchange for the sale of its products which is determined based upon the sales price per the invoice or contract and the estimated fair market value for any non-cash consideration received in connection with the trade-in program.

During the years ended December 31, 2023 and 2022 the Company provided certain customers with the option to trade-in their existing Delivery System and applied the fair value of their old Delivery System towards the transaction price of a Syndeo device.

During the year ended December 31, 2023, the Company provided certain customers with the option to trade-in their existing Delivery System and applied the fair value of their old Delivery System towards the transaction price of a Syndeo device.

The Company determined that the trade-in is viewed as a marketing offer due to the fact that it did not constitute the Company’s customary business practice and was not offered at contract inception.

2 unchanged sentences

The estimated selling price was determined based on the Company’s historical experience of reselling refurbished Delivery Systems.

The Company recognized revenue based on the estimated fair value of such Delivery Systems for the years ended December 31, 2023 and 2022 of approximately $ 17 million and $ 9 million, respectively.

No trade-in revenue was recognized for the year ended December 31, 2024.

The Company recognized revenue based on the estimated fair value of such Delivery Systems for the year ended December 31, 2023 of approximately $ 17 million.

No trade-in revenue was recognized for the years ended December 31, 2025 and 2024.

Discounts applied to invoices are not associated with future purchases and solely relate to the product invoiced.

9 unchanged sentences

Depending on the type of Delivery System that was purchased, the Company offers its customers with a one to two-year standard type warranty from point of sale that provides the customer with the assurance that its Delivery Systems will function as intended.

During the fourth quarter of 2023, the Company announced a one year extension of warranty for certain Syndeo systems from the date it was either brought to the 3.0 standards or the customer received a Syndeo 3.0 device.

The warranty reserve is assessed periodically, and the reserve is adjusted as necessary based on a review of historical warranty experience as well as the length and actual terms of the warranties.

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

As of December 31, 2023, total warranty reserve was approximately $ 6 million, of which approximately $ 4 million was included in other accrued expenses and approximately $ 2 million was included in other long-term liabilities on the Consolidated Balance Sheets.

As of December 31, 2025 and 2024, total warranty reserve was approximately $ 1 million and $ 4 million, respectively, which was included in other accrued expenses on the Consolidated Balance Sheets.

The Company also has a loyalty program that allows members to receive points based on qualifying Consumable purchases that may be redeemed as a discount on future Consumable purchases.

6 unchanged sentences

Advertising costs are expensed in the period in which they are incurred.

Total advertising costs were $ 1.7 million, $ 2.3 million and $ 3.8 million for the years ending December 31, 2024, 2023, and 2022 respectively.

Advertising costs primarily include costs related to digital media, social media, television, events, and various other media outlets.

Total advertising costs were $ 6.0 million, $ 8.7 million, and $ 9.9 million for the years ended December 31, 2025, 2024, and 2023 respectively.

Research and Development Expense

7 unchanged sentences

The 2026 Notes mature on October 1, 2026 and accrue interest at a rate of 1.25 % per annum.

The 2028 Notes mature on November 15, 2028 and accrue interest at a rate of 7.95 % per annum.

Debt issuance costs are being amortized over the term of the Notes using the effective interest method.

52 unchanged sentences

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Standards Accounting Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures" which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The Company adopted ASU 2023-07 during the year ended December 31, 2024 on a retrospective basis.

See Note 16 - Segment, Geographic, and Other Information for additional information.

New Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topic 740):

In December 2023, the Financial Standards Accounting Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09 "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

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 financial statement disclosures.

The Company adopted ASU 2023-09 on a prospective basis for the 2025 annual reporting period.

Refer to Note 14 - Income Taxes for further detail.

New Accounting Pronouncements Not Yet Adopted

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, with either retrospective or prospective application.

ASU 2024-03 is effective for annual reporting 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.

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 reporting 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.

In July 2025, the FASB issued ASU 2025-05 “Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets” which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under ASC 606.

ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted, and should be applied prospectively.

The Company does not expect the updated standard will have a material impact on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06 “Intangibles:

Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software” which modernizes the accounting for internal-use software to current development practices, clarifies when to begin capitalizing costs, and enhances disclosure requirements.

ASU 2025-06 is effective for interim and annual reporting periods beginning after December 15, 2027, with early adoption permitted, and should be applied either prospectively, retrospectively, or under a modified prospective transition approach.

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

In December 2025, the FASB issued ASU 2025-11 “Interim Reporting (Topic 270):

Narrow Scope Improvements” which clarifies and reorganize GAAP interim reporting guidance to improve navigability, applicability, and consistency without changing the fundamental nature or volume of required interim disclosures.

This amendment clarifies when ASC 270 is applicable, establishes a disclosure principle requiring disclosure of material events or changes occurring since the most recent annual reporting period, and consolidates into ASC Topic 270 a comprehensive list of interim disclosures required by other Codification Topics.

The amendment also clarifies the form and content of interim financial statements, including guidance for condensed interim reporting.

ASU 2025-11 is effective for interim reporting periods beginning after December 15, 2027, with early adoption permitted.

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

In December 2025, the FASB issued ASU 2025-12 “Codification Improvements” to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to GAAP.

The update represents changes to the Codification that (1) clarify, (2) correct errors or (3) make minor improvements.

ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, 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.

Note 3 — Balance Sheet Components

4 unchanged sentences

Total inventories $ 48,012 $ 69,113

During the year ended December 31, 2024, the Company recognized $ 28.0 million of inventory charges for discontinued, excess, obsolete inventory, including the write-down of Delivery System inventory to its net realizable value and the write-off of excess raw materials.

During the years ended December 31, 2025 and 2024, the Company recognized $ 7.2 million and $ 28.0 million, respectively, of inventory charges for discontinued, excess, obsolete inventory, including the write-down of Delivery System inventory to its net realizable value and the write-off of excess raw materials.

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

13 unchanged sentences

Total other accrued expenses $ 15,384 $ 20,002

During the year ended December 31, 2024, in connection with the Company’s manufacturing optimization plans, the Company recorded approximately $ 8 million of contract termination costs related to the Company concluding its relationship with its third-party manufacturing partner in China, which was recorded within cost of sales on the Consolidated Statements of Comprehensive Income (Loss).

As of December 31, 2024, the Company has accrued $ 0.5 million for the contract termination related costs, which was included in other accrued expenses on the Consolidated Balance Sheets.

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

As of December 31, 2023 , total warranty reserve was approximately $ 6 million, of which approximately $ 4 million was included in other accrued expenses and approximately $ 2 million was included in other long-term liabilities on the Consolidated Balance Sheets.

As of 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 Consolidated Balance Sheets.

