What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 133 added, 43 removed, 167 unchanged (51% of the section changed)

1 unchanged sentence

Cautionary Note Regarding Forward-Looking Statements

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.

This Quarterly Report on Form 10-Q for the three months ended June 30, 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.

19 unchanged sentences

Business and Macroeconomic Conditions

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.

During the three and six months ended June 30, 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:

8 unchanged sentences

Business and macroeconomic factors may also negatively impact, in the short-term or long-term, the global economy, the beauty health industry, our providers and their budgets with us, our business, the Company’s brand reputation, financial condition, and results of operations.

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.

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

Australia and New Zealand Market

After evaluating the Company's global distribution strategy to align with its go-to-market strategy with in-market partner capabilities and market opportunity, the Company transitioned sales in the Australia and New Zealand market to a distributor partner in June 2026.

As a result, the Company has discontinued its direct sales presence in Australia and New Zealand.

The change in go-to-market strategy is expected to be accretive to the Company’s long-term profitability, as reductions in operating spend are partially offset by a reduction to revenue.

Comparison of Three Months Ended June 30, 2026 to Three Months Ended June 30, 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 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.

The results of operations data for the three months ended June 30, 2026 and June 30, 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 March 31,

Three Months Ended June 30,

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

7 unchanged sentences

Total operating expenses 45.8 63.5 51.8 66.3

Loss from operations (1.8) (2.8) (12.0) (17.3)

Income (loss) from operations 3.6 5.0 (2.7) (3.5)

Interest expense 6.3 8.7 4.1 5.3

3 unchanged sentences

Foreign currency transaction loss (gain), net — — (4.5) (5.7)

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

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 March 31, Change

(Loss) income before provision for income taxes (1.5) (2.0) 18.7 23.9

Income tax expense (benefit) 1.2 1.7 (1.0) (1.3)

Net (loss) income $ (2.7) (3.7) % $ 19.7 25.2 %

Three Months Ended June 30, Change

(in millions) 2026 2025 Amount %

3 unchanged sentences

Total net sales $ 72.1 $ 78.2 $ (6.1) (7.8) %

Three Months Ended March 31,

Three Months Ended June 30,

Percentage of net sales 2026 2025

2 unchanged sentences

Total 100.0% 100.0%

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.

Total net sales for the three months ended June 30, 2026 decreased $6.1 million, or 7.8%, compared to the three months ended June 30, 2025.

Delivery Systems net sales for the three months ended June 30, 2026 decreased $4.1 million, or 18.4%, compared to the three months ended June 30, 2025, with decreases across all regions.

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

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.

Consumables net sales for the three months ended June 30, 2026 decreased $2.0 million, or 3.5%, compared to the three months ended June 30, 2025, with decreases in Europe, the Middle East, and Africa, and the Americas, impacted by pressure on treatment volume and timing of booster launches in the prior year.

Cost of Sales, Gross Profit, and Gross Margin

Three Months Ended March 31, Change

Three Months Ended June 30, Change

(in millions) 2026 2025 Amount %

2 unchanged sentences

Gross margin 68.4 % 62.8 %

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.

Cost of sales for the three months ended June 30, 2026 decreased $6.3 million, compared to the three months ended June 30, 2025, primarily due to lower net sales in 2026 and higher product costs related to the sell through associated with Delivery Systems received back as part of the Company’s previous trade-in program and higher inventory related charges in 2025.

Gross margin increased to 68.4% for the three months ended June 30, 2026 from 62.8% for the three months ended June 30, 2025 primarily due to higher product costs related to the sell through associated with Delivery Systems received back as part of the Company’s previous trade-in program and higher inventory related charges in 2025.

Selling and Marketing

Three Months Ended June 30, Change

(in millions) 2026 2025 Amount %

Selling and marketing $ 21.0 $ 23.1 $ (2.1) (9.0) %

As a percentage of net sales 29.1 % 29.6 %

Selling and marketing expense for the three months ended June 30, 2026 decreased $2.1 million, or 9.0%, compared to the three months ended June 30, 2025.

The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense and severance, partially offset by higher marketing-related spend.

Research and Development

Three Months Ended June 30, Change

(in millions) 2026 2025 Amount %

Research and development $ 1.4 $ 1.3 $ 0.2 12.5 %

As a percentage of net sales 2.0 % 1.6 %

Research and development expense for the three months ended June 30, 2026 increased $0.2 million, or 12.5%, compared to the three months ended June 30, 2025, reflecting increased investment in future product development.

