SkinHealth Systems Inc.

Good day and welcome to the Beauty Health Company 2025 Fourth Quarter Earnings Conference Call. All participants will be in a listen-only mode. Should 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 your touchtone phone. And 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 Mr. Norberto Aja, Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Thank you for joining the Beauty Health Company's fourth quarter 2025 conference call. We released our results earlier this afternoon via an earnings press release, which can be found on our corporate website at beautyhealth.com. Joining me on the call today is Beauty Health's Chief Executive Officer, Pedro Mala, along with our Chief Financial Officer, Mike Monahan. Before we begin, I would like to remind everyone of the company's safe harbor language. Management may make forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including guidance and underlying assumptions. Forward-looking statements are based on current expectations and beliefs. and involve risks and uncertainties that could cause actual results to defer materially. Listeners are cautioned not to place undue reliance on forward-looking statements. For further discussion of risks related to our business, please refer to the risk factors contained in the company's filings with the SEC. This call will present non-GAAP financial measures, a reconciliation of these non-GAAP financial measures to the most comparable GAAP measures is 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, Pedro Mella. Please go ahead, Pedro.

Good afternoon, everybody, and thank you for joining us today. Beauty Health has built one of the most recognized platforms in professional skin health, and My first five months with the company have reinforced my conviction in the long-term opportunity ahead of us. But before we review the quarter, I'd like to share a few observations here. My background is in global medtech business built around differentiated technology and disciplined commercial execution to drive growth. And what attracted me to beauty health was the opportunity to bring the same model to the company. The foundation is already in place. We have a global recognized brand. We have a large install base of systems placed with providers around the world. And we operate a consumables model that, when executed well, generates meaningful operating leverage. So our task now is straightforward, to unlock the full economic potential of these assets. And that means strengthening the commercial engine behind the platform with greater discipline and operating rigor consistent with established medtech companies. And it all begins with activating the install base, improving utilization, reinforcing the economies of our providers, and continue to invest in clinically meaningful innovations. But before discussing the progress we are making, I think it will be useful to step back a little and look at the broader market. First, the fundamentals of the aesthetic category remain strong. Research shows that consumers continue to invest in their skin even when they pull back in other areas. Skin health is increasingly becoming a lifestyle category, one that is built around prevention, routine care, and clinical proven outcomes. And we have seen this evolution before in areas like oral health or wellness, where treatments that once happened occasionally became part of everyday consumer's behavior. We believe skin health is following the similar trajectory, which can make the long-term opportunity for this category significant. The market itself has expanded dramatically. According to industry data, the U.S. med spa market has grown from roughly 1,600 locations in 2010 to more than 13,000 today. And at the same time, the consumer has evolved. We are seeing broader demographics entering the category. Men, Gen Z, and younger consumers are engaging with treatments earlier. And today's consumers are seeking outcomes that look healthy natural, and authentic. Also, consumers are more informed than ever before. They understand ingredients, treatment mechanisms, and outcomes. So they're not simply purchasing a brand. They're looking for results. Providers also have evolved as well. They are more focused on return on investment and are increasingly building treatment protocols that combine multiple modalities to deliver better clinical outcomes. So taken together, we believe that all of these trends are well aligned with our core product strengths. Hydrofacial treatments are non-invasive, clinically credible, and repeatable. And they also serve as an accessible entry price point for consumers into the aesthetic category, which helps to bring new patients into the provider's practices and in creating opportunities for additional procedures. Hydrofacial is also uniquely versatile. The treatment works across genders, ages, and skin types, a combination that very few technologies in the medical aesthetic space can match. Because our treatment is repeatable and easy to integrate, it also fits naturally into prevented skin health routines and combination protocols, which is exactly where the market is moving. So Beauty Health is uniquely positioned at the intersection of clinical skin health and consumer aesthetics. However, our commercial model was built for an early phase of the market. one where the category was newer, competition was lighter, and placing devices was the primary growth driver. That playbook worked well for a long time, but markets mature and we need to evolve our model ahead of that curve and shift it from a model of device placement to a model of device utilization, which is where we believe the long-term growth of the business is. Over the past year, the company strengthened its balance sheet, it improved its cost structure, and restored financial discipline across the organization. Our fourth quarter results reflect that progress. But at the same time, we hold the view that these results do not yet reflect the full potential of beauty health. What they do demonstrate is that the foundation of the business has stabilized. So for the fourth quarter, total revenue was $82.4 million, representing a decrease of 1.3% compared to the prior year's quarter, a meaningful improvement from the double-digit decline we experienced in Q3. Consumables revenue increased to $57.7 million from $56.7 million in the prior year. representing a growth of 1.7 year-over-year and reinforcing the resilience of our recurring revenue model. Device revenue was $24.7 million, still down 7.9% year-over-year, but performance improved meaningfully here related to the third quarter. And these numbers still reflect some pressure in the capital equipment segment, which is consistent with the broader market economic environment. That said, the trend is moving in the right direction, and the improvement we saw from the prior quarter is an encouraged sign that the capital equipment business is stabilizing. Adjusted gross margin expanded to 67.4%. while GAAP gross margin expanded to 64.4%, driven primarily by a favorable mixed