As of December 31, 2024 and December 31, 2023, the Company has approximately $ 1 million and $ 15 million, respectively, of non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture or assemble final products for the Company, which is included in prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company purchases components directly from suppliers and do not reflect the sale of these components to the manufacturing vendors in net sales.

As of December 31, 2025 and December 31, 2024, total warranty reserve was approximately $ 1 million and $ 4 million, respectively, which was included in other accrued expenses on the Consolidated Balance Sheets.

As of December 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 Consolidated Balance Sheets.

The changes in allowance for estimated credit losses are as follows:

41 unchanged sentences

Right-of-use assets obtained in exchange for new and modified lease liabilities $ 2,355 $ 6,593 $ 1,181

$ 6,593 $ 1,181 $ 4,476

Weighted average remaining lease term (in years) 4.0 5.0 6.1

Weighted average discount rate 5.4 % 4.6 % 3.2 %

Finance leases are not material and are included in property and equipment, net and other accrued expenses on the Consolidated Balance Sheets.

Subsequent to December 31, 2025, the Company amended the terms its principal executive office lease agreement to expire in November 2032, which will result in an increase to its future operating lease payments by approximately $ 14 million.

Note 6 — Goodwill and Intangible Assets, net

The changes in the carrying value of goodwill for the year ended December 31, 2024 is as follows (in thousands):

The changes in the carrying value of goodwill for the years ended December 31, 2025 and 2024 are as follows (in thousands):

December 31, 2023 $ 125,818

1 unchanged sentence

December 31, 2024 123,499

Foreign currency translation impact

December 31, 2025 $ 126,621

The Company performed its annual impairment test and determined that goodwill was not impaired since the reporting unit’s fair value exceeded its carrying value.

36 unchanged sentences

In March 2023, the Company acquired assets from Anacapa Aesthetics LLC and recognized approximately $ 5 million of intangible assets, primarily related to non-compete agreements.

Acquisition of The Personalized Beauty Company, Inc.

In April 2022, Edge Systems Intermediate, LLC, acquired The Personalized Beauty Company, Inc., a Delaware corporation d.b.a.

Mxt in exchange for (i) cash payment of $ 1.5 million and (ii) 28,733 shares of the Class A Common Stock of the Company ($ 0.5 million).

In addition, depending on the achievement of certain revenue milestones, the former Mxt shareholders were entitled to receive up to $ 30 million of earn-out payments.

The Company accounted for this transaction as an asset acquisition and allocated substantially all of the purchase price totaling $ 1.9 million to intangible assets, primarily related to developed technology.

During the year ended December 31, 2023, Mxt was sold, resulting in a loss on sale of $ 2.8 million.

The estimated future amortization expense for the next five years is as follows:

The estimated future intangible asset amortization expense as of December 31, 2025 is as follows:

(in thousands) Amortization Expense

3 unchanged sentences

Convertible Senior Notes - 2026

On September 14, 2021, the Company issued an aggregate of $ 750.0 million in principal amount of its 1.25 % Convertible Senior Notes due 2026.

On September 14, 2021, the Company issued an aggregate of $ 750.0 million in principal amount of its 1.25 % Convertible Senior Notes due October 1, 2026.

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.

7 unchanged sentences

Before April 1, 2026, noteholders have the right to convert their 2026 Notes only upon the occurrence of certain events.

From and after April 1, 2026, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

From and after April 1, 2026, noteholders may convert their 2026 Notes at any time at their election until the close of business on the second scheduled trading day immediately before October 1, 2026.

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.

3 unchanged sentences

The conversion price as of December 31, 2025 was $ 31.76 per share of Class A Common Stock.

The Notes are 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 October 6, 2024, and on or before the 40 th scheduled trading day immediately before the maturity date, but only if certain liquidity conditions are satisfied and the last reported sale price per share of the Company’s Class A Common Stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

The 2026 Notes are 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 October 6, 2024, and on or before the 40 th scheduled trading day immediately before October 1, 2026, but only if certain liquidity conditions are satisfied and the last reported sale price per share of the Company’s Class A Common Stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (ii) the trading day immediately before the date the Company sends such notice.

12 unchanged sentences

(vii) the rendering of certain judgments against the Company or any of its significant subsidiaries for the payment of at least $ 45.0 million, where such judgments are not discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished and (viii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of its significant subsidiaries.

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person.

If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Notes then outstanding to become due and payable immediately.

However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 180 days at a specified rate per annum not exceeding 1.00 % on the principal amount of the Notes.

If an Event of Default (as defined in the 2026 Indenture) involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the 2026 Notes then outstanding will immediately become due and payable without any further action or notice by any person.

If any other Event of Default (as defined in the 2026 Indenture) occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of 2026 Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2026 Notes then outstanding to become due and payable immediately.

However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default (as defined in the 2026 Indenture) relating to certain failures by the Company to comply with certain reporting covenants in the 2026 Indenture consists exclusively of the right of the noteholders to receive special interest on the 2026 Notes for up to 180 days at a specified rate per annum not exceeding 1.00 % on the principal amount of the 2026 Notes.

The 2026 Notes were issued to the initial purchasers of such 2026 Notes in transactions not involving any public offering in reliance upon Section 4(a)(2) of the Securities Act.

The 2026 Notes were resold by the initial purchasers to persons whom the initial purchasers reasonably believe are “qualified institutional buyers,” as defined in, and in accordance with, Rule 144A under the Securities Act.

The total amount of debt issuance costs of $ 21.3 million was recorded as a reduction to Convertible senior notes, net in the Consolidated Balance Sheets and are being amortized as interest expense over the term of the Notes using the effective interest method.

During the years ended December 31, 2024, 2023, and 2022, the Company recognized $ 3.3 million, $ 4.2 million, and $ 4.2 million, respectively, in interest expense related to the amortization of the debt issuance costs related to the Notes.

The Company incurred $ 21.3 million of debt issuance costs related to the 2026 Notes, which was recorded as a reduction to convertible senior notes, net in the Consolidated Balance Sheets.

2026 Notes Repurchase

During the year ended December 31, 2024, the Company repurchased $ 192.3 million principal amount of the 2026 Notes for $ 156.1 million and recognized a net gain of $ 33.4 million, which includes $ 2.8 million of unamortized debt issuance costs related to the repurchase.

During the year ended December 31, 2025, the Company repurchased $ 20.0 million principal amount of the 2026 Notes for $ 18.4 million and recognized a net gain of $ 1.5 million, which includes $ 0.1 million of unamortized debt issuance costs related to the repurchase.

Additionally, in February 2026, the Company repurchased $ 21.3 million principal amount of the 2026 Notes at a weighted-average price equal to 94.875 % for $ 20.2 million.

