管理層發言
Good afternoon, ladies and gentlemen, and welcome to the Skin Health Systems Inc. second quarter conference call. This call is being recorded on Thursday, August 26. I would now like to turn the conference over to Norberto Aja, Investor Relations. Please go ahead.
Thank you, operator, and good afternoon, everyone. Thank you for joining us today to review Skin Health Systems' 2026 second quarter results. We released our results earlier this afternoon, which can be found on our corporate website at skinhealthsystems.com. Joining me on the call today is Skin Health Systems' Chief Executive Officer, Pedro Malha, along with our Chief Financial Officer, Michael Monahan. Before we begin, I want 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 current expectations and beliefs and 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 further discussion of risks related to our business, please refer to the risk factors contained in the company's filings with the SEC. In addition, this call presents non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is available in the earnings press release, which was furnished to the SEC and is 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 Malha. Please go ahead, Pedro.
Good afternoon, everybody, and thank you for joining us to discuss our second quarter results. Let me start with the quarter at a high level. Overall, this was a mixed quarter. Revenue came in at approximately $72 million at the lower end of our guidance range. Equipment sales remain the biggest headwind as providers continue to take a cautious approach to capital investments. Consumables proved a bit more resilient, supported by the continuous growth of our installed base, although treatment activity remained below expectations. This overall revenue pressure was evident across both our domestic and international businesses, with international markets remaining a bit more challenging. At the same time, profitability for the quarter was significantly stronger than we expected. Adjusted EBITDA came in at $17 million, well above our guidance range, and was driven by strong gross margins and continued discipline in how we manage the business. In summary, we are not satisfied with our top-line performance, but the quarter reinforces an important point: even in a more demanding commercial environment, we are building a stronger company with better margins, greater operating discipline, and a more resilient financial model. As importantly, nothing we saw this quarter changed our strategic direction. If anything, it reinforced it. Let me spend a few minutes now on what we are seeing in the market because it can provide an important context for both the quarter and the strategic choices we are making. The long-term demand for skin health remains healthy. What is changing is how that demand is being distributed. Consumers have more treatment options than ever before and providers are making more selective capital investment decisions as they evaluate a broader range of technologies. We believe that environment rewards companies with trusted brands, meaningful innovation, strong clinical evidence, and deep provider relationships. Those are the areas where our company is best positioned to compete and where we continue to focus our investments. As we said last quarter, market conditions are only a part of this story. Our responsibility is to execute better, and that is exactly where our efforts are focused. We are strengthening our commercial capabilities, improving how we engage with customers, and becoming more effective at converting opportunities. Those are the things we can control, and that is where our team is focused every day. We also continue to believe strongly in the long-term opportunity for this business. For more than 20 years, HydraFacial has built one of the most recognized and clinically validated brands in professional skin health. Today, we serve more than 3,000 providers worldwide, have a large and growing installed base, and generate around 75% of our revenue from recurring consumables, which together build a durable competitive advantage that position us to create long-term value. Last quarter, we discussed several of the investments we are making across the business, including consumable boosters and the next generation of the HydraFacial device. Today, I want to explain how this work together to support our long-term strategy. Our strategy is built around three priorities. First, strengthening and growing the core HydraFacial franchise. Second, increasing the value of every system already in the field. And third, leveraging our platform and provider relationships to expand into attractive adjacent categories. Together, these priorities are designed to accelerate sustainable growth by expanding our installed base, increasing treatment utilization, growing recurring revenue, and creating a more diversified business over time. Let me start with the first priority: strengthening and growing our core HydraFacial franchise. A key part of strengthening the franchise is making the platform accessible to a broader range of providers. As we discussed in prior quarters, capital constraints remain one of the most significant barriers to adoption. To address that, earlier this month we introduced in the U.S. a new device rental program designed to lower the upfront investment by providers and make HydraFacial accessible to more practices. We believe this will expand our addressable market and support growth of our installed base. The financial accounting for the program is similar to our existing sales program, with the revenue for the sales being booked upfront upon shipment. Also, the program was built with a third-party financing partner who takes ownership of the devices and administers the program. Part of this strategy of strengthening and growing our core HydraFacial franchise is also the investment we are making in the next generation of the HydraFacial platform. As we discussed last quarter, this remains a multi-year development program targeting a 2028 launch. Our objective with the next generation of the HydraFacial platform is to deliver a meaningful step forward in clinical outcomes, treatment experience, and workflow while also creating a compelling reason for existing customers to upgrade and for new customers to choose HydraFacial. Moving now to our