shift towards consumable revenue. Additionally, profitability improved significantly. Adjusted EBITDA was $15 million in the fourth quarter compared to $9 million of last year's quarter, representing approximately 700 basis points of margin expansion. For the full year, Adjusted EBITDA increased to $45.1 million compared to $12.3 million in the prior year. Again, a significant improvement. So the results for this quarter highlight two important characteristics of our model. First, this business has meaningful operating leverage. Second, that leverage responds directly to discipline execution. Operationally, we place more than 1,000 devices in the quarter, and they end up the year with over 36,000 systems in our global install base. That install base is the strategic core of this company, and it represents a recurring revenue infrastructure that is already in place. While this base has already been built, we think it remains underutilized. We believe that even modest improvements in utilization can drive significant consumables revenue and margin expansion. So our job now is to unlock the full productivity of that installed base. Now, looking ahead, the message here is that we remain optimistic about the category in which we operate. Demand for non- or minimally invasive science-based treatments continues to grow globally. The market is shifting away from procedures driven primarily by short-term trends towards treatment outcome-driven protocols. The market is also shifting from individual treatments towards combination therapies. and from soft marketing claims towards more clinically validated results. These trends favor companies with scale, clinical credibility, stronger provider education, and durable recurring economics, which is exactly where Beauty Health is positioned. At the center of our strategy is a powerful commercial model. Our brand credibility drives consumer demand. Consumer demand drives patient traffic into the provider's practices. Patient traffic drives higher treatment utilization per device, and utilization drives consumables revenue, which is our margin engine. For providers, this generates additional revenue and motivates them to expand, upgrade, and deepen their relationship with us. But utilization is at the center of gravity. And we believe that when utilization improves, it creates a positive momentum across the model. So to accelerate this flywheel, we are focused on three priorities. First, Salesforce excellence. Second, marketing discipline. And third, focused innovation. Starting with Salesforce excellence, Historically, much of our commercial success was relationship-driven. That worked well in the early stages of the company, but the next phase of growth requires a much more structured, disciplined commercial approach. So we are now transitioning to a value-based selling model, one where our teams clearly demonstrate how hydrofacial drives revenue, patient demand, and attractive returns for provided practices. That means also sharpening our clinical and economic differentiation, improving how we segment and prioritize accounts, and we are implementing more structured sales plans. These plans focus not only on acquiring new practices, but also on expanding utilization across our install base and reactivating low utilization accounts. We are also deploying stronger commercial tools and analytics so we can track activation, utilization, and retention across the install base in real time. And this gives us better visibility into performance and allows us to manage the business with greater precision. Second, marketing discipline. Our marketing strategy needs to be more focused on demand generation that directly supports provider growth. So we are working to refine the position of HydroFacial as a clinical-grade skin health platform, one that is supported by science, outcomes, and stronger provider education. At the same time, we are activating an under-leveraged asset in our portfolio, skin stylists. It's a strong technology in the growing microneedling category that historically has never received the commercial focus it deserves. And we see a meaningful opportunity to expand its role with the provider's practices. We are also expanding consumer demand generation programs designed to bring new patients into the provider's office and strengthen the economics value proposition of these providers. Additionally, we recently brought a new brand and clinical strategy office with deep med tech experience to lead our brand and marketing strategy and strengthen the clinic position of our technology. Third, focus innovation. So innovation will remain disciplined and targeted at opportunities that only strength our platform. This includes the development of a next generation hydro facial system, which will be designed to drive upgrades across the style base and expand our market share. We are also investing in a much more selective portfolio of clinically backed boosters designed to increase booster attachment rates, improve provider economics and expand treatment protocols. If we look back, Hydrofacial has historically been viewed primarily as a single treatment, but we see it differently. We see Hydrofacial as the foundation of a broader skin health platform, one that integrates devices, boosters, protocols, and complementary technology into a comprehensive ecosystem for providers and customers. So, we are also exploring selective commercial and technology external partnerships aimed to broaden our product ecosystem and enlarge our relationship and offer to providers. So, all in all, we believe that taken together, these initiatives will strengthen the install base, expand Hydrofacial's role in providers' practices, and accelerate the compounding economics of our model. But this means that we will shift from a single product company to a skin health platform. And for that reason, 2026 will be an execution year, focused on stabilization and investment into the next phase of growth. This means that with the operational changes that we are implementing, we expect to return to growth in 2027 and accelerate beyond that as innovation and product launches scale. Beauty health has one of the largest installed bases in the aesthetics industry. One of the most recognized brands in skin health and a proven device plus consumables model. A global and a global commercial infrastructure across North America, Europe, and Asia Pacific. These are proven and durable advantages. Our task now is to match those advantages with the commercial discipline and the operating rigor of the best-in-class MedTech company. So before I turn over to Mike, let me quickly frame our expectations for the year. The first half of 2026 is likely to come in modestly below the prior year. But as our initiative stakeholder, we expect momentum to build through the second half, position the company to exit 2026 on a stronger trajectory, setting up the stage for returning to growth in 2027. And so with that, I'll turn over the call to Mike to walk you through the financials and our 2026 guidance in more detail. Mike.