BeautyHealth Reports Third Quarter 2023 Financial Results

The Beauty Health Company, home to flagship brand Hydrafacial, have announced financial results for the third quarter ended Sept. 30, 2023. 

 

For the quarter, net sales of $97.4 million increased 10% year-over-year, on the strength of performance in Asia-Pacific, including China, and EMEA. The quarter was overshadowed by lower-than-expected US revenue and $63.1 million in restructuring charges related to device upgrades of early generation Syndeo devices.

 

As a result, the company is revising its fiscal year 2023 net sales guidance to a range of $385 to $400 million, its fiscal year adjusted EBITDA margin guidance to a range of 5% to 6% and is suspending its long-term 2025 financial outlook.

 

“We are focused on protecting Hydrafacial’s strong brand equity as we address the Syndeo provider experience challenges,” said BeautyHealth Chief Financial Officer Michael Monahan. “We are confident that, with our strategy, we will return Hydrafacial to the reliable standard that our customers have come to expect from us and keep their trust—and, with this, re-accelerate Syndeo adoption in the US.”

 

Gross margin was 12.9% in Q3 2023 compared to 69.1% in Q3 2022. Gross margin was adversely impacted by $63.1 million associated with the Syndeo Program and higher charges related to other discontinued, excess and obsolete product costs.

To stand behind its commitment to its customers and protect brand reputation, management decided that the company will only market and sell Syndeo 3.0 devices due to provider experience issues with earlier generation Syndeo devices.

 

The company will provide, at no cost to the customer, the option of a technician upgrade to their Syndeo 1.0 or 2.0 devices to 3.0 standards in the field; or a replacement Syndeo 3.0 device for their existing device.

 

The company will also extend all Syndeo warranties by one year, as a thank you to providers.

The company has designated all Syndeo 1.0 and 2.0 devices on-hand as obsolete, resulting in an inventory write-down in cost of sales of $18.8 million during the three months ended Sept. 30, 2023.

 

The company incurred costs of $12.3 million associated with the Syndeo Program and has accrued an additional $32.1 million for the estimated cost to remediate or upgrade or exchange the remaining Syndeo 1.0 and 2.0 devices.

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