SkinHealth Systems Inc.

Good day, and welcome to the Beauty Health Company fourth quarter and 2024 full-year earnings and conference call. All participants will be in listen-only mode. If you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Norberto Aja of 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 fourth quarter and 2024 full-year financial results. We will release our results earlier this afternoon, which can be found on our corporate website at beautyhealth.com. Joining me on the call today is Beauty Health's Chief Executive Officer, Marla Beck, along with her Chief Financial Officer, Mike Monaghan. 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 risks and uncertainties that could cause actual results to differ materially. Listeners are cautioned not to place undue reliance on any forward-looking statements. For a 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. A reconciliation of these non-GAAP measures to the most comparable GAAP measure 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 to review our fourth quarter and full year 2024 results. A year ago, I expressed my enthusiasm for the opportunity I saw in Leading Beauty Health, an innovative category creator at the intersection of beauty, aesthetics, wellness, and health that needed a transformational strategy and disciplined execution. Over the past 12 months, we have made significant strides in stabilizing operations, optimizing costs, reigniting our product pipeline, attracting top talent, and building a stronger foundation for long-term profitable growth. Our fourth quarter financials demonstrate that our transformation efforts are beginning to take hold. with continued growth in consumable sales across all regions and substantial improvements in gross margin and bottom-line profitability. For the full year, we delivered net revenue of $334 million and adjusted EBITDA of $12.3 million, both of which exceeded our guidance. In addition, we reduced operating expenses by over $30 million, demonstrating our commitment to financial discipline and operational excellence. More importantly, we are transforming our business to set us up for long-term leadership and scalability. Hydrofacial was in a hypergrowth mode for many years, but lacked certain infrastructure, commercial execution, and financial discipline needed for a sustainable, high-margin business. That has now changed. Let me walk you through our key accomplishments in 2024 and what's ahead. At the start of the year, we identified three transformation priorities. sales execution, operational excellence, and financial discipline. Starting with sales execution during the fourth quarter of 2024, we continued to build a more robust and scalable go-to-market model as we refined our sales structure, expanded pricing options, and introduced new tools to improve sales execution. We diversified our device sales strategy by expanding our good, better, best pricing model for Allegro, Elite, and Sundeo. In Q4, we saw a continued increase in non-Sendayo unit sales, demonstrating that this strategy is working. In addition, we enhanced our lead generation process, implementing advanced analytics and segmentation tools to improve targeting and conversion. We also expanded our consumables offering with demonstrated success, specifically within our U.S. corporate accounts, which grew approximately 25% year-on-year. We've added a new commercial leadership team with deep industry expertise. They've been with us for a little over four months and share a clear mandate of driving device and consumable sales, increasing utilization, deepening relationships with our providers, and executing our product launch plans. As a result, we are now better positioned to capture demand and drive long-term device and consumables growth. With regard to operational excellence, we are driving efficiency and improving profitability as we streamline operations, strengthen supply chain oversight, and stabilize key product lines. Our new manufacturing and supply chain leadership consolidated manufacturing in Long Beach and exited China production, reducing costs and improving quality control. We also completed the Cindea 3.0 global replacement program, ensuring all providers have the most advanced version of our device. Lastly, we implemented new inventory management processes ensuring alignment with demand and improving working capital efficiency. These initiatives prove critical in helping to restore provider trust and reliability while enhancing our gross margin profile and bringing added operational rigor across the organization. Turning to financial discipline, we are focused on creating a leaner, more profitable business driven by cost discipline. We reduced full-year operating expenses by over $30 million year over year, improving our adjusted EBITDA profile, and implemented data-driven decision-making across all functions, ensuring a higher return on investments. We are optimizing our international footprint with the intent to shift our direct business in China to a third-party distributor model, allowing us to capture market potential while maintaining a capital-light approach. We expect to complete this transition in the second quarter of 2025. These actions have given us the flexibility to reinvest in innovation, brand elevation, and commercial execution while maintaining strong financial discipline. Towards the end of 2024, we showcased beauty, health, and hydrafacials innovation and clinical leadership by introducing our MedTech Meets Beauty positioning at the intersection of aesthetics, beauty, and wellness. We released the HydroLock HA Booster in Q3 our first clinically-backed booster, and the most successful hydrafacial-branded booster launched to date, selling out in record time. We are planning to launch additional boosters in 2025, continuing our momentum in science-backed, high-efficacy consumables. Our Wrap the Treatment Room strategy, which includes skincare and back bar expansion, extends our presence in treatment rooms to drive higher revenue per provider. We are also validating the efficacy of hydrofacial when combined with other treatments, such as non-ablative lasers. Providers are stacking treatments to enhance outcomes for their clients, and hydrofacial is offering the ideal complement. Clinical validation demonstrates hydrofacial's ability to address multiple skin concerns in a compelling way, which resonates with our medical and med spa providers, estheticians, and end consumers. Ensure we are taking steps to shift hydrofacial from a great treatment to a true science batch clinically validated skincare leader. As we enter 2025, we remain laser focused on executing our vision with precision. This includes deepening our provider partnerships, increasing engagement, simplifying sales execution, and expanding brand support. accelerating science-backed innovation, expanding our booster pipeline skincare offerings and clinical validation initiatives while leveraging our 179 patents, and enhancing commercial execution, refining our pricing model, increasing lead conversion, and strengthening international partnerships. While we are facing the same near-term macroeconomic uncertainty and industry headwinds as many of our peers, we have strengthened our leadership team and fortified our foundation, outlining a clear strategy to unlock the full potential of this business. Hydrafacial is a category-defining treatment with over 34,000 active global devices and over 60% market share in the U.S. microdermabrasion category. It is a traffic driver for providers, a compelling consumer experience, and a uniquely differentiated offering in the medical aesthetic space. We will continue to leverage this distinct advantage to drive long-term success. Before turning the call over to Mike, I want to thank our team for their dedication and execution. Your commitment has been instrumental in reaching this pivotal moment, and I look forward to building on our momentum as we execute our vision in 2025. With that, I'll turn it over to Mike.