AirSculpt Technologies Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2025

Key Takeaways

  • Neutral Sentiment: CFO Dennis Dean announced his intention to retire later this year, and the company has begun the search for his replacement.
  • Negative Sentiment: Q2 revenue totaled $44 million, down 13.7% year-over-year, and adjusted EBITDA declined to $5.8 million (13.3% margin).
  • Positive Sentiment: Reallocated marketing spend drove a record level of lead growth, lower customer acquisition costs, and higher consultation volumes.
  • Positive Sentiment: Proceeds from a follow-on offering were used to repay $16 million of debt, leaving zero revolver borrowings and cutting leverage to 2.87x.
  • Neutral Sentiment: The company is piloting a skin tightening service in select centers, but results are too preliminary to factor into current guidance.
AI Generated. May Contain Errors.
Earnings Conference Call
AirSculpt Technologies Q2 2025
00:00 / 00:00

There are 7 speakers on the call.

Operator

Greetings, and welcome to the AirSculpt Technologies Incorporated Second Quarter twenty twenty five Earnings Conference Call. At this time, participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to Allison Malkin, Partner of ICR.

Speaker 1

Good morning, everyone. Thank you for joining us to discuss AirScope Technologies results for the 2025. Joining me on this call today are Yogi Jasnani, Chief Executive Officer and Dennis Dean, Chief Financial Officer. Before we begin, I would like to remind you that this conference call may include forward looking statements. These statements may include our future expectations regarding financial results and guidance, market opportunities and our growth.

Speaker 1

Risks and uncertainties that may impact these statements could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC, all of which can be found on our website at investors.airscope.com. We undertake no obligation to revise or update any forward looking statements or information except as required by law. During our call today, we will also reference certain non GAAP financial measures. We use non GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business. A reconciliation of these measures can be found in our earnings release as filed this morning and in our most recent 10 Q, which will also be available on our website.

Speaker 1

For today's call, Yogi will begin with an overview of our second quarter performance and share an update on our strategic priorities. Then Dennis will review our financial results in more detail and provide our outlook. With that, I'll turn the call over to Yoly.

Speaker 2

Thank you, Alison. Good morning, everyone, and thank you for joining today's call. As we outlined in our earnings release this morning, Dennis Dean has announced his intention to retire later this year, following a transition to a new Chief Financial Officer. We currently have a search underway to identify his replacement. Dennis has been integral to our business, setting up the financial framework and the team that supported our successful initial public offering, and most recently, our common stock offering.

Speaker 2

I am very thankful for Denys' partnership. AirSculpt is better capitalized today versus when I joined the business seven months ago, and our transformation is well underway. Now turning to our results. In the second quarter, we made encouraging progress on our strategic initiatives to deliver improved revenue and profit trends. While we continue to operate in a dynamic demand environment, I am pleased to see us realize the early benefits of our actions.

Speaker 2

This has manifested in three things: a sequential improvement in our year over year revenue performance, a record level of lead growth, and a meaningful increase in consultation volume. We once again saw strong consumer interest in Airscout this quarter, with an average revenue per case consistent between $12,000 and $13,000 The quarter also saw us take important steps to strengthen our capital structure with the completion of our follow on offering, which allowed us to pay down $16,000,000 in debt, with no borrowings on our revolving credit facility at quarter end. Looking forward, I'm confident that we have the right strategy in place to stabilize our sales and return to growth. In total for the second quarter, revenue was $44,000,000 declining 13.7% from the 2024, and adjusted EBITDA was $5,800,000 for a margin of 13.3% versus $6,900,000 for a margin of 13.5% in the 2024. We narrowed our year over year revenue decline by four percentage points versus the first quarter.

