What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-06 · 66 added, 168 removed, 144 unchanged (62% of the section changed)

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Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q for the three months ended September 30, 2025 (the “Quarterly Report on Form 10-Q”) contains “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995.

This Quarterly Report on Form 10-Q for the three months ended March 31, 2026 (the “Quarterly Report on Form 10-Q”) contains “forward looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995.

When used in this Quarterly Report on Form 10-Q, the words “estimates,” “projected,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,” “propose” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.

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Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled Risk Factors of this filing and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2026 (the “Annual Report on Form 10-K”).

Important factors, among others, that may affect actual results or outcomes include the inability to recognize the benefits of the business combination consummated on May 4, 2021 pursuant to a certain Agreement and Plan of Merger entered into by and among the Company and other parties (the “Business Combination”);

costs related to the Business Combination;

Important factors that may affect actual results or outcomes include, among others:

the inability to recognize the benefits of the business combination consummated on May 4, 2021 pursuant to a certain Agreement and Plan of Merger entered into by and among the Company and other parties (the “Business Combination”);

the Company’s availability of cash for debt service and exposure to risk of default under debt obligations;

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the Company’s ability to execute its business plan;

potential negative reactions or outcomes related to the Company’s name change in general and focused shift in operations;

potential litigation involving the Company;

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and also with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K.

Unless the context otherwise requires, references to the “Company”, “Hydrafacial”, “we”, “us”, and “our” in this section are intended to mean the business and operations of The Beauty Health Company and its consolidated subsidiaries.

Unless the context otherwise requires, references to the “Company”, “Hydrafacial”, “we”, “us”, and “our” in this section are intended to mean the business and operations of SkinHealth Systems Inc.

and its consolidated subsidiaries.

Company Overview

The Beauty Health Company 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.

SkinHealth Systems Inc.

(the “Company” or “SkinHealth Systems”) 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.

Business and Macroeconomic Conditions

During the three and nine months ended September 30, 2025 , we continued to execute against our plan to expand our footprint by selling and placing our patented hydradermabrasion delivery systems (“Delivery Systems”) worldwide, drive consumables, which consist of single-use tips, solutions, serums and other consumables used to provide a Hydrafacial treatment that cleanses, extracts, and hydrates the skin (collectively “Consumables”), invest in our community of providers, partners, and consumers, drive brand awareness, and optimize our global infrastructure.

During the three months ended March 31, 2026 , we continued to strengthen the foundation of the business while expanding our footprint by selling and placing our patented hydradermabrasion delivery systems (“Delivery Systems”) worldwide, driving consumables, which consist of single-use tips, solutions, serums, and other products used to provide a Hydrafacial treatment (collectively “Consumables”), investing in our community of providers, partners, and consumers, driving brand awareness, advancing our science-backed innovation product pipeline, and optimizing our global infrastructure.

Although we believe we can be successful in our current operating environment, various factors may impact our business in unpredictable ways such as:

• Global economic conditions, including inflation, recession, changes in foreign currency exchange rates, higher interest rates, and other changes in economic conditions;

• The imposition of tariffs and/or trade restrictions may impact material costs and pricing;

• Disruptions in transportation and other supply chain related constraints, such as labor strife in the transportation industry;

• Market conditions, including increased competition and the interest rate environment, affecting the ability of potential customers to obtain credit on acceptable terms and longer sales cycles;

• The imposition of tariffs and/or trade restrictions, due to geopolitical tensions or otherwise, may impact material costs and pricing;

• Changes in applicable laws, regulations, regulatory interpretations, or enforcement policies in countries in which we operate;

• Disruptions in transportation and other supply chain related constraints, such as labor strife in the transportation industry or geopolitical tensions;

• Issues related to older models of Syndeo and our actions to remediate such issues.

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We remain attentive to these business and macroeconomic conditions that may materially impact our business, and we continue to explore and implement reporting and quality management systems and risk mitigation strategies in the face of these unfolding conditions to remain agile in adopting to changing circumstances.