second strategic priority: increasing the value of every system already in the field. Our installed base is one of our company's greatest competitive advantages. It gives us long-standing relationships with providers around the world and supports a highly recurring revenue model that few companies in our industry can match. As we discussed last quarter, improving utilization remains one of the largest and most immediate growth opportunities that we have. Our objective here is very clear: to help providers perform more treatments, deliver better clinical outcomes, and improve the value of every customer visit. That is exactly what our investments in clinically validated boosters and treatment enhancements are designed to do. To support that strategy, our next clinically validated booster is expected to launch globally in April, with additional launches planned throughout 2027. Finally, our third strategic priority is to use our platform and provider relationships that we have built over the past two decades and leverage those to expand into adjacent categories where providers and consumers are increasingly investing. This strategy is intended to diversify our portfolio, create additional growth engines, and to do so by building on capabilities we already have. The skin microneedling device is a good example of that strategy in action. It gives us participation in one of the fastest-growing categories in aesthetics and continues to perform well. Recently, we received FDA clearance for an improvement in the appearance of periorbital wrinkles and, more importantly, it also demonstrates our ability to introduce clinically differentiated technology through the provider relationships we have already established. HydraScalp is another example. The repositioning and relaunch of Keravive extends our presence into the growing scalp and hair wellness category while increasing the value of HydraFacial systems already in the field. Following its June relaunch, we are encouraged by how HydraScalp continues to gain traction. Also, as we discussed on our last call, we continue to make progress on our plans to introduce a new device to the U.S. market in 2027. This is not another HydraFacial device and reflects our broader strategy of building a platform of clinically differentiated skin health solutions that leverages the provider relationships and commercial infrastructure we have spent more than two decades building. Before I turn the call over to Mike, let me leave you with two observations. First, we are not satisfied with our current performance. Despite our current business environment remaining challenging, improving execution is our responsibility and remains our highest priority. Secondly, we believe our company has exceptional assets and a clear path to using them more effectively. The rental program and the continued advancement of our next-generation platform demonstrate that the strategy is moving from planning to execution. We know that there is still plenty of work to do, but we are in the process of building a stronger and more diversified company with multiple opportunities for long-term growth. And so with that, I will turn the call over to Mike to review the financial results in more detail.
Thank you, Pedro. In the second quarter, total net sales were $72.1 million, down 7.8% versus the prior year. Delivery systems revenue was $18.3 million, down 18.4%, with 770 systems placed compared to 957 in the prior year. Consumables revenue was $53.9 million, down 3.5%, driven primarily by lower utilization and a tough prior-year comparison that included booster launches. Our active installed base grew to 36.5 thousand systems globally, up 3.8% year over year and remains the foundation of our recurring revenue. Despite this continued top-line pressure, adjusted EBITDA came in above our projections. This was primarily driven by adjusted gross margin expansion, disciplined cost management, and timing of R&D investments and commercial initiatives. Sales performance by region is as follows. Americas net sales were $49.9 million, down 4.2%. Consumable sales were down 1.4% while delivery systems reflected the broader capital equipment pressure. EMEA net sales were $14.9 million, down 19% driven by softness in both equipment and consumables. We have been actively addressing headwinds in the EMEA market. We had personnel shortages in the region along with a shift in timing of distributor orders, which we expect to improve in the second half of the year. APAC net sales were $7.3 million, down 5.4%. During the second quarter, we transitioned Australia and New Zealand back to a distributor model from a direct model. We now have the entire APAC region being served by a distributor model. We believe this approach better serves the region going forward. The 2026 financial impact of the Australia and New Zealand transition to a distributor model is a reduction of revenue of approximately $1 million. GAAP gross margin was 68.4%, up from 62.8%. Adjusted gross margin was 71.8% compared to 65.9% in the prior year, representing a 590 basis point improvement. The year-over-year improvement was primarily driven by three factors. First, lower cost of goods on equipment due to sell-through of trade-in units that pressured margins a year ago. Second, lower inventory-related charges and continued efficiency in operations as we realized the benefits of tightened inventory purchasing and disciplined cost management. And third, a favorable mix shift towards consumables. GAAP operating expenses were $45.8 million, down from $51.8 million, reflecting lower personnel costs and improved efficiencies. Within total operating expense, selling and marketing was $21 million, G&A was $23.3 million, and R&D was $1.4 million. We expect R&D to step up in the second half of the year as our innovation initiatives ramp. On a GAAP basis, we generated income from operations of $3 million compared to a loss of $2.7 million in the prior year. Net loss was $2.7 million compared to net income of $19.7 million a year ago. The prior year figure included an $18.1 million net gain related to the exchange and repurchases of our 2026 notes. Adjusted EBITDA was $17 million, up from $13.9 million in the prior year and above our guidance range of $11 million to $13 million. The year-over-year increase in adjusted EBITDA was largely driven by operating