Speaker 2

The decline in revenue was driven by lower case volume, which reflects the challenging macro environment. Same store revenue, which does not include new centers, improved marginally from the first quarter and declined approximately 22% over the prior year quarter. While we are experiencing early progress from improvements made to our go to market strategy, our new growth initiatives are only just beginning to pilot and therefore were not expected to drive growth in the quarter. Adjusted EBITDA totaled $5,800,000 marking an improvement from Q1 twenty twenty five of $2,000,000 which mainly reflects the sequential increase in our revenue, as well as a more meaningful impact from our cost reduction plan. We have achieved these cost savings, while simultaneously enhancing our operational efficiency.

Speaker 2

We will remain disciplined with regard to spend, focusing on the highest return opportunities. I will now discuss the progress we have made against our business imperatives this quarter, which center on enhancing our culture and improving our go to market strategy. At AirSculpt, we believe it is integral to foster a culture that propels our transformation and positions us for long term success. Having visited 20 of our 32 centers since I joined AirSculpt in January, I have seen firsthand that our teams are committed to deliver against our strategic priorities, and are fueled by a deeper sense of purpose in what we are achieving together. Their enthusiasm and continued dedication is truly inspiring, and I am grateful for their efforts, as they are the engine behind the progress we have made and the momentum we are building.

Speaker 2

As you may recall, our go to market strategy includes five business priorities. First is marketing. We continue to see benefits from our reallocated marketing spend to proven strategies, including search engine marketing, social media, and online video. As a result, we have seen lead generation at record highs, with improvements in marketing spend as a percentage of revenue and a reduction in customer acquisition costs. This is a signal that we are better monetizing our marketing tactics, and we ended the quarter with a robust pipeline of leads that we will continue to work to convert to cases.

Speaker 2

We are laser focused on using data to optimize our marketing investment by dedicating spend to channels that show performance. Second is optimizing sales to convert these leads into cases. We have been supporting our sales team with enhanced training on key initiatives, including our expanded financing options, to ensure they are well equipped to convert interest into cases. Additionally, the expansion of virtual appointments has contributed to higher concert volumes. Third, we are introducing new services to tap into more consumer demand.

Speaker 2

We launched a pilot of our skin tightening procedure in the second quarter to three centers, and plan to extend the pilot into the third quarter to additional centers. We are gaining valuable learnings from the pilot, and believe it can be a meaningful opportunity for us, given the skin laxity that occurs following the use of GLP-one. Fourth is enhancing our customer experience to ensure we consistently provide premium results. I've been impressed by the excellent quality of care delivered across our locations. That being said, we recognize there is an opportunity to further elevate the experience with initiatives we have planned in the back half of the year and into 2026.

Speaker 2

Lastly, we continue to invest in technology to accelerate these priorities. In support of this, we have launched expanded financing options across all our centers, and our sales team has been trained on the benefits of these offerings. We expect to see positive impacts on conversion rates in the back half of the year. Second, we upgraded our IT system to enable more efficient routing of sales calls, significantly improving workflow and increasing the number of consultations booked. This has helped reduce friction for customers and made the process smoother for our team.

Speaker 2

Third, we expanded the use of Salesforce in the first half of the year, which has contributed to higher consultation volume. By reconnecting with past customers through this platform, we have seen strong response rates. As Dennis will discuss in detail shortly, we are reiterating our annual outlook and currently expect fiscal twenty twenty five revenue in the range of $160,000,000 to $170,000,000 and adjusted EBITDA between $16,000,000 and $18,000,000 Our guidance reflects the current economic conditions, with some conservatism built in due to consumer spending uncertainty, but does not anticipate a downturn in the economy. In summary, we have continued to make progress on our initiatives in the second quarter and have seen encouraging signs with plans for the remainder of the year to further improve our performance. Our intense focus on our business priorities and cost management, along with our durable balance sheet, positions us well to return our business to growth and perform at a higher rate of profitability.

Speaker 2

Overall, I continue to believe that Airscult is a compelling business with a competitive moat that is ripe for disruption and that the best years lie ahead for AirScult and its shareholders. And with that, I will now pass it over to Dennis. Thank you, Yogi, and good

Speaker 3

morning, everyone. I'd like to begin by expressing my gratitude to the team at AirSculpt for the opportunity to lead this organization as Chief Financial Officer over the past four years. It has been a privilege to be a part of AirSculpt's journey, and I continue to believe in the long term potential of AirSculpt under Yogi's leadership and execution of our business plan. My healthcare career has spanned over twenty five years, mostly in the public domain. And I look forward to this next phase of my life where I can spend more time with my family and pursue personal life goals.