General and Administrative

Three Months Ended June 30, Change

(in millions) 2026 2025 Amount %

General and administrative $ 23.3 $ 27.5 $ (4.1) (15.0) %

As a percentage of net sales 32.4 % 35.1 %

General and administrative expense for the three months ended June 30, 2026 decreased $4.1 million, or 15.0%, compared to the three months ended June 30, 2025.

The decrease is primarily driven by lower personnel-related expenses, including share-based compensation expense, legal fees, and professional fees, partially offset by the costs associated with the proposed settlement the Company has reached with the plaintiffs in the Securities Class Action.

Interest Expense, Interest Income, and Other Income, Net

Three Months Ended June 30, Change

(in millions) 2026 2025 Amount %

Interest expense $ 6.3 $ 4.1 $ 2.2 51.9 %

Interest income

$ (1.3) $ (3.2) $ 1.9 (59.2) %

Other income, net

$ — $ (18.1) $ 18.1 N/M

N/M - Not meaningful

Interest expense for the three months ended June 30, 2026 increased $2.2 million compared to the three months ended June 30, 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 June 30, 2026 decreased $1.9 million compared to the three months ended June 30, 2025 primarily due to lower average invested balances and interest rates during the three months ended June 30, 2026.

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

Comparison of Six Months Ended June 30, 2026 to Six Months Ended June 30, 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 six months ended June 30, 2026 and June 30, 2025 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.

Six Months Ended June 30,

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

Net sales $ 137.0 100.0 % $ 147.8 100.0 %

Cost of sales 43.2 31.6 50.1 33.9

Gross profit 93.8 68.4 97.7 66.1

Operating expenses

Selling and marketing 44.2 32.3 49.1 33.3

Three Months Ended March 31, Change

Research and development 2.5 1.8 2.2 1.5

General and administrative 45.3 33.0 61.0 41.3

Total operating expenses 92.0 67.1 112.4 76.1

Income (loss) from operations 1.8 1.3 (14.7) (10.0)

Interest expense 12.6 9.2 6.6 4.5

Interest income (2.8) (2.0) (6.2) (4.2)

Other income, net (1.1) (0.8) (18.2) (12.3)

Change in fair value of warrant liabilities — — (0.1) (0.1)

Foreign currency transaction loss (gain), net 1.2 0.9 (6.3) (4.3)

(Loss) income before provision for income taxes (8.3) (6.0) 9.5 6.4

Income tax expense (benefit) 1.0 0.7 (0.1) (0.1)

Net (loss) income $ (9.3) (6.8) % $ 9.6 6.5 %

Six Months Ended June 30, Change

(in millions) 2026 2025 Amount %

Delivery Systems

$ 36.8 $ 42.6 $ (5.8) (13.6) %

Consumables 100.2 105.2 (5.0) (4.7) %

Total net sales $ 137.0 $ 147.8 $ (10.7) (7.3) %

Six Months Ended June 30,

Percentage of net sales 2026 2025

Delivery Systems 26.9% 28.8%

Consumables 73.1% 71.2%

Total 100.0% 100.0%

Total net sales for the six months ended June 30, 2026 decreased $10.7 million , or 7.3% , compared to the six months ended June 30, 2025.

Delivery Systems net sales for the six months ended June 30, 2026 decreased $5.8 million , or 13.6% , compared to the six months ended June 30, 2025, with decreases across all regions.

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

Consumables net sales for the six months ended June 30, 2026 decreased $5.0 million , or 4.7% , compared to the six months ended June 30, 2025, with decreases across all regions, impacted by pressure on treatment volume and the transition to a distributor model in China in the prior year.

Cost of Sales, Gross Profit, and Gross Margin

Six Months Ended June 30, Change

(in millions) 2026 2025 Amount %

Cost of sales $ 43.2 $ 50.1 $ (6.8) (13.6)%

Gross profit $ 93.8 $ 97.7 $ (3.9) (4.0)%

Gross margin 68.4 % 66.1 %

Cost of sales for the six months ended June 30, 2026 decreased $6.8 million, compared to the six months ended June 30, 2025, primarily due to lower net sales in 2026 and higher product costs related to the sell through associated with Delivery Systems received back as part of the Company’s previous trade-in program and higher inventory related charges in 2025.

Gross margin increased to 68.4% for the six months ended June 30, 2026 from 66.1% for the six months ended June 30, 2025 primarily due to higher product costs related to the sell through associated with Delivery Systems received back as part of the Company’s previous trade-in program and higher inventory related charges in 2025.