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

During the second quarter of 2025, the Company transitioned sales in the China market to a distributor partner, and as a result, the Company has discontinued direct sales to customers in China.

Comparison of Three Months Ended September 30, 2025 to Three Months Ended September 30, 2024

Comparison of Three Months Ended March 31, 2026 to Three Months Ended March 31, 2025

The following tables set forth our consolidated results of operations in dollars and as a percentage of net sales for the periods presented.

The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future.

The results of operations data for the three months ended September 30, 2025 and September 30, 2024, have been derived from the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

The results of operations data for the three months ended March 31, 2026 and March 31, 2025, have been derived from the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Amounts and percentages may not foot due to rounding.

Three Months Ended September 30,

Three Months Ended March 31,

(in millions) 2026 % of Net Sales 2025 % of Net Sales

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Loss before provision for income taxes (6.8) (10.5) (9.2) (13.2)

Income tax expense 0.4 0.5 1.9 2.5

Income tax (benefit) expense (0.2) (0.3) 0.9 1.3

Net loss $ (6.6) (10.2) % $ (10.1) (14.5) %

Three Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions) 2026 2025 Amount %

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Total net sales $ 64.9 $ 69.6 $ (4.7) (6.7) %

Three Months Ended September 30,

Three Months Ended March 31,

Percentage of net sales 2026 2025

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Total 100.0% 100.0%

Total net sales for the three months ended September 30, 2025 decreased $8.1 million, or 10.3%, compared to the three months ended September 30, 2024.

Delivery Systems net sales for the three months ended September 30, 2025 decreased $6.8 million, or 24.6%, compared to the three months ended September 30, 2024, with decreases across all regions.

Total net sales for the three months ended March 31, 2026 decreased $4.7 million, or 6.7%, compared to the three months ended March 31, 2025.

Delivery Systems net sales for the three months ended March 31, 2026 decreased $1.7 million, or 8.3%, compared to the three months ended March 31, 2025, with decreases in the Americas and Europe, the Middle East, and Africa.

Delivery Systems net sales were negatively impacted globally by unfavorable macroeconomic and credit conditions.

Consumables net sales for the three months ended September 30, 2025 decreased $1.4 million, or 2.6%, compared to the three months ended September 30, 2024.

The slight decrease in Consumables net sales includes declines related to the China transition to a distributor partner.

Excluding the impact of the China transition, Consumables net sales increased slightly, with price increases offset by lower volume.

Consumables net sales for the three months ended March 31, 2026 decreased $3.0 million, or 6.1%, compared to the three months ended March 31, 2025, with decreases across all regions.

Consumables net sales were negatively impacted by the transition to a distributor model in China, the timing of distributor orders, and promotions in the fourth quarter of 2025.

Cost of Sales, Gross Profit, and Gross Margin

Three Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions) 2026 2025 Amount %

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Gross margin 68.5 % 69.8 %

Cost of sales for the three months ended September 30, 2025 decreased $13.1 million, compared to the three months ended September 30, 2024 primarily due to lower inventory related charges and net sales.

Cost of sales for the three months ended September 30, 2024 include approximately $8 million of manufacturing optimization related costs.

Gross margin increased to 64.6% for the three months ended September 30, 2025 from 51.6% for the three months ended September 30, 2024 primarily due to lower inventory related charges and favorable mix shift towards consumable net sales, partially offset by lower average selling price of equipment net sales.

Cost of sales for the three months ended March 31, 2026 decreased $0.5 million, compared to the three months ended March 31, 2025.

Gross margin decreased to 68.5% for the three months ended March 31, 2026 from 69.8% for the three months ended March 31, 2025 primarily due to higher amortization expense.

Operating Expenses

Selling and Marketing

Three Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions) 2026 2025 Amount %

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As a percentage of net sales 35.7 % 37.4 %

Selling and marketing expense for the three months ended September 30, 2025 decreased $6.7 million, or 24.2%, compared to the three months ended September 30, 2024.

The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense, and lower depreciation and amortization expense.