expense savings from lower selling and marketing expenses and lower professional service fees in G&A. We ended the quarter with approximately $26 million in cash, cash equivalents, and restricted cash. This is approximately $1.5 million above our first quarter ending cash position. Our October 2026 convertible maturity is approximately $103 million. Based on our current cash position and our expected second-half cash needs, we remain confident in our ability to address this maturity. We will continue to evaluate options based on our cash needs and market conditions. As of today, our current plan is to retire the October 2026 maturity with cash on hand at the end of the third quarter. We are lowering our revenue outlook to $280 million to $290 million by reducing the top end of the previous guide, reflecting continued pressure on year-over-year device sales. We are raising our adjusted EBITDA outlook to $39 million to $46 million from $35 million to $45 million previously, reflecting the margin strength and cost discipline we delivered in the first half of the year. Our second-half guidance reflects increased investment of $4 million in R&D and commercial initiatives versus the first half of the year. As a result, we are projecting our second-half adjusted EBITDA to decline relative to the first half. For the third quarter, we expect revenue of $65 million to $70 million and adjusted EBITDA of $5 million to $7 million. Finally, I would like to briefly address our NASDAQ listing. As we disclosed, we received notice from Nasdaq that our stock had traded below the $1.00 minimum bid price requirement for 30 days. As outlined in our preliminary proxy statement filed last Friday, we will be asking stockholders to approve a reverse stock split at a special meeting scheduled for September 22 to remain compliant. The proxy provides a range of potential split ratios, and if approved, our board will determine the specific ratio within that range it believes is appropriate based on market conditions and other relevant factors at the time of implementation. For more information, please read the definitive proxy statement that we will file with the SEC. With that, I will turn the call back to Pedro.
Thanks, Mike. Let me close with one final thought. This quarter did not change our view of the business. The market remains demanding, and we know that we need to continue improving on execution. But at the same time, we are making tangible progress against the strategic priorities that we laid out. The rental program is underway, HydraScalp has been relaunched, SkinStylus is taking good traction. The development of our next boosters and next-generation HydraFacial platform continues to advance, and we continue to make progress on our plans to introduce a new device in the U.S. in 2027. All of these are meaningful milestones and they reinforce our conviction that we are building a stronger, more diversified company with multiple drivers of future growth. Operator, you can now open the line for questions.
分析師問答
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please. Your first question comes from Oliver Chen with TD Cowen. Please go ahead.
Hi, Pedro and Mike. Regarding what you are seeing with consumables being down relative to the active installed base, what is happening there with utilization and/or the inventory on the installed base that you are noticing? Also, I think you had a tough compare there too. Second question: on the convertible note due in October, what do you need for cash in terms of your base level of cash and also things we should know about working capital dynamics and needs there in terms of the cash flow? And finally, regarding the rental program, how do you manage for incrementality and not cannibalization? What is the thinking there? It sounds like it is going to increase your TAM and there is a reason for people to buy and a different reason for people to rent. Thank you.
Thanks, Oliver. I will address the consumable dynamics and then go into the rental program, and then I will let Mike address the convertible note, the cash, and the working capital question. In terms of what we are seeing in consumer dynamics, I do not think that the consumer itself has fundamentally changed. People continue to invest in skin health and they continue to believe in the long-term demand for non-invasive skin treatments. What has changed, in our view, is that consumers now have more choices than they ever did years ago and they are spreading their aesthetic spending across a broader range of treatments. Providers also have to work harder to keep these patients engaged and keep these consumers coming back. That is why we do not look at this simply as a demand issue when it comes to consumables performance. We see it as an opportunity to increase the productivity of every HydraFacial system that we have in the field. That is exactly why I discussed during my prepared remarks the second pillar of our strategy, which is to focus on improving and increasing utilization. We have the boosters, HydraScalp — all of that enhances utilization. We also are working on better provider education and better protocols. All of those initiatives come with one single objective: for these providers to perform more treatments, to be able to personalize those treatments, and to create a better economic return from every system that they own. So yes, consumables have been under pressure and we think that they have been under pressure in the near term, but we see this as an execution opportunity for us, and that is exactly where we are investing. In terms of the rental program, you're asking about devices. The rental program addresses one of the biggest barriers we've seen in recent quarters, which is the upfront capital commitment from providers. With this new program that we launched in the U.S., we are giving qualified U.S. providers another way to access HydraFacial through a much more manageable payment structure and terms. I am not going to go through all the mechanics of the program right here, but the objective is simple: to remove a meaningful adoption barrier that we have been noticing. When doing that, we expect to expand the installed base. We do not expect to cannibalize; we expect to bring more providers into the fold by lifting this barrier. Mike, Adam, do you want to address the capital questions?
