Q3 2021 Airsculpt Technologies Inc Earnings Call

Good morning, and welcome to Air Sculpt Technologies third quarter 2021 earnings Conference call. Today's call is being recorded and we've allocated one hour for prepared remarks and Q&A.

At this time I'd like to turn the conference over to Dennis Steen, Chief Financial Officer that are skilled technology.

Thank you you may begin.

Good morning, everyone and thanks for joining us to discuss air Sculpt technologies third quarter 2021 results joining me on the call today is our founder and Chief Executive Officer, Dr. Ann Rollins.

Ron Bill Hull, our Chief operating officer.

Before we begin I would like to remind you that this conference call May include forward looking statements. These statements may include our future expectations regarding financial results and guidance market opportunities and our growth.

Risks and uncertainties that may impact these statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC.

All of which can be found on our website at investors Dot elite body Sculpsure dotcom, we undertake.

No obligation to revise or update any forward looking statements or information, except as required by law.

During our call today, we will also reference certain non-GAAP financial information such as adjusted EBITDA and adjusted EBITDA margin, we use non-GAAP measures and some of our financial discussion as we believe they more accurately represent the true operational performance and underlying results of our business a reconciliation of these measures.

It can be found in our earnings release filed this morning and in our most recently quarterly report when filed which will also be available on our website with that I'll turn the call over to Dr. Enrollments Erin.

Thank you Dennis good morning, and thank you for all for joining our first earnings call as a public company. Our IPO was a very exciting achievement for us, but it was just one step in a long journey, we had an exceptional quarter, but before we discuss our results I wanted to share some remarks about the company for those who aren't as familiar with are still we are.

An experienced fast growing national provider of body contouring procedures, we operate under the brand elite body Sculpsure and we deliver a premium consumer experience and the luxurious spa like atmosphere for our custom body country using our proprietary her still procedure.

Our network of specialty centers focuses on the removal of them wanted but simultaneously achieved exceptional skin tightening for our patients.

We offer fast transfer procedures, which allows patients to transfer their unwanted that to other areas of their body.

I develop their sculpt over 10 years ago, because I saw great need to deliver the highest quality results and body country and to provide patients a luxurious first class experience. Unlike traditional liposuction, which pieces of scraping or sharing techniques are still uses a cannula that moves a thousand times per minute in the back.

And fourth corkscrew motion to remove lives. So one by one all while simultaneously tightening skip we do this through a freckle sized hole instead of using a scalpel incision. Moreover, we perform this procedure, while our patients are fully awake and in a minimally invasive fashion, we use no needle no scalpel.

And those dishes and it's all done away, there's no general anesthesia or average patient can resume normal activities. The very next day and patients see results immediately.

Air sculptors covered under two utility patents, which we directly.

They relate to proprietary processes are performing fat removal and the combination of multiple components to perform proprietary systems that are specifically configured for carrying out or sculpt procedures. We believe the systems and methodologies claims in our patents provide impressive results with less patient trauma relative to other systems.

Methods and fat removal.

We further rely on copyright trademark and trade secret laws to protect their brands proprietary technology, Knowhow data and copyrighted content, which includes our library of before and after photographs.

Have a gallery of well over 200000 before and after pictures of satisfied patients, which we believe to be the largest in the world.

No matter what type of problem someone may have our gallery allows them to see patients.

We have helped with similar body concerns as theirs.

Well air scope speaks to our innovation and body contouring it doesn't stop there.

In 2020, we began broadcasting are sculpt TV, which takes you live inside an air scope procedure to see patients having procedures performed. Additionally, we allowed the online audience to ask questions of the patients while they're undergoing their procedure. We believe this to be a first of its kind.

And it again speaks to our innovation in every aspect of the business we.

We have now grown our footprint to 18 centers in 14 States as we recently announced our newest centers in Miami Beach, Florida, and Salt Lake City, Utah.

This expansion demonstrates our ability to execute on our de Novo strategy of opening three to four centers each year and speaks to the demand in the U S for our dramatic body contouring services only available with Air School.

We also believe there's a great opportunity in the future to expand our network of centers internationally.

We would like to emphasize that we feel that are still provides the absolute best results in body contouring or not.

Not only are they incredibly dramatic compared to competitors.

But the experience is far less invasive.