Convertible Senior Secured Notes - 2028

On May 21, 2025, the Company entered into Exchange Agreements with Exchanging Holders of the Existing Notes.

Pursuant to the Exchange Agreements, the Company exchanged and repurchased $ 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, 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, 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 November 15, 2028.

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.

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 40 th scheduled trading day immediately before November 15, 2028, 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 Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the 2028 Indenture), which include the following:

(i) certain payment defaults on the 2028 Notes (which, in the case of a default in the payment of interest on the 2028 Notes, will be subject to a five business-day cure period);

(ii) the Company’s failure to send certain notices under the 2028 Indenture within specified periods of time;

(iii) the Company’s failure to convert a 2028 Note upon the exercise of the conversion right with respect to such 2028 Note, subject to a three business-day cure period;

(iv) the Company’s failure to comply with certain covenants in the 2028 Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person;

(v) a default by the Company in its other obligations or agreements under the 2028 Indenture or the 2028 Notes if such default is not cured or waived within 30 days after notice is given in accordance with the 2028 Indenture;

(vi) certain defaults by the Company or any of its subsidiaries with respect to indebtedness for money borrowed of at least $ 15.0 million;

(vii) the rendering of certain judgments against the Company or any of its significant subsidiaries for the payment of at least $ 15.0 million, where such judgments are not discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished, (viii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of its significant subsidiaries, and (ix) the Company’s failure to perfect, or otherwise become unenforceable, a lien on certain of its collateral in favor of the secured parties under the 2028 Indenture.

If an Event of Default (as defined in the 2028 Indenture) involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the 2028 Notes then outstanding will immediately become due and payable without any further action or notice by any person.

If any other Event of Default (as defined in the 2028 Indenture) occurs and is continuing, then, the trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of 2028 Notes then outstanding, by notice to the Company and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the 2028 Notes then outstanding to become due and payable immediately.

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 $ 11.5 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 Consolidated Balance Sheets.

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) December 31, 2025 December 31, 2024

Notes due in 2026 $ 557,700 $ 750,000

2026 Notes $ 124,485 $ 557,700

2028 Notes 250,000 —

Unamortized debt issuance costs ( 10,095 ) ( 5,502 )

( 5,502 ) ( 11,628 )

Net carrying value

$ 552,198 $ 738,372

The Notes are carried at face value less the unamortized debt issuance costs on the Company’s Consolidated Balance Sheets.

Notes Repurchase

During the year ended December 31, 2024, the Company repurchased $ 192.3 million principal amount of the Notes for $ 156.1 million and recognized a net gain of $ 33.4 million, which includes $ 2.8 million of unamortized debt issuance costs related to the repurchase.

The net gain is included in other income, net on the Consolidated Statements of Comprehensive Income (Loss).

Amended and Restated Credit Facility

On November 14, 2022, the Company, as successor by assumption to Hydrafacial, a California limited liability company, entered into an Amended and Restated Credit Agreement (as it may be further amended, restated, supplemented or modified from time to time, the “Credit Agreement”) with JPMorgan Chase Bank, N.A.

(the “Administrative Agent”).

The Credit Agreement provided the Company with a $ 50.0 million revolving credit facility that had a maturity date of November 14, 2027.

On August 6, 2024, the Company prepaid all obligations and terminated all commitments, liabilities, and other obligations under the Credit Agreement.

There were no material early termination penalties incurred in connection therewith, all outstanding obligations and commitments under the Credit Agreement were satisfied and terminated, and all related security interests and liens securing such obligations and commitments were released.

Total convertible senior notes, net 364,390 552,198

Current portion of convertible senior notes, net ( 123,959 ) —

Convertible senior notes, net $ 240,431 $ 552,198

During the years ended December 31, 2025, 2024, and 2023, the Company recognized $ 3.6 million, $ 3.3 million, and $ 4.2 million, respectively, in interest expense related to the amortization of the debt issuance costs related to the 2026 Notes and 2028 Notes.

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

Note 8 — Commitments and Contingencies

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 with opening briefs set to be exchanged 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, both fact and expert discovery have been completed, motions for summary determination have been filed, and the parties are preparing for evidentiary hearing, which will be held April 9-15, 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.

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.

These IPR proceedings are in their early stages, with initial briefing due between March-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.

Briefing on the motion to dismiss is complete, but no order has been issued yet.

The Medicreations Case is in its early stages, and 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 has been stayed pending the resolution of the ITC Sinclair Matter, discussed below, and there will be no activity on the Sinclair Case until the conclusion of the ITC Sinclair Matter.

After conclusion of the ITC Sinclair Matter, Hydrafacial plans to reopen the Sinclair Case to 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.

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 is now stayed, and there will be no activity until the conclusion of the ITC Sinclair Matter.

After conclusion of the ITC Sinclair Matter, Hydrafacial plans to reopen the AMP Case to 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.

The MPR Case is in its early stages, and Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against Medical Purchasing Resource.

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 is now stayed, and there will be no any activity until the conclusion of the ITC Luvo Matter.

After conclusion of the ITC’s investigation, Hydrafacial plans to reopen the Luvo Case to seek monetary damages and plans to vigorously pursue its claims against Luvo, Healthcare Markets, and Eunsung.

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.

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

In the ITC Luvo Matter, the parties have completed fact discovery and will complete expert discovery on February 20, 2025.

The evidentiary hearing is scheduled for April 23-29, 2025.

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.

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 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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2:23-cv-09733 (C.D.

Ca.) (the “Securities Class Action”), asserts claims for violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against all defendants (First Claim), and violation of Section 20(a) of the Exchange Act against the individual defendants (Second Claim).

The complaint alleges that, between May 10, 2022 and November 13, 2023, defendants materially misled the investing public by publicly issuing false and/or misleading statements and/or omissions relating to Hydrafacial's business, operations, and prospects, specifically with respect to the performance of and demand for the Syndeo 1.0 and 2.0 devices.

The relief sought in the complaint includes a request for compensatory damages suffered by the plaintiff and other members of the putative class for damages allegedly sustained as a result of the alleged securities violations.

Ca.) (the “Securities Class Action”), asserted claims for violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated thereunder against all defendants (First Claim), and violation of Section 20(a) of the Exchange Act against the individual defendants (Second Claim).

The complaint alleged that, between May 10, 2022 and November 13, 2023, Defendants materially misled the investing public by publicly issuing false and/or misleading statements and/or omissions relating to Hydrafacial's business, operations, and prospects, specifically with respect to the performance of and demand for the Syndeo 1.0 and 2.0 devices.

The relief sought in the complaint included a request for compensatory damages suffered by the plaintiff and other members of the putative class for damages allegedly sustained as a result of the alleged securities violations.