Speaker 3

Until my replacement is identified, I am committed to continuing to lead the financial strategy of the business and facilitating a seamless transition as we identify the next AirSculpt CFO. Now turning to our financial performance. As mentioned, revenue for the quarter was $44,000,000 a 13.7% decline versus the prior year quarter, with same store revenue down approximately 22%. Cases declined 14.1% to 3,392 and average revenue per case for the quarter was $12,975 which is approximately flat to the 2024. The decline in revenue was mainly driven by lower cases due to operating in a challenging market environment with softness in consumer spending.

Speaker 3

But the percentage of patients using financing to pay for procedures was 50%, which is above the 44% rate we have experienced in the first quarter. We look forward to sharing updates on our broadening financing solutions as we experience the full benefit in the back half of the year. As a reminder, we receive full payment of all procedures upfront and we have no recourse related to patients who finance their procedures with third party vendors. Cost of service decreased $1,600,000 compared to the prior year period and as a percentage of revenue increased to 39.1% versus 36.9%, primarily due to certain fixed cost components such as rent and nursing, which do not scale down completely with short term revenue fluctuations. However, on a sequential basis, our percentage improved 140 basis points compared to the 2025.

Speaker 3

Selling, general and administrative expenses decreased $11,600,000 in the quarter compared to the same period in fiscal twenty twenty four, which reflect reductions in equity based compensation, restructuring costs and advertising expense. Our customer acquisition cost for the quarter was $2,905 per case as compared to $3,325 in the prior year quarter, marking the first quarter over quarter decline in our since we went public. Our CAC was lower year over year driven by our marketing and sales efforts gaining traction. Adjusted EBITDA was $5,800,000 compared to $6,900,000 for the fiscal twenty twenty four second quarter as a result of our revenue declines. Adjusted EBITDA margin was 13.3% compared to 13.5% in the prior year quarter.

Speaker 3

Adjusted net income for the quarter was $1,200,000 or income of $02 per diluted share. Turning to the balance sheet. During the quarter, we made substantial progress toward improving our financial position. As of 06/30/2025, cash was $8,200,000 and gross debt outstanding was $58,800,000 We repaid $16,000,000 of debt, including $5,000,000 on our revolver and a $10,000,000 prepayment on our long term debt, which was in addition to our regular quarterly amortization payment. We were able to reduce our debt through using proceeds from our capital raise last month as well as cash from operations.

Speaker 3

Our leverage ratio was 2.87 times at 06/30/2025, down from 3.76 times as of 03/31/2025. And we are compliant with all covenants under the terms of our credit agreement. These activities reflect our ongoing commitment to strengthening the balance sheet, which allows us to move forward with an improved capital structure and enhanced financial flexibility. Cash flow from operations for the quarter was $5,000,000 compared to $3,400,000 in the 2024. Turning to our outlook.

Speaker 3

For 2025, we are reiterating our guidance of revenue in the range of $160,000,000 to $170,000,000 and adjusted EBITDA between 16,000,000 and $18,000,000 As we remain committed to strengthening same store sales across our existing footprint, our 2025 guidance reflects no planned de novo openings. Also, we anticipate remaining in compliance with the terms of our credit agreement throughout the fiscal year. As a reminder, we are not directly impacted by tariffs given our service based business model and the immateriality of our products cost to our expenses. However, we are impacted by weakening consumer sentiment to tariffs and inflationary pressures and have taken actions such as providing more financing options in order to provide flexibility to our customers. Despite the challenged operating environment, we believe that executing our business priorities will help us improve our sales trend and we achieve our guidance.

Speaker 3

I will now turn the call over to the operator to begin the question and answer portion of the call.