Operating Expenses

Selling and Marketing

Six Months Ended June 30, Change

(in millions) 2026 2025 Amount %

Selling and marketing $ 44.2 $ 49.1 $ (4.9) (10.0) %

As a percentage of net sales 32.3 % 33.3 %

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.

Selling and marketing expense for the six months ended June 30, 2026 decreased $4.9 million, or 10.0%, compared to the six months ended June 30, 2025.

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

Research and Development

Three Months Ended March 31, Change

Six Months Ended June 30, Change

(in millions) 2026 2025 Amount %

1 unchanged sentence

As a percentage of net sales 1.8 % 1.5 %

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.

Research and development expense for the six months ended June 30, 2026 increased $0.3 million, or 11.6%, compared to the six months ended June 30, 2025, reflecting increased investment in future product development.

General and Administrative

Three Months Ended March 31, Change

Six Months Ended June 30, Change

(in millions) 2026 2025 Amount %

1 unchanged sentence

As a percentage of net sales 33.0 % 41.3 %

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.

General and administrative expense for the six months ended June 30, 2026 decreased $15.7 million, or 25.8%, compared to the six months ended June 30, 2025.

The decrease is primarily driven by lower legal fees, personnel-related expenses, including share-based compensation expense and severance, professional fees, and depreciation and amortization expense, partially offset by the costs associated with the proposed settlement the Company has reached with the plaintiffs in the Securities Class Action.

Interest Expense, Interest Income, and Other Income, Net

Three Months Ended March 31, Change

Six Months Ended June 30, Change

(in millions) 2026 2025 Amount %

5 unchanged sentences

N/M - Not meaningful

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.

Interest expense for the six months ended June 30, 2026 increased $6.0 million compared to the six months ended June 30, 2025, 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 six months ended June 30, 2026 decreased $3.4 million compared to the six months ended June 30, 2025 primarily due to lower average invested balances and interest rates during the six months ended June 30, 2026 .

Other income, net for the six months ended June 30, 2026 included $1.0 million net gain related to the repurchase of the 2026 Notes.

Other income, net for the six months ended June 30, 2025 included $18.1 million net gain related to the exchange and repurchases 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 March 31, 2026, we had cash, cash equivalents, and restricted cash of $204.4 million.

Our primary sources of capital are (i) cash flow from operating activities, (ii) net proceeds received from the consummation of the Business Combination, and (iii) net proceeds received from the Notes.

As of June 30, 2026, we had cash, cash equivalents, and restricted cash of $206.1 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.

21 unchanged sentences

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.

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.

6 unchanged sentences

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

During the three months ended March 31, 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.

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

During the six months ended June 30, 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 and six months ended June 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.

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

17 unchanged sentences

Negative trends in our financial performance or financial condition may result in a sustained decline in our stock price, which may result in a triggering event necessitating an interim goodwill impairment assessment and potential goodwill impairment.

The Company continues to evaluate options to address its 2026 Notes maturity based on our cash needs and market conditions;

however, the Company currently intends to repay its 2026 Notes maturity with cash on hand at the end of the third quarter of 2026.

The following table summarizes the activities from our statements of cash flows.

Amounts may not foot due to rounding.

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions) 2026 2025

2 unchanged sentences

Operating activities:

Net loss (6.6) (10.1)

Net (loss) income (9.3) 9.6

Non-cash adjustments 20.9 4.6

4 unchanged sentences

Net change in cash, cash equivalents, and restricted cash

(26.9) (163.7)

Effect of foreign currency translation 0.3 5.6

2 unchanged sentences

Operating Activities

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.

Net cash used for operating activities for the six months ended June 30, 2026 was $2.9 million, as compared to net cash provided by operating activities of $12.6 million for the six months ended June 30, 2025.

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

The prior year net income and non-cash adjustments include $18.1 million of net gain, as compared to $1.0 million of net gain in the current year related to the 2026 Notes.

Investing Activities

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.

Net cash used for investing activities for the six months ended June 30, 2026 was $2.9 million, as compared to $2.7 million for the six months ended June 30, 2025.

The change in cash used for investing activities was due to higher capital expenditures during the six months ended June 30, 2026.

Financing Activities

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.

Net cash used for financing activities for the six months ended June 30, 2026 was $21.1 million, as compared to $173.6 million for the six months ended June 30, 2025.

The cash used for financing activities for the six months ended June 30, 2026 was primarily related to the repurchase of the Company’s 2026 Notes.

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

Critical Accounting Policies and Estimates

11 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis