We define Adjusted Net Income as net (loss)/income excluding restructuring and related severance costs, loss/(gain) on disposal of long-lived assets, settlement costs for non-recurring litigation, equity-based compensation and the tax effect of these adjustments.

We include Adjusted EBITDA and Adjusted Net Income because they are important measures on which our management assesses and believes investors should assess our operating performance. We consider Adjusted EBITDA and Adjusted Net Income each to be an important measure because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis. Adjusted EBITDA has limitations as an analytical tool including: (i) Adjusted EBITDA does not include results from equity-based compensation and (ii) Adjusted EBITDA does not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments. Adjusted Net Income has limitations as an analytical tool because it does not include results from equity-based compensation.

We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue. We define Adjusted Net Income per Share as Adjusted Net Income divided by weighted average basic and diluted shares. We included Adjusted EBITDA Margin and Adjusted Net Income per Share because they are important measures on which our management assesses and believes investors should assess our operating performance. We consider Adjusted EBITDA Margin and Adjusted Net Income per Share to be important measures because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis.

The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to net (loss)/income, the most directly comparable GAAP financial measure:

 
                       Three Months Ended        Nine Months Ended 
                          September 30,             September 30, 
                    ------------------------  ------------------------ 
                      2024         2023         2024         2023 
                                  ------                    ------ 
  Net 
   (loss)/income    $(6,040)     $(1,667)     $(3,217)     $    95 
   Plus 
  Equity-based 
   compensation(1)    3,430        4,492        1,522       13,483 
  Restructuring 
   and related 
   severance 
   costs              1,099          995        5,487        4,300 
  Depreciation and 
   amortization       3,003        2,629        8,693        7,479 
  Loss/(gain) on 
   disposal of 
   long-lived 
   assets                --            4            4         (198) 
  Litigation 
   settlements(2)       850           --          850           -- 
  Interest 
   expense, net       1,591        1,836        4,638        5,462 
  Income tax 
   expense              733          786          894        2,522 
                     ------       ------       ------       ------ 
Adjusted EBITDA     $ 4,666      $ 9,075      $18,871      $33,143 
                     ======       ======       ======       ====== 
Adjusted EBITDA 
 Margin                11.0%        19.4%        13.4%        22.3% 
 
 
(1)    As of the nine months ended September 30, 2024, this 
        amount contains a cumulative reversal of stock compensation 
        expense of $10.4 million related to reassessing the 
        probability of achieving the performance target on 
        certain of the Company's performance-based stock units. 
        For further discussion, see Note 6 to the condensed 
        consolidated financial statements of the Company's 
        Quarterly Report on Form 10-Q for the Quarterly Period 
        ended September 30, 2024. 
(2)    This amount relates to settlement costs for non-recurring 
        litigation of $0.9 million for the three and nine 
        months ended September 30, 2024. This amount is accrued 
        in "Accrued and other current liabilities" as of September 
        30, 2024. See Note 9 to the condensed consolidated 
        financial statements included in this Quarterly Report 
        on Form 10-Q for further discussion. 
 

For the three months ended September 30, 2024 and 2023, pre-opening de novo and relocation costs were $0.7 million and $0.5 million, respectively. For the six months ended September 30, 2024 and 2023, pre-opening de novo and relocation costs were $0.8 million and $3.3 million, respectively.

The following table reconciles Adjusted Net Income and Adjusted Net Income per Share to net income/(loss), the most directly comparable GAAP financial measure:

 
                        Three Months Ended           Nine Months Ended 
                           September 30,                September 30, 
                        2024          2023          2024          2023 
                     ----------    ----------    ----------    ---------- 
Net (loss)/income   $    (6,040)  $    (1,667)  $    (3,217)  $        95 
Plus 
  Equity-based 
   compensation(1)        3,430         4,492         1,522        13,483 
  Restructuring 
   and related 
   severance 
   costs                  1,099           995         5,487         4,300 
  Loss/(gain) on 
   disposal of 
   long-lived 
   assets                    --             4             4          (198) 
 
 
  Litigation 
   settlements(2)           850            --           850            -- 
  Tax effect of 
   adjustments             (717)         (751)          996        (2,079) 
                     ----------    ----------    ----------    ---------- 
Adjusted net 
 (loss)/income      $    (1,378)  $     3,073   $     5,642   $    15,601 
                     ==========    ==========    ==========    ========== 
 
Adjusted net 
(loss)/income per 
share of common 
stock (3) 
    Basic           $     (0.02)  $      0.05   $      0.10   $      0.28 
    Diluted         $     (0.02)  $      0.05   $      0.10   $      0.27 
Weighted average 
shares 
outstanding 
    Basic            57,650,923    56,785,087    57,543,678    56,661,903 
    Diluted          57,650,923    58,954,829    58,289,022    58,329,685 
 
 
(1)    During the first quarter of fiscal year 2024, the 
        Company recorded a cumulative reversal of stock compensation 
        expense of $10.4 million related to reassessing the 
        probability of achieving the performance target on 
        certain of the Company's performance-based stock units. 
        For further discussion, see Note 6 to the condensed 
        consolidated financial statements of the Company's 
        Quarterly Report on Form 10-Q for the Quarterly Period 
        ended September 30, 2024. 
(2)    This amount relates to settlement costs for non-recurring 
        litigation of $0.9 million for the three and nine 
        months ended September 30, 2024. This amount is accrued 
        in "Accrued and other current liabilities" as of September 
        30, 2024. See Note 9 to the condensed consolidated 
        financial statements included in this Quarterly Report 
        on Form 10-Q for further discussion. 
(3)    Diluted Adjusted Net Income Per Share is computed 
        by dividing adjusted net income by the weighted-average 
        number of shares of common stock outstanding adjusted 
        for the dilutive effect of all potential shares of 
        common stock. 
 

Investor Contact

Allison Malkin

ICR, Inc.

airsculpt@icrinc.com

(END) Dow Jones Newswires

November 08, 2024 06:00 ET (11:00 GMT)