Selling and marketing expense for the three months ended March 31, 2026 decreased $2.8 million, or 10.9%, compared to the three months ended March 31, 2025.

The decrease is primarily driven by lower depreciation expense, sales commission expense, and marketing-related spend.

Research and Development

Three Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions) 2026 2025 Amount %

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As a percentage of net sales 1.7 % 1.4 %

Research and development expense for the three months ended September 30, 2025 increased $0.6 million, or 53.2%, compared to the three months ended September 30, 2024.

The increase is primarily driven by higher other professional services expenses.

Research and development expense for the three months ended March 31, 2026 increased slightly compared to the three months ended March 31, 2025, reflecting increased investment in future product development.

General and Administrative

Three Months Ended September 30, Change

Three Months Ended March 31, Change

(in millions) 2026 2025 Amount %

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As a percentage of net sales 33.8 % 48.2 %

General and administrative expense for the three months ended September 30, 2025 decreased $4.2 million, or 12.5%, compared to the three months ended September 30, 2024.

The decrease is primarily driven by lower share-based compensation expense and other general corporate spend, and bad debt recoveries.

The decrease was partially offset by higher amortization expense, severance expense, and legal fees.

Interest Expense, Interest Income, Change in Fair Value of Warrant Liabilities, and Other Income, Net

Three Months Ended September 30, Change

General and administrative expense for the three months ended March 31, 2026 decreased $11.6 million, or 34.6%, compared to the three months ended March 31, 2025.

The decrease is primarily driven by lower personnel-related expenses, including severance and share-based compensation expense, legal fees, and depreciation and amortization expense.

Interest Expense, Interest Income, and Other Income, Net

Three Months Ended March 31, Change

(in millions) 2026 2025 Amount %

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$ (1.5) $ (3.0) $ 1.5 (51.0) %

Change in fair value of warrant liabilities

$ (0.2) $ (0.4) $ 0.2 N/M

Other income, net

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N/M - Not meaningful

Interest expense for the three months ended September 30, 2025 increased $3.8 million compared to the three months ended September 30, 2024, primarily due to interest and amortization of debt issuance costs related to the 2028 Notes, partially offset by lower outstanding balances related to the 2026 Notes.

Interest income for the three months ended September 30, 2025 decreased $3.6 million compared to the three months ended September 30, 2024 primarily due to lower average invested balances and interest rates during the three months ended September 30, 2025.

Comparison of Nine Months Ended September 30, 2025 to Nine Months Ended September 30, 2024

The following tables set forth our consolidated results of operations in dollars and as a percentage of net sales for the periods presented.

The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future.

The results of operations data for the nine months ended September 30, 2025 and September 30, 2024 have been derived from the condensed consolidated financial statements included elsewhere in this Form 10-Q.

Amounts and percentages may not foot due to rounding.

Nine Months Ended September 30,

(in millions) 2025 % of Net Sales 2024 % of Net Sales

Net sales $ 218.4 100.0 % $ 250.8 100.0 %

Cost of sales 75.1 34.4 120.8 48.2

Gross profit 143.3 65.6 130.0 51.8

Operating expenses

Selling and marketing 70.1 32.1 91.8 36.6

Research and development 3.9 1.8 5.1 2.0

General and administrative 90.3 41.3 93.7 37.4

Total operating expenses 164.3 75.2 190.6 76.0

Loss from operations (21.0) (9.6) (60.6) (24.2)

Interest expense 13.0 5.9 7.9 3.2

Interest income (7.4) (3.4) (14.4) (5.8)

Other income, net (18.8) (8.6) (33.5) (13.3)

Change in fair value of warrant liabilities (0.3) (0.2) (3.0) (1.2)

Foreign currency transaction (gain) loss, net (6.2) (2.8) 0.2 0.1

Loss before provision for income taxes (1.1) (0.5) (17.8) (7.1)

Income tax expense 0.3 0.1 0.9 0.4

Net loss $ (1.4) (0.6) % $ (18.8) (7.5) %

Nine Months Ended September 30, Change

(in millions) 2025 2024 Amount %

Delivery Systems

$ 63.4 $ 98.6 $ (35.2) (35.7) %

Consumables 155.0 152.2 2.8 1.9 %

Total net sales $ 218.4 $ 250.8 $ (32.4) (12.9) %

Nine Months Ended September 30,

Percentage of net sales 2025 2024

Delivery Systems 29.0% 39.3%

Consumables 71.0% 60.7%

Total 100.0% 100.0%

Total net sales for the nine months ended September 30, 2025 decreased $32.4 million , or 12.9% , compared to the nine months ended September 30, 2024.

Delivery System net sales for the nine months ended September 30, 2025 decreased $35.2 million , or 35.7% , compared to the nine months ended September 30, 2024, with decreases across all regions.

Delivery Systems net sales were negatively impacted globally by unfavorable macroeconomic and credit conditions.

Consumables net sales for the nine months ended September 30, 2025 increased $2.8 million , or 1.9% , compared to the nine months ended September 30, 2024.

The increase in Consumables net sales was primarily attributable to increased placements of Delivery Systems and the adjoining consumption of Consumables during the nine months ended September 30, 2025.

Cost of Sales, Gross Profit, and Gross Margin

Nine Months Ended September 30, Change

(in millions) 2025 2024 Amount %

Cost of sales $ 75.1 $ 120.8 $ (45.8) (37.9)%

Gross profit $ 143.3 $ 130.0 $ 13.4 10.3%

Gross margin 65.6 % 51.8 %

Cost of sales for the nine months ended September 30, 2025 decreased $45.8 million, compared to the nine months ended September 30, 2024 primarily due to lower inventory related charges and net sales.

Cost of sales for the nine months ended September 30, 2024 include $22.7 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 and approximately $8 million of manufacturing optimization related costs.

Gross margin increased to 65.6% for the nine months ended September 30, 2025 from 51.8% for the nine months ended September 30, 2024 primarily due to lower inventory related charges and favorable mix shift towards consumable net sales, partially offset by lower average selling price of equipment net sales.

Operating Expenses

Selling and Marketing

Nine Months Ended September 30, Change

(in millions) 2025 2024 Amount %

Selling and marketing $ 70.1 $ 91.8 $ (21.7) (23.7) %

As a percentage of net sales 32.1 % 36.6 %

Selling and marketing expense for the nine months ended September 30, 2025 decreased $21.7 million, or 23.7%, compared to the nine months ended September 30, 2024.

The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense and sales commission expense, and lower marketing related spend and depreciation and amortization expense.

Research and Development

Nine Months Ended September 30, Change

(in millions) 2025 2024 Amount %

Research and development $ 3.9 $ 5.1 $ (1.1) (22.2) %

As a percentage of net sales 1.8 % 2.0 %

Research and development expense for the nine months ended September 30, 2025 decreased $1.1 million, or 22.2%, compared to the nine months ended September 30, 2024.

The decrease is primarily driven by lower personnel-related expenses, partially offset by higher other professional services expenses.

General and Administrative

Nine Months Ended September 30, Change

(in millions) 2025 2024 Amount %

General and administrative $ 90.3 $ 93.7 $ (3.4) (3.7) %

As a percentage of net sales 41.3 % 37.4 %

General and administrative expense for the nine months ended September 30, 2025 decreased $3.4 million, or 3.7%, compared to the nine months ended September 30, 2024.

The decrease is primarily driven by lower share-based compensation expense, depreciation expense, and other general corporate spend, and bad debt recoveries.

The decrease is partially offset by higher legal fees, amortization expense, and severance expense.

Interest Expense, Interest Income, Change in Fair Value of Warrant Liabilities, and Other Income, Net

Nine Months Ended September 30, Change

(in millions) 2025 2024 Amount %

Interest expense $ 13.0 $ 7.9 $ 5.0 63.0 %

Interest income

$ (7.4) $ (14.4) $ 7.0 (48.4) %

Change in fair value of warrant liabilities

$ (0.3) $ (3.0) $ 2.6 N/M

Other income, net

$ (18.8) $ (33.5) $ 14.7 (43.8) %

N/M - Not meaningful

Interest expense for the nine months ended September 30, 2025 increased $5.0 million compared to the nine months ended September 30, 2024, primarily due to interest and amortization of debt issuance costs related to the 2028 Notes, partially offset by lower outstanding balances related to the 2026 Notes.

