SkinHealth Systems Inc.

Hello and welcome to the Beauty Health First Quarter 2024 Earnings Conference Call. At this time, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. I will now turn the call over to your host, Roberto Aja, Investor Relations.

Please go ahead. Thank you, Operator, and good afternoon, everyone. Welcome to Beauty Health Company's 2024 First Quarter Conference Call. We will start in just a minute with management's comments and your questions. But before doing so, let me take a minute to read the Safe Harbor language. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on expectations that involve risk and uncertainties that could cause actual results to differ materially. Listeners are cautioned not to place some new reliance on any forward-looking statements. For further discussion of risks related to our business, See the company's filings with the SEC. This call will present non-GAAP financial measures. Reconciliation of these non-GAAP measures to the most comparable GAAP measures are to be found in the earnings press release furnished to the SEC and available on our website. Joining me on the call today is Beauty Health Chief Executive Officer Marla Beck, along with Chief Financial Officer Mike Monahan. Following management's prepared remarks, we will open the call for a question and answer session. With that, I would now like to turn the call over to our CEO, Marla Beck. Please go ahead, Marla.

Thank you, Norberto. Good afternoon, everyone, and thank you for joining us. We are pleased to be with you today to review Beauty Health's first quarter results and the progress we are making on our business transformation. As discussed on our last call, we continue to drive towards rebuilding and restoring confidence with a focus on laying the foundation for future growth. While this transformation will take time, I am encouraged by the progress we are making towards our three strategic priorities, sales excellence, operational excellence, and financial discipline. Our teams are driven and focused, and I'm excited by the long-term potential of Duty Health. Turning to our first quarter results, we had a solid start to 2024. First quarter revenues came in above our guidance midpoint, with healthy consumable sales. Profitability was also well ahead of expectations, driven by continued cost rationalization. While we are encouraged by our progress, there is still more work to be done, particularly on the device side of the business. We've addressed the core issues that impacted earlier versions of our Sundeo system with the release of Sundeo 3.0 last July. The quality has improved significantly, However, our field teams and customer service teams are finding some technical issues, most of which are resolvable by phone or an in-field technical visit. In the last 30 days, we have brought in a seasoned operations leader who has decades of experience to rapidly bring our quality processes and our global production and supply chain processes up to superior levels. We will get this right over the next couple of quarters. Our number one priority is to make sure Our providers have the devices they need to serve their customers and maximize their revenue streams. We are committed to this every day. We remain acutely focused on improving our financial results and addressing our near-term operational challenges while building the foundation necessary to capture the significant long-term growth opportunities for our hero brand, Hydrafacial. For providers and consumers alike, Hydrafacial is beloved for its instant skin health results, scientifically proven clinical efficacy, and strong brand recognition. Investing in hydrafacial treatment devices offers providers the potential for a new revenue stream, increased traffic, and ongoing support by our business development and training teams. It is a treatment asked for by name across doctor's offices, med spas, single room estheticians, as well as retail and hospitality locations. for healthy, glowing results every time. On our last earnings call, we introduced three key strategic priorities for 2024, including sales excellence, operational excellence, and financial discipline. While early in this transformation, I am encouraged by our progress. Regarding our first priority, sales excellence, our field team has been successful in elevating our strong provider relationships through best in class customer service and engagement. The treatment room is the center of our business, and providers and our sales teams are the face of the brand. We believe consistent personal connection between our experienced and tenured sales team and our providers is a unique differentiator for the Hydrafacial brand. In putting the provider first, we've also allocated additional resources to support them. We've refined our training programs, giving our providers more accessible and convenient education opportunities to hone their craft and effectively grow their businesses. We've also expanded our technical and customer service teams, including the addition of 24-7 technical support in the U.S. and Canada to swiftly address the needs of our customers. In a study conducted in February, Hydrafacial has the highest NPS among branded capital equipment in med spas and traditional spots. Additionally, Hydrafacial was recently named Aesthetics Vendor of the Year by our corporate partner, Relive Health, at their Franchisee Conference. This recognition is a testament to both the clinical efficacy of our treatment system and the world-class support of our field team. Our providers continue to recognize the unmatched results of our treatment and the power of the Hydrafacial brand to not only bring consumers through their doors, but also to serve as a revenue multiplier for their business. As we look further ahead, we are more confident than ever in Hydrafacial's potential, both in its current form and through innovation. Moving to our second area of focus, operational excellence. As I mentioned on our last call, my focus from day one has been to streamline our operations, concentrating on our most promising growth avenues and instituting added rigor, accountability, and oversight throughout our supply chain. A comprehensive evaluation of our entire manufacturing and operational framework is underway. I look forward to updating everyone upon its completion later this year. To this end, we recently made additional strategic leadership changes. In April, we appointed Sherry Lewis to the newly created position of Chief Supply Chain and Operations Officer. Sherry is a talented and deeply experienced executive who brings decades of relevant expertise across global supply chains and operations, including at Medtronic. She will serve an important role in advancing our strategic objectives in this area. She is currently leading a comprehensive global supply chain review to drive continuous quality improvements. Regarding our third priority, financial discipline, our goal is to be cost conscious in everything we do, balancing our cost structure with revenue and opportunity. Operationally, this means tighter expense management and a reallocation of resources to high-impact areas of the business. Looking ahead, we see a number of compelling opportunities to drive long-term profitable growth. by leveraging the tremendous power of the Hydrafacial brand and our clinically proven treatments. We see an attractive opportunity around consumables to drive further penetration. We'll be working through our long-term innovation pipeline. We will look at how we expand our offering to increase the efficacy and longevity of our results. We see a clear opportunity to grow our device installed base by further segmenting our provider channels and offering unique value. We have exclusive offerings in our medical channel currently, such as our wet diamond tip and our medical grade peel. We see an opportunity to expand our offerings, treating each segment in a unique way. Additionally, we have meaningful clinical studies related to the efficacy of hydrafacial treatments, both historic and underway, that we will leverage in all of our stakeholder channels. We also see the opportunity to increase penetration in our existing markets to drive scale. We are looking at how we increase our investments in our direct markets to drive both provider and consumer adoption and retention. Of course, none of these opportunities would be possible without our entire team's unwavering focus on delivering the highest levels of support and service to our providers and end consumers. Our past and future success is predicated on this ironclad commitment. What gives me the most confidence in our ability to drive further improvements and growth while creating added value for our partners and shareholders is the quality of our team, including the recent additions we have made. While we remain cautious in the short term as we work through the remaining headwinds, I believe the long-term outlook and opportunity for beauty health has never been more promising. I look forward to engaging with you over the coming quarters to discuss our progress. With that, I will turn the call over to Mike.