Q2 2025 AirSculpt Technologies Inc Earnings Call

August 1, 2025

A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Session will follow the formal presentation, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Note. This conference is being recorded.

I would now like to turn the conference over to Allison Malkin of partner of ICR.

Good morning, everyone. Thank you for joining us to discuss <unk> Technologies' results for the second quarter of fiscal 2025, joining me on this call today are Yogi, just nanny, Chief Executive Officer, and Dennis <unk>, Chief Financial Officer, before we begin I would like to.

Good morning, everyone. Thank you for joining us to discuss air Sculpt Technologies' results for the second quarter of fiscal 2025, joining me on this call today are Yogi, just natty, Chief Executive Officer, and Dennis <unk>, Chief Financial Officer, before we begin I would like to.

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 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 that are sculpt dot com.

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 that are scope dot com.

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 measures, we use non-GAAP measures in some of our financial discussions as we believe.

They more accurately represent the true operational performance and underlying results of our business a.

A reconciliation of these measures can be found in our earnings release filed this morning.

And in our most recent 10-Q, which will also be available on our website.

For today's call Yogi will begin with an overview of our second quarter performance and share an update on our strategic priorities then Dennis will review our financial results in more detail and provide our outlook with that I'll turn the call over to you.

Sure Allison good morning, everyone and thank you for joining today's call.

Thank you Alison good morning, everyone and thank you for joining today's call.

As we outlined in our earnings release this morning.

<unk> has announced his intention to retire later this year following our transition to a new Chief financial Officer.

<unk> has announced his intention to retire later this year following our transition to our new Chief Financial Officer.

We currently have a search underway to identify his replacement.

Dennis has been integral to our business setting up the financial framework and the team that supported our successful initial public offering and most recently our common stock offering.

I'm ready for Dennis as partnership.

I'm very thankful for Dennis as partnership.

It's got better capitalized today versus when I joined the business seven months ago, and our transformation is well underway.

<unk> got better capitalized Judy verses, when I joined the business seven months ago, and our transformation is well underway.

Now turning to our results.

In the second quarter, we made encouraging progress on our strategic initiatives to deliver improved revenue and profit trends.

While we continue to operate in a dynamic demand environment.

Pleased to see us realize the benefits of productions.

I'm pleased to see us realize the early benefits of Florida auctions.

This has manifested in three things.

Sequential improvement in our year over year revenue performance.

The sequential improvement in our year over year revenue performance.

Record level of fleet growth.

Record level of fleet growth and a meaningful increase in consultation volume.

A meaningful increase in consultation volume.

We once again saw strong consumer interest in <unk> this quarter.

We once again saw strong consumer interest in asphalt this quarter.

Average revenue per case, consistent between 12000 and $14000.

The quarter also saw us take important steps to strengthen our capital structure with the completion of our follow on offering which allowed us to pay down $16 million in debt with no borrowings on our revolving credit facility at quarter end.

Looking forward.

Confident that we have the right strategy in place to stabilize and.

<unk> that we have the right strategy in place to stabilize and.

And return to growth.

In total for the second quarter revenue was $44 million.

Declining 13, 7% from the second quarter of 2024, and adjusted EBITDA was $5 8 million for a margin of 14, 3% with a $6 9 million for a margin of 13, 5% in the second quarter of 2024.

Declining 14, 7% from the second quarter of 2024, and adjusted EBITDA was $5 8 million for a margin of 14, 3% with the $6 9 million for a margin of 13, 5% in the second quarter of 2024.

We narrowed our year over year revenue declined by four percentage points versus the first quarter.

The decline in revenue was driven by lower case volume, which reflects the challenging macro environment.

Same store revenue, which does not include new centers improved marginally from the first quarter and declined approximately 22% over the prior year quarter.

While we are experiencing early progress from improvements made to our go to market strategy.

Our new growth initiatives are only just beginning to pilot and therefore were not expected to drive growth in the quarter.

New growth initiatives are.

Only just beginning to pilot and therefore were not expected to drive growth in the quarter.

Adjusted EBITDA totaled $5 $8 million, marking an improvement from Q1 2025 of $2 million.

Adjusted EBITDA totaled $5 8 million.

Marking an improvement from Q1 2025 of $2 million.

Which mainly reflects the sequential increase in our revenue as well as a more meaningful impact from a cost reduction plan.

We have achieved these cost savings while simultaneously enhancing our operational efficiency.

We will remain disciplined with regard to spend focusing on the highest return opportunities.

We will remain disciplined with regard to spend.