The skin tightening is incredible all of these factors lead us to believe that we provide the best body contouring that currently exists Kerry.

Our industry, leading results should not be overlooked we strongly encourage you to compare our results to any other technology or methodology. Moreover, we sell these results to our patients not to physicians or to hospitals, we sell our services to patients that want the absolute best in body country.

And at what we believe is a very fair price finally, before we begin to discuss our results for the quarter.

Wanted to provide a quick update regarding COVID-19 by now I'm sure everyone is aware of the new overcrowded very up to date, we have not experienced any negative impacts in our centers, while we cannot speculate on how this new variant might impact our country or how certain government bodies might respond, but we can say is we continue to monitor the situation.

And we'll follow appropriate measures to address that just as we have two previous variant outbreaks such as the Delta variant.

I want to turn the call over to Ron <unk>, Our Chief operating Officer Rob.

Thank you Dr Raj and good morning, everyone I'm going to focus my remarks today on providing a few highlights for the third quarter and then share with you some color on our business model and our attractive unit economics, we had an exceptional quarter and we continue to be encouraged by our strong top line revenue of $34 7 million.

A growth of 94, 3% over the prior year quarter.

Our growth continues to be driven by strong volumes and revenue per case expansion.

Our total case volume increased 64% over the prior year quarter of which 29, 9% was from the same centers and our revenue per case for the quarter was $12632 a 21.1 increase over the prior year quarter, we continue to be.

Courage by our rate increases, which is the result of patients desiring to have more areas performed at one time as well as continued demand for our services.

Our third quarter, adjusted EBITDA increased to $12 1 million, reflecting a 127% growth over the prior year quarter and our adjusted EBITDA margins have expanded to 35% compared to 29, 9% in the prior year quarter.

Our advertising costs, which include our digital social and traditional advertising was $4 3 million for the quarter, which is approximately 12, 3% of our revenue when combined with our marketing and sales personnel costs. Our total customer acquisition cost for the quarter was approximately $6 million.

Approximately $2100 per customer, we expect our marketing cost as a percentage of revenue to move up and down from quarter to quarter related to timing of investments and we may compare to the related revenue expansion, which we achieve from these investments.

I'm now going to comment a bit regarding our business model for those that may not be as familiar with our business. Our centers have an extremely attractive unit economic profile as Dr. <unk> mentioned, we now have 18 centers across the United States, We haven't modest upfront investment in our centers, which typically is less than 1 million.

Which includes construction and equipment historically, our centers become cash flow positive in approximately three months and generate 100% return on invested capital in approximately one year.

We are 100% private pay with zero reimbursement risk and for patients that requested we assist them with securing third party financing at no recourse to us patient financing allows us to schedule procedures more quickly and approximately 44% of our patients utilize the financing option.

During the quarter.

We anticipate opening three to four centers each year and now that Miami in Salt Lake City have opened that brings our total for 2020 124 de novo's. We will also be increasing the number of procedure rooms at certain locations.

All our legacy centers were built at single procedure room centers.

And due to capacity constraints, we are converting those to multiple procedure room centers. So far we have converted three centers in our plants to convert the remaining four during 2022, adding the procedure rooms will not only give us additional capacity, but also allow us to increase the speed.

T of treating our patients with that I'll turn it back over to Dennis to provide additional details on our financial results and outlook Dennis.

Thanks, Ron since this is our first earnings call as a public company I want to provide a framework of our key performance metrics and how we evaluate the business.

Key metrics, we will report outside of the core financial statement metrics. Our cases revenue per case number of centers and number of procedural and will report. These both total and on a same center basis.

Now I'll go into our financial performance for the third quarter, and then provide some comments regarding our full year estimates.

Revenue for the quarter increased $16 8 million.

The $34 $7 million or 94% increase from the prior year quarter, and our cases increased 60% to 2000 and 743.

The increase is a result of adding three new de Novo centers, which expanded our footprint from 13 centers to 16 centers and there are a number of procedure range from 21 to 27 as of September 32021.

Our revenue per case was 12632.

21% increase from the prior year quarter.

We also had favorable revenue metrics on a same center basis.

China revenue increased 56% over the prior year quarter, primarily driven by case growth of approximately 30%.

Much of our same store growth can be attributed to addition of virtual consultations and an increase in our social media and marketing capabilities, such as air Sculpt television to drive further brand awareness.