Sure. Hi, Oliver. The midpoint of our forecast assumes that we will end the year roughly with about $100 million in cash. That would exclude any kind of unforeseen items that we do not have in the model, but we feel pretty comfortable with that level and it gives us enough cushion, in our view, heading into 2027 to manage the business and meet working capital needs. Thank you. Best regards.
All right. Thank you. Your next question comes from Susan Anderson with Canaccord Genuity. Please go ahead.
Hi. Thanks for taking my questions. I guess maybe I was just looking for some color around the consumer behavior you are seeing out there. Consumables now down two quarters in a row — are you seeing consumers maybe extend the time frame between treatments or foregoing a treatment, or is it more just that they are not trading up and adding consumables to the treatments they are getting done? Thanks.
Sure. As I explained, yes, consumers have more choices for treatments, which is a positive because it means the segment is healthy, continues to see innovation, and consumers continue to spend in the category. We just need to position ourselves better to take advantage of that willingness to spend in aesthetics. All the initiatives we are putting in place speak to that. The boosters are intended to increase treatment frequency. The relaunch of HydraScalp is intended to create additional recurring revenue from the same devices in the same practices. The relaunch of SkinStylus is focused on leveraging the relationship into the microneedling category. All of that is targeted to take advantage of the healthy spend we see happening. Regarding the competitive landscape, not much has changed from last quarter. The market has become more competitive and some competitors are using pricing and other commercial incentives more aggressively; we've seen that throughout the year. Nothing new here, but our focus is on differentiating HydraFacial and SkinStylus, highlighting the economics of our treatments, and creating value for providers' practices. Short answer: no change from last quarter in the undercurrent dynamics we've been noticing in the market.
Your next question comes from John-Paul Wollam with ROTH Capital Partners. Please go ahead.
Great. Hi, guys. I appreciate you taking my questions. If I could maybe start, could you give us an update on the new Syndeo equipment and where payback periods are? I know you opened up the rental program, but for providers who are still making the full investment, where do payback periods sit today, and how is that influencing your thoughts about pricing for the eventual new equipment in 2028?
I can speak a little bit and touch on the new Syndeo in terms of the innovation roadmap, and Mike can share some of the numbers. Regarding the next-generation HydraFacial, as we've discussed in past quarters, this continues to be a program targeting a 2028 launch. The objective is to bring a meaningful step of innovation to market — in clinical outcomes, the overall experience, and provider workflow — and to give existing providers a compelling reason to upgrade and new providers a reason to choose HydraFacial over other procedures. It is too early to discuss specific features or the economics behind it, but we feel encouraged by the development and the gate reviews we are currently conducting.
Sure. Hi, JP. Typically, we tell consumers and providers that payback can be roughly around nine months. That obviously depends on how many treatments and the volume that you do — the more treatments a provider performs, the faster the payback. But generally, that's the overall number we provide.
And then a follow-up, Mike: on the last call, I think you talked about Q1 gross margin maybe being the high for the year. Just curious — you broke down a little bit of where the strength in Q2 is coming from — but any more detail on that and how you expect gross margin to run through the back half of the year would be appreciated. And the implication for EBITDA in the back half: you have managed costs well, but why is that stepping down? Is that baking in conservatism?
Thanks, JP. Overall, to speak to the midpoint of our guide: the first half of the year adjusted gross margin was 72%. The midpoint of our guide assumes a step-down in adjusted gross margin into the high 60s, roughly the 68% range. The reason for that is a couple of things. One, we expect an increased mix of equipment revenue in the back half of the year. In the first half, revenue leaned more heavily towards consumables. As we introduce the rental program and some other device initiatives, we expect the mix to shift toward equipment, which pressures margins. The second piece is within the equipment mix: we've modeled an increased percentage of Syndeo machines in the back half versus the first half, largely because to qualify for the rental program, it is only for Syndeo devices, and those devices tend to have a higher cost of goods than some of our other devices. Those are the two big drivers pressuring margin. On adjusted EBITDA, the first half of the year adjusted EBITDA was a little over $25 million. The midpoint of our guide assumes a little less than $17 million of adjusted EBITDA in the back half of the year. That is driven by three things: the lower adjusted gross margin I just walked through, timing of R&D and commercial marketing expenses that are more back-end weighted this year, and some general operating expenses that were lower than normal in the first half. A simple example: bad debt expense was running very low in the first half and we are projecting it to return to more normalized levels in the back half. So, as you look to the midpoint, it's those two key factors: higher operating expenses and lower adjusted gross margin.