<unk> on the highest return opportunities.

I will now discuss the progress we have made against our business imperatives, This quarter, which center on enhancing our culture and improving our go to market strategy.

Scott We believe it is integral to foster a culture that propels our transformation and positions us for long term success.

Having visited 20 of our 32 centers since I joined <unk> in January.

<unk> visited 20 of our 32 centers since I joined <unk> in January.

Seen firsthand that our teams are committed to deliver against our strategic priorities and fueled by a deeper sense of purpose in what we are achieving together.

<unk> first time that our teams are committed to deliver against our strategic priorities and are fueled by a deeper sense of purpose in what we are achieving together.

Did enthusiasm and continued dedication is truly inspiring and I'm grateful for their efforts as they are the engine behind the progress we have made and the momentum we are building.

Did enthusiasm and continued dedication is truly inspiring and I'm grateful for their efforts.

They are the engine behind the progress we have made and the momentum we are building.

As you May recall, our go to market strategy includes five business priorities.

First is marketing.

Post is marketing.

Can you to see benefits from our reallocated marketing spend to proven strategies, including search engine marketing social media and online video.

We continue to see benefits from our reallocated marketing spend to proven strategies, including search engine marketing social media and online video.

As a result, we have seen lead generation at record highs with improvements in marketing spend as a percentage of revenue and a reduction in customer acquisition costs.

This is a signal that we are better monetizing our marketing tactics and we ended the quarter with a robust pipeline of leads that we will continue to work to convert the cases.

This is a signal that we are better monetizing our marketing tactics and we ended the quarter with a robust pipeline of leads that we will continue to work to convert two cases.

We are laser focused on using data to optimize our marketing investment by dedicating spend to channels that show performance.

Second is optimizing sales to convert these leads into cases.

We have been supporting our sales team with enhanced training on key initiatives, including our expanded financing options to ensure they are well equipped to convert interest into cases.

Additionally, the expansion of virtual appointments as contributors to higher contracted volumes.

Additionally, the expansion of virtual appointments has contributed to higher contracted volumes.

And I'm grateful for their efforts as they are the engine behind the progress we have made and the momentum we are building.

Could we are introducing new services to tap into more consumer demand.

Launched a pilot of a skin tightening procedure in the second quarter of two three centers and plan to extend the pilot into the third quarter additional centers.

Launched a pilot of a skin tightening procedure in the second quarter to three centers and plan to extend the pilot into the third quarter of two additional centers.

As you May recall, our go to market strategy include five business priorities.

Post is marketing we can.

We are gaining valuable learnings from the pilot and believe it can be a meaningful opportunity for us given the skin laxity that occurs following the use of <unk>.

Can you see benefit from our reallocated marketing spend to proven strategies, including search engine marketing social media and online video.

As a result, we have seen lead generation at record highs with improvements in marketing spend as a percentage of revenue.

Fourth is enhancing our customer experience to ensure we consistently provide premium results.

I have been impressed by the excellent quality of care delivered across our locations.

Reduction in customer acquisition costs.

This is a signal that we are better monetizing our marketing tactics and we ended the quarter with a robust pipeline of leads that we will continue to work to convert the cases.

That being said, we recognize there is an opportunity to further elevate the experience with initiatives. We have planned in the back half of the year and into 2026.

We are laser focused on using data to optimize our marketing investment by dedicating spend to channels that show performance.

Lastly, we continue to invest in technology to accelerate these priorities.

In support of this we have launched expanded financing options across all our centers and our sales team has been trained on the benefits of these offerings.

Second is optimizing sales to convert these leads into cases.

We have been supporting our sales team with enhanced training on key initiatives, including our expanded financing options to ensure they are well equipped to convert interest into cases.

Expect to see positive impacts on conversion rates in the back half of the year.

Second the upgraded our IP system to enable more efficient routing of sales calls significantly improving blood flow and increasing the number of consultations booked.

<unk> the expansion of virtual appointments as contributors to higher contracted volumes.

Could we are introducing new services to tap into more consumer demand.

This has helped reduce friction for customers and made the process smoother for our team.

We launched a pilot of a skin tightening procedure in the second quarter to three centers and plan to extend the pilot into the third quarter with additional centers.

Third we expanded the use of sales force in the first half of the year, which has contributed to higher consultation volume.

We are gaining valuable learnings from the pilot and believe it can be a meaningful opportunity for us given the skin laxity that occurs following the use of <unk>.

By reconnecting with past customers to this platform, we have seen strong response rates.