On January 16, 2024, putative class members Jeff and Kevin Brown (the “Browns”), Priscilla and Martjn Dijkgraaf (the “Dijkgraafs”), and Joseph Jou filed three competing motions for appointment as lead plaintiff under the Private Securities Litigation Reform Act (“PSLRA”), 17 U.S.C.

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On July 1, 2024, lead plaintiffs filed a consolidated amended class action complaint asserting the same causes of action as the original complaint.

The Securities Class Action case is assigned to U.S.

The Securities Class Action case was assigned to U.S.

District Judge Sherilyn Peace Garnett.

On September 30, 2024, the Company filed a motion to dismiss the consolidated amended class action complaint in its entirety.

Plaintiffs filed their opposition brief on November 22, 2024, and the Company filed its reply brief on December 23, 2024.

On September 30, 2024, Defendants filed a motion to dismiss the consolidated amended class action complaint in its entirety.

Plaintiffs filed their opposition brief on November 22, 2024, and Defendants filed their reply brief on December 23, 2024.

A hearing on the Defendants’ motion to dismiss was scheduled for January 15, 2025.

On January 10, 2025, the Court granted the parties’ joint stipulation to adjourn the January 15, 2025 hearing.

On January 17, 2025, the court granted the parties’ joint stipulation to withdraw briefing on Defendants’ motion to dismiss without prejudice to refiling and to briefly stay proceedings so that the parties can complete a private mediation that is scheduled to occur on March 27, 2025.

On January 17, 2025, the Court granted the parties’ joint stipulation to withdraw briefing on Defendants’ motion to dismiss without prejudice to refiling and to briefly stay proceedings so that the parties could complete a private mediation.

The parties conducted the private mediation on March 27, 2025.

The parties were unable to reach a settlement at the mediation.

On May 5, 2025, the plaintiffs filed a second amended complaint (the “SAC”), pursuant to the parties’ stipulation, which was so-ordered by the Court on April 16, 2025.

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

The Court scheduled a hearing on Defendants’ motion for September 17, 2025.

On September 15, 2025, the Court vacated the hearing sua sponte .

On September 25, 2025, the Court denied Defendants’ motion to dismiss.

On November 24, 2025, each Defendant filed an answer to the SAC.

On November 26, 2025, the parties filed a Fed.

26(f) joint report and proposed stipulated pretrial schedule.

On December 15, 2025, the Court so-ordered the parties’ stipulated pretrial schedule, set the final pretrial conference for November 17, 2027, and set trial for December 7, 2027.

On the same day, the Court referred the parties to a private mediation before a private mediator of their choice, to be completed by October 13, 2027.

The parties are currently in the discovery phase of the case.

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

The Company is unable to reasonably estimate the possible loss or range of loss, if any, associated with these claims, and, accordingly, it has not accrued any liability associated with the Securities Class Action.

Consumer Class Action

On October 24, 2024, Jason Davalos (“Jason Davalos”), Sonia Davalos (“Sonia Davalos”, and collectively with Jason Davalos, the “Davaloses”), and Sol Tan Tanning & Spa LLC (“Sol Tan”, and collectively with the Davaloses, the “Class Action Plaintiffs”), individually and on behalf of all others similarly situated, filed a putative class action complaint against Hydrafacial LLC d/b/a The Hydrafacial Company and The Beauty Health Company (collectively, the “Class Action Defendants”) for alleged violations of New York consumer fraud statutes, breach of contract, and common law breach of implied warranties (the “Consumer Class Action”).

Customer Class Action

On October 24, 2024, Jason Davalos (“Jason Davalos”), Sonia Davalos (“Sonia Davalos”, and collectively with Jason Davalos, the “Davaloses”), and Sol Tan Tanning & Spa LLC (“Sol Tan”, and collectively with the Davaloses, the “Class Action Plaintiffs”), individually and on behalf of all others similarly situated, filed a putative class action complaint (the “Complaint”) against Hydrafacial LLC d/b/a The Hydrafacial Company (“Hydrafacial”) and The Beauty Health Company (“BHC” and collectively with Hydrafacial, the “Class Action Defendants”) for alleged violations of New York consumer fraud statutes, breach of contract, and common law breach of implied warranties (the “Customer Class Action”).

The case is captioned Jason Davalos, Sonia Davalos, Sol Tan Tanning & Spa LLC, on behalf of themselves and all others similarly situated v.

Hydrafacial LLC dba The Hydrafacial Company, and The Beauty Health Company, Case No.

24-cv-8073 (S.D.N.Y.) (Caproni, J.) The complaint alleges that all three versions of the Syndeo machine (Syndeo 1.0, Syndeo 2.0, and Syndeo 3.0) were defective and did not perform in the manner in which it had been represented by Class Action Defendants.

24-cv-8073 (S.D.N.Y.) (Caproni, J.) The Complaint alleged that all three versions of the Syndeo machine (Syndeo 1.0, Syndeo 2.0, and Syndeo 3.0) were defective and did not perform in the manner in which it had been represented by Class Action Defendants.

Class Action Plaintiffs claim that Class Action Defendants made various misrepresentations in its marketing and sales of the Syndeo machines and, rather than provide a refund to customers for the defective machines, replaced them with another Syndeo machine that exhibited the same defects.

Class Action Plaintiffs purport to bring claims on behalf of themselves, and all other similarly situated purchasers within the United States, of Class Action Defendants’ Syndeo machines.

The complaint asserts five causes of action:

Class Action Plaintiffs purported to bring claims on behalf of themselves, and all other similarly situated purchasers within the United States, of Class Action Defendants’ Syndeo machines.

The Complaint asserted five causes of action:

(1) violations of N.Y.

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and (5) breach of the implied warranty of fitness.

The relief sought in the 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.

The relief sought in the Complaint included 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 December 30, 2024, the Class Action Defendants filed a motion to dismiss the Consumer Class Action complaint in its entirety.

On December 30, 2024, the Class Action Defendants filed a motion to dismiss the Complaint in its entirety.

On January 3, 2025, the Class Action Defendants filed a motion to stay discovery during the pendency of their motion to dismiss.

On January 8, 2025, the Davaloses voluntarily dismissed their claims against the Class Action Defendants pursuant to Fed.

41(a)(1)(A)(i), leaving Plaintiff Sol Tan as the sole remaining Consumer Class Action Plaintiff.

41(a)(1)(A)(i), leaving Plaintiff Sol Tan as the sole remaining Customer Class Action Plaintiff.

Plaintiff Sol Tan filed their opposition brief on January 9, 2025, and the Class Action Defendants filed their reply brief on January 13, 2025.

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or (ii) file a revised proposed case management plan and a revised joint letter required by the Court’s Notice of Initial Pretrial Conference.

