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01/10 16:36
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows a challenging macro environment with a decline in same-store revenue and cases, despite some cost reductions and improved cash flow. The Q&A section highlights consumer hesitancy, uncertainty in revenue guidance, and lack of clear data on new initiatives like skin tightening. The leverage ratio improvement is positive, but overall, weak financial performance and guidance uncertainty suggest a negative sentiment.
Revenue $44 million, declining 13.7% from the second quarter of 2024. The decline was driven by lower case volume due to the challenging macro environment.
Same-store revenue Declined approximately 22% over the prior year quarter. The decline reflects the challenging market environment and softness in consumer spending.
Adjusted EBITDA $5.8 million for a margin of 13.3% versus $6.9 million or a margin of 13.5% in the second quarter of 2024. The decline was due to revenue declines, but there was a sequential improvement from Q1 2025 of $2 million, mainly reflecting the sequential increase in revenue and cost reduction plans.
Cases Declined 14.1% to 3,392. The decline was due to operating in a challenging market environment with softness in consumer spending.
Average revenue per case $12,975, approximately flat to the second quarter of 2024.
Cost of service Decreased $1.6 million compared to the prior year period. As a percentage of revenue, it increased to 39.1% versus 36.9%, primarily due to fixed cost components such as rent and nursing, which do not scale down completely with short-term revenue fluctuations.
Selling, general and administrative expenses Decreased $11.6 million in the quarter compared to the same period in fiscal 2024. This reflects reductions in equity-based compensation, restructuring costs, and advertising expense.
Customer acquisition cost (CAC) $2,905 per case compared to $3,325 in the prior year quarter. The decline was driven by marketing and sales efforts gaining traction.
Adjusted net income $1.2 million or income of $0.02 per diluted share.
Cash flow from operations $5 million compared to $3.4 million in the second quarter of fiscal 2024. The increase reflects improved operational efficiency.
Cash $8.2 million as of June 30, 2025.
Gross debt outstanding $58.8 million as of June 30, 2025. The company repaid $16 million of debt during the quarter, including $5 million on the revolver and a $10 million prepayment on long-term debt.
Leverage ratio 2.87x at June 30, 2025, down from 3.76x as of March 31, 2025. The improvement reflects debt repayment and improved financial flexibility.
Skin tightening procedure pilot: Launched in three centers during Q2, with plans to expand to additional centers in Q3. The procedure addresses skin laxity, particularly following the use of GLP-1s.
Lead generation and consultation volume: Achieved record lead growth and increased consultation volume through optimized marketing strategies, including search engine marketing, social media, and online video.
Cost reduction plan: Achieved $2 million improvement in adjusted EBITDA from Q1 2025, reflecting sequential revenue increase and cost savings.
Customer acquisition cost (CAC): Reduced CAC to $2,905 per case from $3,325 in the prior year quarter, marking the first quarter-over-quarter decline since going public.
Technology upgrades: Upgraded IT systems for efficient sales call routing and expanded Salesforce usage, leading to higher consultation volumes and smoother customer processes.
Marketing reallocation: Shifted marketing spend to proven strategies, improving lead generation and reducing customer acquisition costs.
Financing options: Expanded financing options across all centers, with 50% of patients using financing in Q2, up from 44% in Q1.
Revenue Decline: Revenue for the quarter declined by 13.7% compared to the prior year, driven by lower case volumes and a challenging macroeconomic environment. Same-store revenue declined approximately 22% year-over-year.
Consumer Spending Uncertainty: Softness in consumer spending and economic conditions have negatively impacted case volumes and revenue. The company has built conservatism into its guidance due to this uncertainty.
Debt Levels: Although the company has reduced its debt by $16 million, it still has $58.8 million in gross debt outstanding, which could pose financial risks if economic conditions worsen.
Cost Structure Challenges: Fixed costs such as rent and nursing do not scale down with short-term revenue fluctuations, leading to increased cost of service as a percentage of revenue.
Customer Acquisition Costs: While customer acquisition costs (CAC) have decreased, they remain a significant expense at $2,905 per case, which could impact profitability if not managed effectively.
Market Environment: The company is operating in a challenging market environment with weakening consumer sentiment and inflationary pressures, which could further impact demand for its services.
Strategic Execution Risks: New growth initiatives, such as the skin tightening procedure pilot, are in early stages and have not yet contributed to revenue growth, posing risks to achieving strategic objectives.
Leadership Transition: The planned retirement of the CFO and the ongoing search for a replacement could disrupt financial strategy and operational continuity during the transition period.
Fiscal 2025 Revenue Guidance: The company expects fiscal 2025 revenue to be in the range of $160 million to $170 million.
Fiscal 2025 Adjusted EBITDA Guidance: Adjusted EBITDA is projected to be between $16 million and $18 million.
Economic Conditions Assumptions: Guidance reflects current economic conditions with some conservatism due to consumer spending uncertainty but does not anticipate a downturn in the economy.
Financing Solutions Impact: The company expects to see positive impacts on conversion rates from expanded financing options in the back half of the year.
Skin Tightening Procedure Pilot: The pilot of the skin tightening procedure, launched in three centers in Q2, will be extended to additional centers in Q3, with potential for meaningful opportunity.
Customer Experience Enhancements: Initiatives to elevate customer experience are planned for the back half of 2025 and into 2026.
Technology Investments: Investments in technology, including expanded financing options, upgraded IT systems, and Salesforce utilization, are expected to improve operational efficiency and consultation volumes.
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The earnings call presents a negative outlook, with reduced revenue guidance, declining financial performance, and high leverage limiting flexibility. Despite some cost-cutting measures, the revenue and EBITDA have decreased, and the company faces challenges with new services. The Q&A highlighted uncertainties in cost savings and service expansion, with management providing vague responses. Given these factors, a negative stock price movement is likely, reflecting the company's current financial struggles and market uncertainties.
The earnings call summary shows a challenging macro environment with a decline in same-store revenue and cases, despite some cost reductions and improved cash flow. The Q&A section highlights consumer hesitancy, uncertainty in revenue guidance, and lack of clear data on new initiatives like skin tightening. The leverage ratio improvement is positive, but overall, weak financial performance and guidance uncertainty suggest a negative sentiment.
The earnings call reveals significant challenges, including a 17.3% revenue decline, increased customer acquisition costs, and financial leverage concerns. Despite some cost savings and potential future improvements, the current negative consumer environment and reduced marketing spend are impacting performance. The lack of a share repurchase program and avoidance of direct answers in the Q&A further contribute to a negative sentiment. Although there are plans for cost savings and improvements, the immediate outlook remains challenging, leading to a predicted negative stock price movement.
The earnings call reveals significant challenges: a 17.3% revenue decline, increased customer acquisition costs, and a high leverage ratio of 3.76. Despite cost-saving measures, the market strategy and financial health sections show weak performance and guidance, with no shareholder return plans. The Q&A highlights management's cautious outlook and lack of clear guidance on key metrics. These factors suggest a negative stock price reaction over the next two weeks, especially given the uncertain consumer environment and financial leverage risks.
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