As Dennis will discuss in detail. Shortly we are reiterating our annual outlook and currently expect fiscal 2025 revenue in the range of $160 million $270 million.

Vote is enhancing our customer experience to ensure we consistently provide premium results.

I've been impressed by the excellent quality of care delivered across our locations.

And adjusted EBITDA between $16 million and $18 million.

That being said, we recognize there is an opportunity to further elevate the experience with initiatives. We have planned in the back half of the year and into 2026.

Our guidance reflects the current economic conditions with some conservatism baked in due to consumer spending uncertainty.

But it does not anticipate a downturn in the economy.

Lastly, we continue to invest in technology to accelerate these priorities.

In summary, we have continued to make progress on our initiatives in the second quarter.

In support of this we have launched expanded financing options across all our centers and our sales team has been trained on the benefits of these offerings.

We have seen encouraging signs with plans for the remainder of the year before the improve our performance our intense focus on our business priorities and cost management.

And have seen encouraging signs with plans for the remainder of the year before the improve our performance our intense focus on our business priorities and cost management, along with our durable balance sheet positions us well to return our business to growth and perform at a higher rate of profit.

Expect to see positive impacts on conversion rates in the back half of the year.

Along with our durable balance sheet.

Second the upgraded our it systems to enable more efficient routing of sales calls significantly improving blood flow and increasing the number of consultations booked.

Positions us well to return our business to growth and perform at a higher rate of profitability.

Stability.

Overall I continue to believe that <unk> is a compelling business with a competitive moat that is ripe for disruption and that the best years lie ahead for it.

This has helped reduce friction for customers and made the process smoother for our team.

Third we expanded the use of sales force in the first half of the year, which has contributed to higher consultation volume.

And its shareholders.

And with that I will now pass it over to Dennis.

Thank you yoga and good morning, everyone I'd like to begin by expressing my gratitude to the team at air scope for the opportunity to lead this organization as Chief Financial officer over the past four years and it's been a privilege to be a part of air Scopes journey and I continue to believe in the long term potential of air sculpt under yoga leadership and execution of our business plan.

Thank you <unk> and good morning, everyone I'd like to begin by expressing my gratitude to the team at air scope for the opportunity to lead this organization as Chief Financial officer over the past four years and it's been a privilege to be a part of air Sculpt journey and I continue to believe in the long term potential of air sculpt under yoga leadership and execution of our business plan.

By reconnecting the past customers to this platform, we have seen strong response rates.

As Dennis will discuss in detail. Shortly we are reiterating our annual outlook and currently expect fiscal 2025 revenue in the range of $160 million $270 million.

My health care career has spanned over 25 years, mostly in the public domain and I look forward to this next phase of my life, where I can spend more time with my family and pursue personal life goals until my replacement is identified I am committed to continuing to lead the financial strategy of the business in facilitating a seamless transition as we identify the next air scope.

And my healthcare career spanned over 25 years, mostly in the public domain and I look forward to this next phase of my life, where I can spend more time with my family and pursue personal life goals.

And adjusted EBITDA between $16 million and $18 million.

Our guidance reflects the current economic conditions with some conservatism baked in due to consumer spending uncertainty.

Until my replacement is identified I am committed to continuing to lead the financial strategy of the business in facilitating a seamless transition as we identify the next air scope CFO.

<unk> does not anticipate a downturn in the economy.

In summary, we have continued to make progress on our initiatives in the second quarter.

CFO.

Now turning to our financial performance.

As mentioned revenue for the quarter was $44 million or 13, 7% decline versus the prior year quarter with same store revenue down approximately 22%.

We have seen encouraging signs with plans for the remainder of the year to further improve our performance.

Our intense focus on our business priorities and cost management.

Cases declined 14, 1% to 3392 and.

Along with our durable balance sheet.

Positions us well to return our business to growth and perform at a higher rate of profitability.

And average revenue per case for the quarter was $12975, which is approximately flat to the second quarter of 2024.

Overall I continue to believe that <unk> is a compelling business with a competitive moat that is ripe for disruption and that the best years lie ahead for <unk>.

The decline in revenue was mainly driven by lower cases due to operating in a challenging market environment with softness in consumer spending.

But the percentage of patients using financing to pay for procedures was 50%, which is above the 44% rate we have experienced in the first quarter.

And its shareholders.

And with that I will now pass it over to Dennis.