On February 7, 2025, the parties filed a joint letter notifying the court that they had agreed to mediate before Greg Danilow of Phillips ADR Enterprises on April 29, 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.

On February 7, 2025, the parties filed a joint letter notifying the Court that they had agreed to mediate before Greg Danilow of Phillips ADR Enterprises.

The parties conducted the private mediation on April 29, 2025;

however, the parties were unable to reach a settlement at the mediation.

Pursuant to the parties’ so-ordered January 16 joint stipulation, on May 7, 2025, the parties filed a revised proposed case management plan and a revised joint letter in accordance with the Court’s Notice of Initial Pretrial Conference.

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.

On June 2, 2025, Plaintiff and fifteen other alleged purchasers of the Syndeo machines (“Plaintiffs”) filed an amended complaint (the “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 included 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.

For Counts IV (violations of N.Y.

G.B.L., § 349) and V (violations of N.Y.

G.B.L., § 350), plaintiff Jennifer Skuratov d/b/a Spa Thirsty, Inc.

(“Spa Thirsty”), sought certification of an alternative subclass of New York purchasers of Syndeo devices (the “Putative New York Subclass”).

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 Spa Thirsty in full;

(iv) dismiss all claims against BHC in full;

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

On December 22, 2025, the Court granted Defendants’ motion to dismiss in its entirety, except it denied Defendants’ request that the claims brought by plaintiff Spa Thirsty be dismissed with prejudice.

Specifically, the Court dismissed (i) all of Plaintiffs’ claims against BHC;

(ii) Plaintiffs’ claims for breach of the implied warranty of merchantability (Count I), breach of express and implied contract and class-wide rescission based on fraudulent inducement (Count II), and violations of N.Y.

G.B.L., §§ 349 and 350 (Counts IV and V), and their request for injunctive relief;

and (iii) the Class Action Plaintiffs’ claim for breach of express warranty (Count III) to the extent it arises out of alleged defects affirmatively identified as “design defects” in the amended complaint.

In addition, the Court denied the Class Action Plaintiffs’ request for leave to amend as to all of the dismissed causes of action except for plaintiff Spa Thirsty’s claims pursuant to N.Y.

§§ 349 and 350.

The Court gave plaintiff Spa Thirsty until January 9, 2026 to move for leave to file a second amended complaint that addresses the deficiencies with plaintiff Spa Thirsty’s §§ 349 and 350 claims.

Those deficiencies included plaintiff Spa Thirsty’s failure to allege that it “was aware of any of Defendants’ purportedly deceptive statements ‘before [it] purchased or came into possession’ of the Syndeo.”

On January 9, 2026, Class Action Plaintiffs filed a letter motion for leave to file a second amended complaint and for reconsideration of the Court’s dismissal of Plaintiffs’ claims for breach of express and implied contract and class-wide rescission based on fraudulent inducement (Count II).

Class Action Plaintiffs appended a proposed second amended complaint (the “Second Amended Complaint”) to their letter motion.

The Second Amended Complaint alleged that plaintiff Spa Thirsty purchased a Syndeo in reliance on representations made by Hydrafacial to plaintiff Spa Thirsty at an aesthetic conference in New York, including that Syndeo was “top of the line,” “hands free,” “had superior cleanliness,” “superior,” “a major upgrade,” “works great,” and “yielded ‘more than 15 uses per bottle of solution serum.” The Second Amended Complaint alleged that those representations were deceptive in violation of N.Y.

§§ 349 and 350 because the Syndeo allegedly lacked attributes Hydrafacial had represented to plaintiff Spa Thirsty and did not yield the promised treatments per bottle of solution serum.

On January 23, 2026, Hydrafacial filed its opposition to Class Action Plaintiffs’ letter motion.

Hydrafacial argued that the Second Amended Complaint was futile because all of its alleged representations about the Syndeo were inactionable puffery, except for, arguably, the representation regarding the number of treatments per bottle of solution serum.

For that representation, Hydrafacial argued that plaintiff Spa Thirsty did not allege that its Syndeo yielded fewer than 15 treatments per bottle and failed to allege other facts required to state §§ 349 and 350 claims.

Hydrafacial also argued that Class Action Plaintiffs’ request for reconsideration of the dismissal of Count II should be denied as untimely.

On January 27, 2026, the Court issued an order granting Class Action Plaintiffs’ motion for leave to file the Second Amended Complaint but denied their request that the Court reconsider its order dismissing the claim for breach of contract in Count II of the Amended Complaint.

Although the Court agreed with Hydrafacial that “many of the claims attributed to HydraFacial in the Second Amended Complaint are non-actionable puffery, the claim that the Syndeo ‘yielded more than 15 uses per bottle of serum’ is a verifiable statement of fact,” and the Court could “infer that plaintiff Spa Thirsty’s machine failed to yield the promised number of uses per bottle of serum ….

From plaintiff Spa Thirsty’s allegation that its ‘machines run through serums faster than Defendant states it should.’” The Court denied reconsideration because Class Action Plaintiffs’ request was both untimely and “would fail on the merits,” as Class Action Plaintiffs “failed to allege the specific provisions of the contract upon which liability was predicated.” Pursuant to the Court’s order, Class Action Plaintiffs filed the Second Amended Complaint on January 29, 2026.

As a result of the Court’s ruling, the only claims still pending before the Court in the Customer Class Action are (i) the Class Action Plaintiffs’ claim against Hydrafacial for breach of its express warranty against defects in materials and workmanship;

and (ii) plaintiff Spa Thirsty’s claim, asserted on behalf of itself and the Putative New York Subclass against Hydrafacial, for alleged violations of N.Y.

G.B.L., § 349 and § 350.

On February 26, 2026, the parties jointly notified the Court that a settlement-in-principle had been reached and requested that all deadlines be stayed for sixty (60) days.

On March 2, 2026, the Court ordered Class Action Plaintiffs to file the necessary motion papers for preliminary approval of the settlement on or before May 29, 2026, and canceled all other deadlines in the case.

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

Consolidated Derivative Action

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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 is due May 2, 2025, and Defendants’ reply brief is due June 3, 2025.

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

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.

The parties held a mediation on November 4, 2025 and have reached agreement on terms of a mutually agreeable resolution.

The parties are finalizing settlement papers for submission to, and the approval of, the Delaware Court of Chancery .

Securities and Exchange Commission (the “SEC”) Subpoena

The Division of Enforcement of the SEC has issued a subpoena in connection with a formal order of investigation of the Company seeking documents and information from us.

The Company is in the process of responding to the subpoena and intends to fully cooperate with the SEC investigation.

On January 11, 2024, the Company was informed that the SEC is conducting a formal investigation of the Company related to, among other things, the allegations brought against the Company in the Securities Class Action lawsuit.