Interest income for the nine months ended September 30, 2025 decreased $7.0 million compared to the nine months ended September 30, 2024 primarily due to lower average invested balances and interest rates during the nine months ended September 30, 2025 .

During the nine months ended September 30, 2025 , the Company recognized income of $0.3 million related to the change in the fair value of the warrant liabilities, as compared to income of $3.0 million for the nine months ended September 30, 2024 , driven primarily by the fluctuation of the price of the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) .

Other income, net for the nine months ended September 30, 2025 included $18.1 million net gain related to the exchange and repurchases of the 2026 Notes.

Other income, net for the nine months ended September 30, 2024 included $33.4 million net gain related to the repurchases of the 2026 Notes.

Interest expense for the three months ended March 31, 2026 increased $3.8 million compared to the three months ended March 31, 2025, primarily due to interest and amortization of debt issuance costs related to the 7.95% Convertible Senior Secured Notes due November 15, 2028 (the “2028 Notes”), partially offset by lower outstanding balances related to the 1.25% Convertible Senior Notes due October 2026 (the “2026 Notes”).

Interest income for the three months ended March 31, 2026 decreased $1.5 million compared to the three months ended March 31, 2025 primarily due to lower average invested balances and interest rates during the three months ended March 31, 2026.

Other income, net for the three months ended March 31, 2026 included $1.0 million net gain related to the repurchase of the 2026 Notes.

Liquidity and Capital Resources

Our primary sources of capital have been (i) cash flow from operating activities, (ii) net proceeds received from the consummation of the Business Combination, (iii) net proceeds received from the Notes, and (iv) net proceeds received from the exercise of public and private placement warrants.

As of September 30, 2025, we had cash, cash equivalents, and restricted cash of $219.4 million.

As of March 31, 2026, we had cash, cash equivalents, and restricted cash of $204.4 million.

Our operating cash flows result primarily from cash received from sales of Delivery Systems and Consumables, offset primarily by cash payments made for products and services, employee compensation, payment processing and related transaction costs, operating leases, marketing expenses, and interest payments for our Notes.

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Convertible Senior Notes, Net

Convertible Senior Secured Notes - 2028

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

Pursuant to the Exchange Agreements, the Company exchanged and repurchased $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 at a weighted-average price equal to 95% for $250.0 million principal amount of new 2028 Notes, and $150.1 million principal amount were repurchased at a weighted-average price equal to 95% for $142.6 million.

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, 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.

Convertible Senior Notes - 2026

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

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.

On September 14, 2021, the Company issued an aggregate of $750.0 million in principal amount of its 2026 Notes pursuant to, and governed by, an indenture dated as of September 14, 2021, between the Company and U.S.

Bank National Association, as trustee.

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

During the three months ended September 30, 2024, there were no repurchases related to the 2026 Notes.

During the nine months ended September 30, 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 three months ended September 30, 2025, there were no repurchases related to the 2026 Notes.

During the nine months ended September 30, 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.

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

Convertible Senior Secured Notes - 2028

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

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

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

The Company incurred $11.4 million of debt issuance costs related to the exchange and repurchase of its Existing Notes which are being amortized over the term of the 2028 Notes using the effective interest method.

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 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.

During the three months ended March 31, 2026, the Company repurchased $21.3 million principal amount of its 2026 Notes at a weighted-average price equal to 94.875% for $20.2 million and recognized a net gain of $1.0 million, which includes $0.1 million of unamortized debt issuance costs.

During the three months ended March 31, 2025, there were no repurchases related to the 2026 Notes.

Since inception through December 31, 2025, the Company exchanged and repurchased in total $625.5 million principal amount of its 2026 Notes.