Yoga and good morning, everyone I'd like to begin by expressing my gratitude to the team at air scope for the opportunity to lead this organization as Chief Financial officer over the past four years and it's been a privilege to be a part of air Scopes journey and I continue to believe in the long term potential of air sculpt under yoga leadership and execution of our business plan.

We look forward to sharing updates on our broadening financing solutions as we experienced the full benefit in the back half of the year. As a reminder, we received full payment of all procedures upfront and we have no recourse related to patients who finance their procedures with third party vendors.

Cost of service decreased $1 6 million compared to the prior year period, and as a percentage of revenue increased to 39, 1% versus 36, 9%, primarily due to certain fixed cost components, such as rent and nursing, which do not scale down completely with short term revenue fluctuations.

However, on a sequential basis, our percentage improved 140 basis points compared to the first quarter of 2025.

CFO.

Now turning to our financial performance.

Selling general and administrative expenses decreased $11 6 million in the quarter compared to the same period in fiscal 2024, which reflect reductions in equity based compensation restructuring costs and advertising expense.

Selling general and administrative expenses decreased $11 $6 million in the quarter compared to the same period in fiscal 2024, which reflect reductions in equity based compensation restructuring costs and advertising expense.

As mentioned revenue for the quarter was $44 million or 13, 7% decline versus the prior year quarter with same store revenue down approximately 22%.

Cases declined 14, 1% to 3392 and.

Our customer acquisition cost for the quarter was $2905 per case as compared to $3325 in the prior year quarter, marking the first quarter over quarter decline in our cash since we went public.

And average revenue per case for the quarter was $12975, which is approximately flat to the second quarter of 2024.

The decline in revenue was mainly driven by lower cases due to operating in a challenging market environment with softness in consumer spending.

Our <unk> was lower year over year, driven by our marketing and sales efforts gaining traction.

Our Tac was lower year over year, driven by our marketing and sales efforts gaining traction.

But the percentage of patients using financing to pay for procedures was 50%, which is above the 44% rate we have experienced in the first quarter.

Adjusted EBITDA was $5 8 million compared to $6 9 million for the fiscal 2024 second quarter as a result of our revenue declines.

Adjusted EBITDA margin was 13, 3% compared to 13, 5% in the prior year quarter.

Adjusted net income for the quarter was $1 $2 million or income of <unk> <unk> per diluted share turning to the balance sheet. During the quarter, we made substantial progress toward improving our financial position as of June 32025, cash was $8 $2 million and gross debt outstanding was $58 8 million.

Yes.

We repaid $16 million of debt, including $5 million on our revolver and a $10 million prepayment on our long term debt, which was in addition to our regular quarterly amortization payment.

However, on a sequential basis, our percentage improved 140 basis points compared to the first quarter of 2025.

We were able to reduce our debt through using proceeds from our capital raise last month as well as cash from operations.

We were able to reduce our debt through are using proceeds from our capital raise last month as well as cash from operations.

Our leverage ratio was 287 times at June 32025 down from 376 times as of March 31, 2025, and were compliance with all covenants under the terms of our credit agreement. These.

Our customer acquisition cost for the quarter was $2905 per case as compared to $3325 in the prior year quarter, marking the first quarter over quarter decline in our cash since we went public.

These activities reflect our ongoing commitment to strengthening the balance sheet, which allows us to move forward with an improved capital structure and enhanced financial flexibility cash.

Our Tac was lower year over year, driven by our marketing and sales efforts gaining traction.

Cash flow from operations for the quarter was $5 million compared to $3 4 million in the second quarter of fiscal 2024.

Adjusted EBITDA was $5 8 million compared to $6 9 million for the fiscal 2024 second quarter as a result of our revenue declines.

Turning to our outlook for 2025, we are reiterating our guidance of revenue in the range of $160 million to $170 million and adjusted EBITDA between 16 and $18 million as we remain committed to strengthening same store sales across our existing footprint. Our 2025 guidance reflects no.

Adjusted EBITDA margin was 13, 3% compared to 13, 5% in the prior year quarter.

<unk> de novo openings.

Also we anticipate remaining in compliance with the terms of our credit agreement throughout the fiscal year.

As a reminder, we are not directly impacted by tariffs given our service based business model and the immateriality of our products cost to our expenses.

We repaid $16 million of debt, including $5 million on our revolver and a $10 million prepayment on our long term debt, which was in addition to our regular quarterly amortization payment.

However, we are impacted by weakening consumer sentiment to tariffs and inflationary pressures and have taken actions such as providing more financing options in order to provide flexibility to our customers.

We were able to reduce our debt through using proceeds from our capital raise last month as well as cash from operations.

