Company Overview

AirSculpt Technologies provides body contouring procedures under the patented AirSculpt® method. As of May 10, 2024, the company operates 27 procedure centers across 18 states, Canada, and the UK, up from 23 centers at the end of Q1 2023.

In Q1 2024, AirSculpt performed 3,746 procedures and generated $47.6 million in revenue, compared to 3,640 procedures and $45.8 million in revenue in Q1 2023. This represents a 4% increase in revenue year-over-year.

Financial Performance

Revenue

AirSculpt’s revenue comes from its AirSculpt® procedures. The company does not accept payments from insurance companies or government payers - all procedures are self-pay.

In Q1 2024, revenue grew by 3.9% to $47.6 million compared to $45.8 million in Q1 2023. This growth was driven by the addition of 4 new procedure centers, expanding AirSculpt’s footprint.

On a same-center basis, Q1 2024 revenue declined by 10.2% year-over-year. AirSculpt attributes this decline to weaker performance across the aesthetic industry, especially impacting more price-sensitive customers.

Expenses

Cost of Service remained flat at $18 million in Q1 2024 compared to the prior year. As a percentage of revenue, Cost of Service improved from 39.3% in Q1 2023 to 37.9% in Q1 2024.

SG&A Expenses declined by 34% year-over-year, from $23.9 million to $15.8 million. This was primarily driven by a reversal of $10.4 million in stock compensation expense related to performance stock units where vesting targets are now deemed unachievable. Excluding this reversal, SG&A increased year-over-year due to higher marketing and corporate overhead costs as AirSculpt expands its center footprint.

Profitability

AirSculpt achieved net income of $6 million in Q1 2024, compared to essentially break-even in the prior year period. This improvement was driven by the reversal of performance stock unit expense mentioned above.

Excluding various adjustments, Adjusted Net Income declined from $4.9 million in Q1 2023 to $1.9 million in Q1 2024. Similarly, Adjusted EBITDA declined from $9.5 million (20.6% margin) to $7.3 million (15.4% margin).

Balance Sheet & Cash Flows

As of March 31, 2024, AirSculpt had:

• $11 million in cash
• Total debt outstanding of $71.2 million

In Q1 2024, the company generated $3.4 million in cash from operations, lower than $6.2 million in the prior year due to higher investment in sales and marketing.

AirSculpt invested $1.6 million in capital expenditures for existing clinic expansions and new clinic openings. The company also made $1.1 million in debt principal payments during the quarter.

Outlook

AirSculpt plans to continue expanding its national footprint, targeting de novo clinic openings and additional procedure rooms at existing clinics.

The company expects expenses related to sales & marketing and corporate overhead to increase as clinic expansion continues. However, these expenses are expected to decrease as a percentage of revenue over time.

Weaker aesthetic industry performance has impacted AirSculpt’s same-center sales growth. Management will monitor performance and adjust sales & marketing investment accordingly.

AirSculpt’s cash from operations and available debt facility provide adequate liquidity for working capital, capital expenditures, and debt service for at least the next 12 months.

Key Takeaways

• Q1 revenue increased 4% driven by new clinic openings
• Same-center sales declined 10% on weaker industry demand
• Adjusted EBITDA margin compressed ~500 bps year-over-year
• Company plans to continue expanding clinic footprint
• Adequate liquidity for near-term business needs

Let me know if you need any clarification or have additional questions on the analysis! I aimed to summarize the key points in straightforward language for a general audience.