Operator

Thank you. We will now be conducting a question and answer session. A confirmation tone will indicate your line is in the question queue. Please limit yourself to one question and one follow-up question. If you have additional questions, please reenter the queue.

Operator

You may press 2 if you would like to remove your question from the queue. Thank you. And our first question will come from Josh Raskin with Nephron Research.

Speaker 4

Hi, thanks. Good morning. I'll start obviously with a congrats to Dennis and really just a thank you for the help over the last couple of years since the IPO. My question, my first question just guidance implies revenues that are flattish in the second half, EBITDA actually up close to mid teens, obviously a lot better than what we saw in the first half on a year over year basis. So maybe you could speak to the drivers other than the easier comps and maybe what's driving that acceleration and perhaps more color on that record level of lead growth and the consultations you're talking about?

Speaker 2

Hey, Josh, this is Yogi. Thank you for the question. Yes, we really appreciate about Dennis' contributions to AirSculpt. To your question, we continue to see uncertainty with the consumer, but we are seeing a lot of interest in AirSculpt. So leads are at record highs, we're seeing growth in consultations as well, but we have consumers hesitant to spend and pull the trigger in the back half.

Speaker 2

So for the back half, we continue to build a solid foundation for the business aligned with the five key priorities. We expect those are going to definitely help us stabilize revenue as you called out. And all of our actions along with that on EBITDA, management, reducing marketing spend will help drive EBITDA margin as well. So that's our expectation from the back half in order to meet guidance.

Speaker 4

Okay. That's helpful. And then just a follow-up on the skin tightening offering. And I'm curious maybe commentary versus what you're seeing in terms of people that are on GLP-1s. Are they coming in for bigger procedures and then adding skin tightening?

Speaker 4

Or are they coming in just for skin tightening? And then I think last quarter, you said that there was still no skin tightening expectations in guidance. I'm just curious if that's still the case.

Speaker 2

Josh, I'll answer your last question first. There's still no skin tightening, stand alone skin tightening expectations within our guidance. So in Q3, we started a pilot in Q2, sorry, we started a pilot with three locations. And what we are seeing is there's strong interest in skin tightening. We also know that we offer a compelling solution.

Speaker 2

It is too early to report on the results from the pilot, but we look forward to keep everyone appraised in the coming quarters as we expand the pilot and get learnings on how that interacts with GLP-one and how that will impact our revenue going forward.

Speaker 4

Okay, that's fair.

Operator

Thank you. Our next question comes from Mayo with Leerink Partners.

Speaker 5

Hey, good morning. This is Morgan McCarthy on for Whit Mayo. Just wanted to first say congratulations on your retirement, Dennis. Thanks for all the help over the years, and we'll really miss working with you. So, my first question is, as we approach the second half, I believe the five centers you opened in 2024 will enter the same store pool.

Speaker 5

So, is

Speaker 1

there any more color you

Speaker 5

can share there on how those centers are performing relative to your expectations? And then within the guidance range, what are you actually assuming for same store case growth across the business in the second half? And should we actually see some benefit in that metric from the 2024 facilities entering the same store pool as they continue to ramp?

Speaker 3

Hey, Morgan, this is Dennis. Appreciate the kind words and Josh also thank you for the kind words as well. As it relates to the 2024 class of de novos, they're performing in line with our expectations. They are performing lower than historical simply because they're under similar pressures from the consumer environment as our existing footprint. But yes, in your answer, we will see some modest help, if you will, from a same store metric as those come into the same store calculation.

Speaker 3

We will do expect again a reduction in our same store decline. Still expect Q3 to be declining, but not as significant as Q1 and Q2. And then as we kind of exit into Q4, we'll start to see modest or I say modest, significant improvement. One, because this again, the full complement of the new centers coming in. And then secondly, some of the comps as you know from Q4 of last year were relatively lower.

Speaker 5

Okay, that's helpful. And then on seasonality, is there anything we should consider entering the third quarter? Like any flow through from some of the initiatives that you guys have been implementing or even around cash flow?

