• Revenue: $42.5 million in Q3, down 9.1% year over year.
• Case Volume: Decreased by 4.3% from the prior year.
• Same Store Cases: Declined 8.1% over the prior year.
• Adjusted EBITDA: $4.7 million, 11% of revenue, down from $9.1 million or 19.4% of revenue in the prior year quarter.
• Average Revenue Per Case: $12,984, compared to $13,658 in last year's third quarter.
• Cost of Service: 41.8% of revenue, up from 38.8% in the prior year period.
• Customer Acquisition Cost: $2,900 per case, compared to $2,750 in the prior year.
• Adjusted Loss: $1.4 million or a loss of 2 per diluted share.
• Cash Flow from Operations: $1.8 million, compared to $0.6 million in the prior year quarter.
• Cash: $6 million as of September 30, 2024.
• Gross Debt Outstanding: $71.3 million.
• Number of Facilities: 31 facilities as of September 30, 2024, up from 27 at the end of Q3 2023.
• Revenue Guidance for 2024: Increased to a range of $183 million to $189 million.
• Adjusted EBITDA Guidance for 2024: Maintained at $23 million to $28 million.

• Warning! GuruFocus has detected 2 Warning Signs with LCUT.

Release Date: November 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• AirSculpt Technologies Inc (NASDAQ:AIRS) reported revenue of $42.5 million for the third quarter, which was in line with expectations.
• The company has made significant progress on its 'back to basics' priorities, focusing on improving lead conversion, successful new center openings, and better cost management.
• Recent De Novo center openings are performing well, with U.S. centers exceeding the year one revenue objective of $4.5 million.
• AirSculpt Technologies Inc (NASDAQ:AIRS) has implemented new payment options to provide consumers with more flexibility, potentially driving incremental revenue.
• The company has identified and achieved half of its planned $1 million cost savings goal for the second half of the year, with an expected annualized savings of $2 million.

Negative Points

• Revenue for the third quarter declined by 9.1% year-over-year, with case volume down 4.3% from the prior year.
• Same store cases declined by 8.1% over the prior year, although this was an improvement from a 14% decline in the second quarter.
• Adjusted EBITDA decreased to $4.7 million, or 11% of revenue, compared to $9.1 million, or 19.4% of revenue, in the prior year quarter.
• The average revenue per case decreased to $12,984 from $13,658 in the previous year's third quarter.
• The cost of service as a percentage of revenue increased to 41.8% from 38.8% in the prior year period, partly due to costs related to new De Novo openings.

Q & A Highlights

Q: Can you provide insights on the ramp-up of new centers and their expected contributions in the fourth quarter? A: Dennis Dean, Interim CEO and CFO, explained that the new centers in Kansas City and Columbus had their first full months in August and September, respectively, while Deerfield and Birmingham opened at the end of the quarter. The case count was about 130 for the quarter, and they expect more than double that in the fourth quarter. The centers opened last year are performing above expectations, and they anticipate significant improvement in the new centers' performance.

Q: What impact are GLP-1 drugs having on your business, particularly regarding skin tightening procedures? A: Dennis Dean noted no significant change from previous quarters but acknowledged publications suggesting GLP-1 drugs lead to increased interest in body contouring procedures. Skin tightening is an area they plan to focus on more in the coming year, as GLP-1 drugs often result in a need for such procedures. They currently offer skin tightening with Airsculpt and additional products like Renuvion.

Q: Could you elaborate on the new payment options for financing procedures? A: Dennis Dean clarified that AirSculpt is not taking on financing risk. They are working with vendors to offer extended payment options, such as 18 to 24 months, for qualified candidates. This aims to enhance revenue per case and attract more volume, especially given current consumer challenges.

Q: What drove the increase in the cost of service as a percentage of sales this quarter, and what should we expect moving forward? A: Dennis Dean attributed the increase to lower volumes and the opening of four new centers, which incur pre-opening costs and take 3 to 4 months to become cash flow positive. The new centers contributed about 130 basis points to the cost increase. Improvement is expected in the fourth quarter as these centers ramp up.

Q: Can you provide details on the reduction in SG&A expenses and expectations for the future? A: Dennis Dean mentioned a sequential reduction of over $4 million in marketing spend, focusing on search marketing, which is more expensive but yields quicker results. They achieved a half-million-dollar reduction in corporate overhead, mainly through staffing adjustments, and expect these savings to continue into the fourth quarter and next year.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.