The Company has subsequently received subpoenas from the SEC for the production of documents and information related to its investigation.

The Company is in the process of responding to the subpoenas and intends to fully cooperate with the SEC investigation.

We cannot predict the duration, scope, or outcome of this matter at this time.

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Under this share repurchase program, for the year ended December 31, 2023, the Company repurchased and retired 10.4 million shares for $ 30.2 million excluding taxes.

During the year ended December 31, 2024, the Company did no t repurchase any shares of its Class A Common Stock.

During the years ended December 31, 2025 and 2024, the Company did not repurchase any shares of its Class A Common Stock.

On September 26, 2022, the Company’s Board of Directors approved a common stock repurchase program pursuant to which the Company may repurchase up to $ 200.0 million of its outstanding shares of Class A Common Stock.

4 unchanged sentences

During the year ended December 31, 2023, the Company paid $ 2.2 million as the final settlement of the November 9, 2022 accelerated share repurchase agreement, which was based upon the average daily volume weighted average price of the Company’s Class A Common Stock during the repurchase period, less an agreed upon discount.

The accelerated share repurchase agreements are accounted for as a repurchases and retirements of shares and as equity forward contracts indexed to the Company’s Class A Common Stock.

The equity forward contracts are classified as equity instruments under ASC 815-40, Contracts in Entity's Own Equity.

The par value of the initial shares received is recorded as a reduction to the Company’s Class A Common Stock and the excess of par value is recognized as a reduction to additional paid in capital.

The equity forward stock purchase contracts are classified as equity instruments and are recognized as a reduction to additional paid in capital.

Preferred Stock

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Money market funds $ 284,462 $ — $ — $ 284,462

International treasuries $ — $ 3,777 $ — $ 3,777

Warrant liability — Private Placement Warrants $ — $ — $ 488 $ 488

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As of December 31, 2025 and 2024, the Company had approximately 7 million Private Placement Warrants outstanding for which the fair value was determined using a Monte Carlo simulation model because these warrants are not subject to redemption if the reference value of the common stock, as defined, is between $ 10.00 and $ 18.00 per share.

The warrants will expire in May 2026.

Long-Term Debt

As of December 31, 2024 and 2023 , the estimated fair value of the Notes were approximately $ 446 million and $ 558 million, respectively.

The estimated fair value of the Notes was determined based on the actual bid price of the Notes on December 31, 2024 and 2023.

The estimated fair values have been calculated based on broker quotes or rates for the same or similar instruments and are classified as Level 2 within the fair value hierarchy.

As of December 31, 2025 and December 31, 2024 , the estimated fair value of the Notes were $ 383.1 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 December 31, 2025 and December 31, 2024, and are classified as Level 2 within the fair value hierarchy.

Note 12 — Share-Based Compensation

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At December 31, 2025 , approximately 14 million shares of the Company’s Class A Common Stock were reserved for the issuance of awards under the 2021 Plan.

Stock Options

The following table summarizes the Company’s stock option activity:

Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value

(in thousands)

Outstanding - January 1, 2024

3,732,420 $ 14.00 6.73 $ —

Forfeited ( 141,900 ) 17.54

Expired ( 107,450 ) 21.28

Outstanding - December 31, 2024

3,483,070 13.64 5.29 —

Vested and Exercisable - December 31, 2024

2,769,240 13.60 5.01 —

Options vested and expected to vest - December 31, 2024

3,483,070 $ 13.64 5.29 $ —

At December 31, 2024, aggregate unrecognized compensation cost for unvested stock options was $ 1.9 million recognized over a weighted average period of 0.4 years .

The stock options granted generally vest over a four year period.

There were no stock options granted during the year ended December 31, 2023.

The weighted average grant date fair value of the stock options granted during the year ended December 31, 2022 was $ 12.23 .

The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.

For the year ended December 31, 2023, t he total intrinsic value of stock options exercised was immaterial.

There were no stock options exercised during the year ended December 31, 2022.

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

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PSUs are granted to select executive officers pursuant to the 2021 Plan and vest based on either (i) the performance of the Company’s Class A Common Stock (“Top-hat”) or (ii) the total shareholder return of the Company’s Class A Common Stock relative to a defined peer group (“TSR”).

Top-hat PSUs are earned over a three or four-year performance period, based on the attainment of pre-determined goals related to the performance of the Company’s Class A Common Stock, and subject to the recipient’s continued employment through the end of the performance period.

through the end of the performance period.

The actual number of shares of the Company’s Class A Common Stock to be issued related to Top-hat PSUs will range from 0 % to 100 % of the number of PSUs granted.

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Risk-free interest rate 3.6 % - 4.0 %

1.5 % - 4.2 %

Expected volatility of the Company’s Class A Common Stock 102.6 % - 120.1 %

57.7 % - 66.0 %

The following table summarizes the Company’s RSU and PSU activity for the year ended December 31, 2025:

9 unchanged sentences

12,311,446 2,154,230 $ 1.97 $ 3.02

(1) Cancelled PSU shares represent Top-hat PSUs and TSR PSUs that were not earned for the performance period that ended during the year ended December 31, 2024.

(1) Cancelled PSU shares represent TSR PSUs that were not earned for the performance period that ended during the year ended December 31, 2025.

The fair value of RSUs that vested, determined based on their respective fair values at vesting date, during the years ended December 31, 2025, 2024, and 2023 was $ 4.6 million, $ 5.9 million, and $ 9.7 million, respectively.

At December 31, 2024, the aggregate unrecognized compensation cost for unvested RSUs and PSUs was $ 21.4 million and $ 4.9 million, respectively, recognized over a weighted average period of 1.8 years and 1.9 years, respectively.

The fair value of PSUs that vested, determined based on their respective fair values at vesting date, during the year ended December 31, 2025 was $ 0.9 million.

There were no PSUs that vested during the years ended December 31, 2024 and 2023.

The weighted average grant date fair value of RSUs granted during the years ended December 31, 2024 and 2023 was $ 3.17 and $ 8.58 , respectively.

The weighted average grant date fair value of PSUs granted during the years ended December 31, 2024 and 2023 was $ 5.27 and $ 17.54 , respectively.

At December 31, 2025, the aggregate unrecognized compensation cost for unvested RSUs and PSUs was $ 16.3 million and $ 4.2 million, respectively, recognized over a weighted average period of 1.9 years and 1.8 years, respectively.

Stock Options

The following table summarizes the Company’s stock option activity:

Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value

(in thousands)

Outstanding - January 1, 2025

3,483,070 $ 13.64 5.29 $ —

Forfeited ( 74,475 ) 15.45

Expired ( 948,675 ) 13.81

Outstanding - December 31, 2025

2,459,920 13.51 5.37 —

Vested and Exercisable - December 31, 2025

2,457,295 13.50 5.37 —

Options vested and expected to vest - December 31, 2025

2,459,920 $ 13.51 5.37 $ —

At December 31, 2025, aggregate unrecognized compensation cost for unvested stock options was immaterial .