Speaker 3

Yes. So, what we think of in Q3 and Q4 is we typically see a little bit of softening in Q3, and that begins to pick up a little bit more in Q4. As I'm modeling it, I'm looking really almost at an equal split. Maybe again with a little bit of softness in Q3 as it relates to how I'm putting the revenues down or kind of looking forward at those. The initiatives that we've done, the heavy portion of it that's going to impact the numbers are in the cost initiatives as Yogi spoke of as well, marketing and our SG and A spend that we focused on reducing.

Speaker 3

We'll get the full impact of that in the back half of the year. Both of the quarters should get similar impact to that. As we said, we are expecting a little over $3,000,000 for the year, didn't get full portion of that in Q1, saw a significant improvement there on Q2 and expect Q3 and Q4 to follow suit there on the cost equation.

Speaker 5

Okay. And if I could just squeeze one last one in there. Can you give us an update on how the London facility is progressing? I know you guys had a bit of a slower start there, but do you think you have a better handle on this now? Or if you could just give us any more color on some of the expectations at this facility moving forward?

Speaker 5

Thank you.

Speaker 2

Morgan, this is Yogi. So, London, as we've said before, been that off to a slow start. Having said that, the last quarter London outperformed the rest of the chain as it relates to comp sales. However, London continues to be cash flow negative. So we saw some encouraging signs in Q2 and we remain focused on improving results over there.

Operator

Our next question comes from Sam Iber with BTIG.

Speaker 6

Hi, good morning. Thanks for taking the questions. And let me echo my congratulations to Dennis here. Thank you for your help helping us get up to speed with the story over the last year. Maybe I can dive a little bit deeper on the state of the market.

Speaker 6

Obviously, you discussed some of the challenging macroeconomic dynamics, but would love any more details you could share on consumer sentiment, if some centers are perhaps doing better than others, if there's a dynamic where patients are maybe moving away toward independent plastic surgeons? And if so, does that present an opportunity to win those patients back as some of these initiatives start to fully ramp here?

Speaker 2

Hey, Sam, this is Yogi. Thank you again for the question. Saw through the quarter, we saw the seasonal lift that's typical in our business at the beginning of the quarter, and the moderation that happens towards the end of the quarter, which is also typical seasonality. What we are also seeing is, as we said, leads at record highs, consultations are strong. But we are seeing the consumer continues to think the best word I can use is that there's this choppiness in consumer behavior.

Speaker 2

We continue to see that consumers are tentative to pull the trigger on the purchase, and that is broadly reflective of the macroeconomic situation that we are seeing. And that is what we continue to hear. So that has not changed much through the quarter as we went through. We do believe, as you called out, just the strength of our balance sheet, the marketing and all the initiatives that we are putting together, we believe position us well and much better than our competition, which predominantly consists of independent plastic surgeons. So while the environment is challenged, we have the right initiatives in place and we anticipate improvement in the back half of the year.

Speaker 6

Okay, that's really helpful. Thank you, Yogi. Then, love any thoughts on maybe what you need to see from the base business before you start thinking or evaluating expansion opportunities? It still sounds like there's a lot of white space, especially in The U. S, right?

Speaker 6

So love any thoughts on what you need to see before exploring expansion again. Thank you for taking the questions.

Speaker 2

Yeah, absolutely, Sam. And look, I'll start by sharing your excitement. We continue to be excited about the long term center opportunity we have. We believe that there is a lot of white space and we have a proven track record in opening de novos and running them successfully. So in the short term, we are focused on improving our same center sales growth.

Speaker 2

That's the highest priority. As we see that turn, as we see our same store sales get to growth, get to stability, and we continue to see stability in our balance sheet, we would revisit the de novo question after that.

Operator

Thank you. This now concludes our question and answer session. I would like to turn the floor back over to Yogi Jashanani for closing comments.

Speaker 2

Thank you again for joining us. We look forward to speaking with you when we report third quarter results.

Operator

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

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