Your next question comes from Sydney Wagner with Jefferies. Please go ahead.
Hi. Thanks for taking our question. When you think about the adjacent categories, how much of the opportunity comes from acquiring new customers versus increasing penetration within your existing provider base? Also, is there any further detail you can share on the new device that is coming? Thank you.
Hey, Cindy. In terms of where we think we'll get the biggest share, it will come from both. We have a very large installed base; it is one of our biggest and most valuable assets. Any product we relaunch or launch is going to be primarily targeted at that install base because it is an automatic channel and an automatic lift for us. Regarding the strategic partnership and the adjacent category we discussed last quarter, we are progressing in that area and intend to bring a device to market next year. The goal is to broaden the set of solutions and procedures we can offer to our extensive provider network and leverage our existing infrastructure. We are not in a position to discuss specifics of the technology yet, but we will share more as we get closer to concluding the project.
Your next question comes from Bruce Jackson with The Benchmark Company. Please go ahead.
Hi. Thanks for taking my question. I wanted to ask a little bit more about the booster you plan to launch during the fourth quarter. Is it going to be targeted to any particular market segment — for example, the medical or the aesthetic segment — and will it be out in time for the holidays?
Yeah, Bruce. The target date is Q4. It will be a clinically validated booster aligned with the new strategy we have put behind every booster we invest in going forward. Everything is going according to plan and tracking. We are comfortable to share that now. We are expecting the same level of performance and commercial behavior as we had with Hydralock, which had good traction. This is just the beginning and we will be launching more clinically backed boosters as part of the booster development and innovation roadmap.
And then one follow-up: in 2027, what do you anticipate in terms of the launch cadence? Will it be one every six months, one big one for the year — how are you thinking about that?
Two boosters is the plan as we stand right now. Again, we are being diligent and good stewards of capital when it comes to boosters. We will only launch boosters that are clinically backed and can provide clinical outcomes.
Your next question comes from Olivia Tong Cheang with Raymond James. Please go ahead.
Hi. Good afternoon. This is Martin on for Olivia. I just want to quickly touch on the rental program and get an idea of what was the impetus for it. Was this a request from potential or existing providers? Is this something other competitors are doing?
What we did was look at challenges to expanding our device footprint. We completed a strategic analysis of the market and identified that the ability to finance or qualify for financing continues to be one of the major barriers for a large number of providers in the U.S. So the team built a rental program and model that eases that barrier to entry and allows these providers to operate a HydraFacial machine in their practice. We saw the need and stood up a model that we believe will substantially fix that problem.
Your next question comes from Navann Ty Dietschi with BNP Paribas. Please go ahead.
Hi. Thanks for taking my question. My first one: we have seen the neurotoxin market improving sequentially this quarter. Do you expect some improvement in the aesthetics capital equipment environment to follow with a lag, or is that too early? Also, could you discuss some early progress or examples on increasing the productivity of the HydraFacial installed base?
That is a good question. We continue to see the category as healthy. Aesthetics continues to grow and people continue to allocate discretionary spending to aesthetics. Many categories are growing — toxins is one of them — so we view this as an opportunity. Our strategies are designed to take advantage of that spend, and the initiatives I discussed speak directly to that objective. Regarding early progress on increasing productivity of the installed base: commercially, we are investing in commercial excellence, which is one lever. Another lever is launching boosters, which directly speak to device utilization. We are very focused on getting more out of every machine in the field.
I would add one example of progress in Q2: SkinStylus. We refocused the sales team to sell SkinStylus into the existing base, and while it is a small revenue stream for us, it grew nearly 50% year over year in the second quarter when the sales and marketing team refocused on it. It is not a material impact on the overall P&L for the quarter, but it is an example of salesforce execution and partnership with marketing where the team was able to drive results.
Ladies and gentlemen, at this time there are no further questions. This concludes today's conference call. Thank you for participating. You may now disconnect.