For more information, see Part I, Item 1 “Financial Statements — Note 5 - “Long-term Debt” in this Quarterly Report on Form 10-Q.

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

Known Trends or Uncertainties

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In addition, we continue to face macroeconomic challenges such as the possibility of recession or financial market instability, and the impact of any governmental actions on the economy, such as tariffs and/or trade restrictions.

Furthermore, the geopolitical landscape poses inherent risks that could significantly impact the operations and financial performance of the Company.

In the event of a military conflict, supply chain disruptions, geopolitical uncertainties, and economic repercussions may adversely affect the Company’s ability to develop, test and manufacture products, and distribute them globally.

This could lead to delays in product development, interruptions in the supply of critical materials, thereby impeding the Company’s commercialization plans.

These factors may adversely impact consumers, business, and government spending as well as our customers' ability to pay for our products and services on an ongoing basis.

If economic and social conditions or the degree of uncertainty or volatility worsen, or the adverse conditions previously described are further prolonged, our revenues could be adversely affected.

Furthermore, the impact of a conflict on global financial markets may result in increased volatility and uncertainty in the capital markets, thereby affecting the valuation of the Company’s Class A Common Stock.

Investor confidence, market sentiment, and access to capital could all be negatively influenced.

Such geopolitical risks are outside the control of the Company, and the actual effects on the Company’s business, financial condition and results of operations may differ from current estimates.

Macroeconomic challenges and credit conditions have negatively impacted our revenues in 2026.

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Amounts may not foot due to rounding.

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in millions) 2026 2025

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Changes in working capital (9.1) 2.9

Net cash provided by (used for) operating activities 22.3 (0.3)

Net cash (used for) provided by operating activities (5.6) 3.0

Net cash used for investing activities (1.6) (1.1)

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Net change in cash, cash equivalents, and restricted cash

(155.9) (163.8)

Effect of foreign currency translation (0.2) 1.4

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Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2025 was $22.3 million, as compared to net cash used for operating activities of $0.3 million for the nine months ended September 30, 2024.

The change in cash provided by operating activities was primarily related to lower working capital usage and changes in net loss and non-cash adjustments.

The current year net loss and non-cash adjustments include $18.1 million of net gain related to the exchange and repurchases of the 2026 Notes.

The prior year net loss and non-cash adjustments include $33.4 million of net gain related to the repurchases of the 2026 Notes and the prior year changes in working capital includes the impact of the costs associated with the Syndeo Program of $21.0 million.

Net cash used for operating activities for the three months ended March 31, 2026 was $5.6 million, as compared to net cash provided by operating activities of $3.0 million for the three months ended March 31, 2025.

The change in cash used for operating activities was primarily related to changes in working capital and net loss.

Investing Activities

Net cash used for investing activities for the nine months ended September 30, 2025 was $3.8 million, as compared to $5.9 million for the nine months ended September 30, 2024.

The change in cash used for investing activities was due to lower capital expenditures during the nine months ended September 30, 2025.

Net cash used for investing activities for the three months ended March 31, 2026 was $1.6 million, as compared to $1.1 million for the three months ended March 31, 2025.

The change in cash used for investing activities was due to higher capital expenditures during the three months ended March 31, 2026.

Financing Activities

Net cash used for financing activities for the nine months ended September 30, 2025 was $174.4 million, as compared to $157.6 million for the nine months ended September 30, 2024.

The cash used for financing activities for the nine months ended September 30, 2025 was primarily related to the exchange and repurchases of the Company’s 2026 Notes.

The cash used for financing activities for the nine months ended September 30, 2024 was primarily related to the repurchases of the Company’s 2026 Notes.

Net cash used for financing activities for the three months ended March 31, 2026 was $20.9 million, as compared to $0.3 million for the three months ended March 31, 2025.

The cash used for financing activities for the three months ended March 31, 2026 was primarily related to the repurchase of the Company’s 2026 Notes.

Critical Accounting Policies and Estimates

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What changed 10-Q

Item 2. Management’s Discussion and Analysis