The stock options granted generally vest over a four year period.

There were no stock options granted during the year ended December 31, 2024 and 2023.

The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.

There were no stock options exercised during the year ended December 31, 2024.

For the year ended December 31, 2023, t he total intrinsic value of stock options exercised was immaterial .

Employee Stock Purchase Plan (“ESPP”)

The Company maintains the ESPP for employees located in the United States, which became effective upon the consummation of the Business Combination.

In 2024, the Company suspended the ESPP for employees located in the United States, which became effective upon the consummation of the Business Combination.

Under the ESPP, eligible employees can have up to 10 % of their earnings withheld, up to certain maximums, to be used to purchase shares of the Company’s Class A Common Stock at certain purchase dates.

The price of the Company’s Class A Common Stock purchased under the ESPP for the offering periods is equal to 85 % of the lesser of the fair market value of a share of Class A Common Stock of the Company on the beginning or the end of the offering period.

In November 2024, the Company suspended the operation of the ESPP after the conclusion of its sixth offering period.

The aggregate number of shares of the Company’s Class A Common Stock initially reserved for issuance pursuant to rights granted under the ESPP was 2,000,000 .

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Note 14 — Income Taxes

The following table presents domestic and foreign components of (loss) income before income taxes as follows for the periods indicated:

The following table presents domestic and foreign components of loss before income taxes as follows for the periods indicated:

Year Ended December 31,

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Foreign 6,524 ( 1,218 ) 2,272

(Loss) income before taxes $ ( 29,550 ) $ ( 101,889 ) $ 45,339

The federal, state and foreign components of the income tax (benefit) expense are summarized as follows for the periods indicated:

Loss before taxes $ ( 5,938 ) $ ( 29,550 ) $ ( 101,889 )

The federal, state and foreign components of the income tax expense (benefit) are summarized as follows for the periods indicated:

Year Ended December 31,

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Foreign 1,879 ( 3,595 ) ( 1,046 )

Total deferred tax benefit ( 3,595 ) ( 5,816 ) ( 1,787 )

Total income tax (benefit) expense $ ( 452 ) $ ( 1,773 ) $ 1,115

The effective tax rate of the provision for income tax differs from the federal statutory rate as follows for the periods indicated:

Total deferred tax expense (benefit) 1,879 ( 3,595 ) ( 5,816 )

Total income tax expense (benefit) $ 3,581 $ ( 452 ) $ ( 1,773 )

The Company adopted ASU 2023-09 on a prospective basis beginning December 31, 2025.

The following table presents the required disclosure pursuant to ASU 2023-09 and is a reconciliation of the Company's income tax expense at the statutory federal tax rate to the Company's effective tax rate for the year ended December 31, 2025:

Year Ended December 31,

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federal statutory income tax rate $ ( 1,247 ) 21.0 %

State and local taxes, net of federal benefit (1)

Foreign tax effects

Statutory tax rate difference between China and U.S.

Changes in valuation allowance 2,745 ( 46.2 )

Other ( 916 ) 15.4

United Kingdom

Statutory tax rate difference between United Kingdom and U.S.

Other 388 ( 6.5 )

Other foreign jurisdictions 111 ( 1.9 )

Tax credits - research and development ( 108 ) 1.8

Change in valuation allowance ( 1,871 ) 31.5

Nontaxable or nondeductible items

Officer compensation 700 ( 11.8 )

Share-based compensation 1,870 ( 31.5 )

Change in fair value of warrants ( 102 ) 1.7

Other 729 ( 12.3 )

Changes in worldwide unrecognized tax benefits 208 ( 3.5 )

Other provision adjustments 875 ( 14.7 )

Income tax expense $ 3,581 ( 60.3 ) %

(1) State taxes in Texas comprise the majority (greater than 50%) of the tax effect in this category.

The following table presents the required disclosures prior to the adoption of ASU 2023-09 and is a reconciliation of the Company's income tax benefit at the statutory federal tax rate to the Company's effective tax rate for the years ended December 31, 2024 and 2023:

Year Ended December 31,

(in thousands) 2024 2023

Federal statutory income tax rate $ ( 6,206 ) 21.0 % $ ( 21,398 ) 21.0 %

State taxes, net of federal benefit 475 ( 1.6 ) ( 3,083 ) 3.0

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Change in fair value of warrants ( 644 ) 2.2 ( 2,503 ) 2.5

Transaction costs — — — — ( 32 ) ( 0.1 )

Share-based compensation 5,130 ( 17.4 ) 2,922 ( 2.9 )

4 unchanged sentences

Other ( 1,061 ) 3.6 1,348 ( 1.3 )

Income tax (benefit) expense $ ( 452 ) 1.5 % $ ( 1,773 ) 1.7 % $ 1,115 2.4 %

Income tax benefit $ ( 452 ) 1.5 % $ ( 1,773 ) 1.7 %

The following table presents cash paid for income taxes, net of refunds received, by jurisdiction during the year ended December 31, 2025:

(in thousands)

Aggregated state and local jurisdictions (2)

United Kingdom 3,218

Australia 249

All other foreign (2)

Total cash paid for income taxes, net of refunds $ 3,950

(2) The amount of income taxes paid during the year ended December 31, 2025 does not meet the 5% disaggregation threshold.

Cash paid for income taxes, net of refunds, during the years ended December 31, 2024 and 2023 was $ 2.8 million and $ 2.3 million, respectively.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

12 unchanged sentences

Capitalized research 2,592 5,249

Property and equipment 1,119 —

Other 2,580 3,480

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Prepaid expenses — ( 283 )

Convertible debt premium ( 3,415 ) —

Right-of-use assets ( 2,889 ) ( 3,401 )

2 unchanged sentences

Valuation allowance ( 34,840 ) ( 34,244 )

Net deferred income tax assets (liabilities)

$ 3,498 $ ( 171 )

The Company’s net deferred income tax assets (liabilities) as presented on the Consolidated Balance Sheets consists of the following items as of the dates indicated:

Net deferred income tax assets $ 1,532 $ 3,498

The Company’s net deferred income tax assets as presented on the Consolidated Balance Sheets consists of the following items as of the dates indicated:

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

1 unchanged sentence

Deferred income tax liabilities ( 393 ) ( 396 )

Net deferred income tax assets (liabilities)

$ 3,498 $ ( 171 )

The Company increased the valuation allowance on the net U.S.

federal and state deferred tax assets by $ 1.0 million for the year ended December 31, 2024.

