SkinHealth Systems Inc.

Good afternoon and welcome to the Beauty Health Company's second quarter 2020 for earnings conference call. Later, you have the opportunity to ask questions during the questions and answer session. You may register to ask a question at any time by pressing the star 1 on your telephone keypad. Please note this event is being recorded and I would like to now turn the conference over to Nibrita Aja for investor relations. Please go ahead.

Thank you, operator, and good afternoon, everyone. Thank you for joining the Beauty Health Company's conference call to discuss our second quarter 2024 financial results, which were released earlier this afternoon and which can be found on our corporate website at beautyhealth.com. Leading the call today is Beauty Health Chief Executive Officer Marla Beck and our Chief Financial Officer Mike Monahan. Before we begin, however, I would like to remind everyone of the company's 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 undue reliance on any forward-looking statements. For further discussion of risks related to our business, please 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 in the earnings press release furnished to the SEC and available on our website. 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, and thank you for joining us today. During my short time as CEO, we have solved our most pressing device issues, identified and began to address the remaining business challenges, and made significant strides in realigning the cost structure and overall operations of the business. While this work will take some time, I am confident we are on the right path to return the company to long-term profitable growth. Today I will walk through a summary of our second quarter results, And then I will explain the initiatives we have already put in place to turn the business around, along with the longer-term initiatives we are executing against to fully realize the company's potential. Our plan revolves around the three core areas of focus that I outlined on our last earnings call, sales execution, operational excellence, and financial discipline. Our second quarter results reflect a slower than expected recovery of device sales, partially due to macroeconomic pressures as well as internal execution. We have an incredible global sales team, and we need to supply them with additional products, tools, processes, and structure to capture the demand for our products. Hydrafacial was in a hyper-growth mode for many years prior to going public. During that time, the company did not fully implement an enduring and scalable infrastructure needed to maximize market share and drive profitability for a company of this size. We are in the process of fixing that. To drive top-line growth, we've implemented three immediate actions to support sales and improve sales execution. First, we have refocused our sales and go-to-market efforts across our entire product portfolio in the U.S., including Elite and Allegro. This will allow us to offer more accessible price points other than Cindeo. This good, better, best approach affords our providers three distinct price points when it comes to their equipment purchasing options. Over 30% of devices sold in the second quarter in the United States were non-Cindeo, either Elite or Allegro. With price sensitivity among many of our smaller business owners, we can expect this number to grow. Second, we have engaged an outside consulting firm to help us restructure our sales strategy, including better processes, tools, and technology to support our capital sales managers and business development managers. Examples include stronger analytics to improve our lead targeting, segmenting, and pipeline forecasting. We expect this project to be completed by the end of the third quarter and to begin to see results later this year. Lastly, we are lowering barriers to entry by improving the availability of financing options, in particular with new and or single location providers. In June, we developed and launched new options to lower the upfront investment required for new customers to purchase a device. We will continue to refine these offerings in the second half of the year. In addition to the above, we are also evaluating our geographic footprint. A few years ago, the company expanded into several new direct markets. To have a meaningful impact in our respective markets, we need to focus and invest behind the brand in a targeted way. We are in the process of evaluating our go-to-market strategy in each country to determine the best way to leverage our brand and products to generate attractive returns. We will have a more detailed update on this initiative on our third quarter call. Regarding operational excellence, I am pleased with our progress. Our new Chief Supply Chain and Operations Officer has been in the seat for just a few months and has already made meaningful contributions. To best address the headwinds related to Sundeo, she has instituted a quality improvement program that has resulted in improved Sundeo system performance and customer satisfaction. We've also completed our global Sandeo replacement program, ensuring all our providers are able to operate on the latest 3.0 standard device. In addition, we've taken the first steps toward refining our global supply chain strategy. We are implementing new inventory management processes and working to realign our global manufacturing capacity and improve our gross margins. On our next call, I will share the results of this review and the actions we will take. And as for financial discipline, we significantly reduced our operating expenses. Our first half 2024 operating expenses are down $24 million versus the prior year. This was achieved through diligent management of expenses and shifting the corporate culture towards cost consciousness and data-driven decision-making. It is important to note that our global footprint is a driver of our operating expenses. As we look at each region, we will be evaluating the growth potential and the cost to support each of the markets. I am confident that the above actions will best position the company to take advantage of the large and growing market and leverage the incredible Hydrafacial brand and products. I will now turn the call over to Mike to discuss our second quarter financial results and revised guidance. After Mike finishes his prepared remarks, I would like to close with discussing our innovation strategy and plans that are underway to capture market share in the future.