Net deferred income tax assets $ 1,532 $ 3,498

The Company increased the valuation allowance on the net deferred tax assets by $ 0.6 million for the year ended December 31, 2025.

In determining whether deferred tax assets are realizable, the Company considered numerous factors including historical profitability, the amount of future taxable income and the existence of taxable temporary differences that can be used to realize the deferred tax assets.

The Company has provided a full valuation allowance against the net U.S.

federal and state deferred tax assets that management believes is not more likely than not to be realized.

The Company has provided a full valuation allowance against the China and U.S.

federal and state net deferred tax assets that management believes is not more likely than not to be realized.

If the Company were to release the valuation allowance upon management determining that it is more likely than not the deferred tax assets could be recognized, $ 34.8 million of income tax benefit would be recorded to continuing operations.

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As of December 31, 2025, the Company has $ 0.7 million of unrecognized tax benefits that, if recognized and realized, will affect the effective tax rate.

The Company does not expect a significant change in the unrecognized tax benefits over the next 12 months.

The Company recognizes interest expense and penalties associated with uncertain tax positions as a component of income tax expense.

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Unrecognized tax benefits at end of period $ 1,737 $ 1,194

$ 1,194 $ 1,104

The Company is subject to taxation and files income tax returns in the U.S.

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The Company will continue to indefinitely reinvest earnings from its foreign subsidiaries, which are not significant.

During the year ended December 31, 2023, the Company received $ 5.4 million for the Employee Retention Credit under the Coronavirus Aid, Relief, and Economic Security Act, of which $ 4.9 million was recorded in other (income) expense, net and $ 0.5 million was recorded in interest income on the Company’s Consolidated Statements of Comprehensive Income (Loss).

Note 15 — Net (Loss) Income Attributable to Common Stockholders

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

On July 4, 2025, the One Big Beautiful Bill Act (the "Act") was signed into law.

The Act includes significant changes to U.S.

tax and related laws.

Some of the provisions of the Act affecting corporations include the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the Global Intangible Low-Taxed Income and Foreign-Derived Intangible Income international tax provisions, an increase in the limit of the deduction of interest expense to thirty percent of earnings before interest, taxes, depreciation, and amortization, and reinstatement of one hundred percent bonus depreciation deduction from the Tax Cuts and Jobs Act for eligible property acquired after January 19, 2025.

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

The Act's financial reporting implications have been recognized in the Company's income tax provision for the year ended December 31, 2025, which did not have a material impact on the U.S.

effective tax rate and net deferred tax assets as the Company maintains a full valuation allowance in the United States.

Note 15 — 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:

Year Ended December 31,

(in thousands, except share and per share amounts) 2025 2024 2023

Net (loss) income available to common stockholders - basic $ ( 29,098 ) $ ( 100,116 ) $ 44,224

Net loss available to common stockholders - basic $ ( 9,519 ) $ ( 29,098 ) $ ( 100,116 )

Adjustments related to the 2026 Notes (1)

( 12,590 ) ( 22,671 ) —

Income on Private Placement Warrants

— — ( 78,343 )

Net loss available to common stockholders - diluted $ ( 22,109 ) $ ( 51,769 ) $ ( 100,116 )

3 unchanged sentences

2026 Notes 9,419,693 18,665,203 —

Private Placement Warrants

Weighted average common stock outstanding - diluted 135,798,202 142,492,575 131,680,605

Basic net (loss) income per share:

Basic net loss per share:

$ ( 0.08 ) $ ( 0.23 ) $ ( 0.76 )

1 unchanged sentence

$ ( 0.16 ) $ ( 0.36 ) $ ( 0.76 )

(1) For the year ended December 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 year ended December 31, 2025 and 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:

2 unchanged sentences

2026 Notes — — 23,614,425

7,254,391 5,242,680 2,580,152

2028 Notes 87,412,575 — —

RSUs 12,311,446 7,254,391 5,242,680

Stock Options 2,459,920 3,483,070 3,732,420

1,237,822 1,306,558 2,500,126

PSUs 2,154,230 1,237,822 1,306,558

For the years ended December 31, 2025, 2024, and 2023, 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.

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Significant expenses within consolidated net (loss) income include cost of sales, total operating expenses, interest expense, interest income, other (income) expense, net, change in fair value of warrant liabilities, foreign currency transaction loss (gain), net, and income tax expense (benefit), all of which are each separately reported on the Consolidated Statements of Comprehensive Income (Loss).

The CODM also reviews the disaggregation of total operating expenses, of which significant segment expenses are related to personnel-related expenses, which includes sales commissions and share-based compensation expense.

Other segment expenses included in total operating expenses primarily consist of fees for professional services principally comprising legal, audit, tax and accounting services, depreciation and amortization expenses, advertising and marketing related expenses,

software, facilities-related costs, credit card and wire fees, and insurance.

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

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Americas $ 203,980 $ 216,993 $ 227,709

45,668 82,193 54,306

Europe, the Middle East and Africa

68,295 71,633 88,089

28,515 45,668 82,193

Total net sales $ 300,790 $ 334,294 $ 397,991

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Additionally, the Company extended the customer’s warranty by one year for each system from the date it was either brought to the 3.0 standards or the customer received a Syndeo 3.0 device.

The Company incurred costs of $ 45.6 million during the year ended December 31, 2023, associated with the costs to upgrade, replace, and remediate Syndeo 1.0 or 2.0 devices.

As of December 31, 2024, the Syndeo Program is complete.

The following table summarizes the Syndeo Program charges and usage (in thousands):

Program liability as of December 31, 2022 $ —

Charges 45,638

Program liability as of December 31, 2023 $ 21,009

Usage ( 21,009 )

Program liability as of December 31, 2024 $ —

With respect to Syndeo devices, as a result of the decision to market and sell Syndeo 3.0 devices exclusively, the Company designated all Syndeo 1.0 and 2.0 builds on-hand as obsolete, resulting in an inventory write-down of $ 19.6 million during the year ended December 31, 2023.

Syndeo Program charges and Syndeo inventory write-down were recognized in cost of sales for the year ended December 31, 2023.

The Company incurred costs of $ 45.6 million during the year ended December 31, 2023, associated with the costs to upgrade, replace, and remediate Syndeo 1.0 or 2.0 devices, which was included in cost of sales on the Consolidated Statements of Comprehensive Income (Loss).

As of December 31, 2024, the Syndeo Program was complete.

Additionally, with respect to Syndeo devices, as a result of the decision to market and sell Syndeo 3.0 devices exclusively, the Company designated all Syndeo 1.0 and 2.0 builds on-hand as obsolete, resulting in an inventory write-down of $ 19.6 million during the year ended December 31, 2023.

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

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data