Despite the challenged operating environment, we believe that executing our business priorities will help us improve our sales trend and we achieve our guidance.

Our leverage ratio was 287 times at June 32025 down from 376 times as of March 31, 2025, and were compliance with all covenants under the terms of our credit agreement. These.

I will now turn the call over to the operator to begin the question and answer portion of the call.

Thank you we will now be conducting a question and answer session.

These activities reflect our ongoing commitment to strengthening the balance sheet, which allows us to move forward with an improved capital structure and enhanced financial flexibility cash flow from operations for the quarter was $5 million compared to $3 4 million in the second quarter of fiscal 2024.

I'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. Please.

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Please limit yourself to one question and one follow up question. If you have additional questions. Please reenter the queue.

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Thank you and our first question will come from Josh Raskin with Nephron research.

Hi, Thanks, Good morning, I'll start obviously with a congrats to Dennis and really just to thank you for the help over the last couple of years since the IPO.

Planned de Novo openings also we anticipate remaining in compliance with the terms of our credit agreement throughout the fiscal year as.

As a reminder, we are not directly impacted by tariffs given our service based business model and the immateriality of our products cost to our expenses.

My question. My first question just guidance implies revenues that are sort of flattish in the second half EBITDA actually up closer to mid teens, obviously a lot better than.

My question. My first question just guidance implies revenues that are sort of flattish in the second half EBITDA actually up closer to mid teens, obviously a lot better.

Then what we saw in the first half on a year over year basis. So maybe you could speak to the drivers.

Then what we saw in the first half on a year over year basis. So maybe you could speak to the drivers are there.

Other than the easier comps and maybe what's driving that acceleration and perhaps more color on that record level of lead growth and the consultations youre talking about.

There then the easier comps and maybe what's driving that acceleration and perhaps more color on that record level of lead growth and the consultations youre talking about.

Despite the challenged operating environment, we believe that executing our business priorities will help us improve our sales trend and we achieve our guidance.

Hey, Josh this is Jeremy Thank you for the question yes.

Hey, Josh this is <unk>. Thank you for the question yes.

I will now turn the call over to the operator to begin the question and answer portion of the call.

Sure.

Really appreciate it.

We really appreciate it offered dennises contributions to add Scott.

His contributions to <unk>.

To your question.

Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.

To your question if we.

Sure.

We continue to see uncertainty with the consumer but we are seeing a lot of interest and are Scott. So leads are at record highs, we are seeing growth in consultations as well.

We continue to see uncertainty, which the consumer but we are seeing a lot of interest and are Scott. So leads are at record highs, we are seeing growth in consultations as well.

Confirmation tone will indicate your line is in the question queue.

Please limit yourself to one question and one follow up question.

But we have a consumer's hesitant to spend and pull the trigger in the back half so for the back half we continue to build a solid foundation for the business alone aligned with the five key priorities.

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Expect those are going to do.

Definitely help us stabilize revenue as you called out and.

Maybe help us stabilize revenue as you called out.

And all of our actions along with that on EBITDA cost management.

Thank you and our first question will come from Josh Raskin with Nephron research.

And all of our actions along with that on EBITDA cost management.

Reducing marketing spend will help drive EBITDA margin as well.

Hi, Thanks, Good morning, I'll start obviously with a congrats to Dennis and really just to thank you for the help over the last couple of years since the IPO.

That's our expectation from from the back half in order to meet guidance.

Okay. That's helpful. And then just a follow up on the skin tightening offering and I'm curious maybe commentary versus.

My question. My first question just guidance implies revenues that are sort of flattish in the second half EBITDA actually up close to mid teens, obviously a lot better.

What youre seeing in terms of people that are on <unk> are they coming in for bigger procedures, and then adding skin tightening or are they coming in just for skin tightening and then I think last quarter. You said that there was still no skin tightening expectations in guidance I'm just curious if that's still the case.

Then what we saw in the first half on a year over year basis. So maybe you could speak to the drivers other than the easier comps and maybe what's driving that acceleration and perhaps more color on that record level of lead growth and the consultations you are talking about.

Okay.

Josh I'll answer your last question for US yet there is still no skin tightening standalone skin tightening expectations within our guidance.

Hey, Josh this is Jeremy Thank you for the question yes.

Josh I'll answer your last question for us yet.

No skin tightening standalone skin tightening expectations within our guidance.

Really appreciate it offered dennises contributions to ask Scott chip.

So in Q3, we've started a pilot in Q2, sorry, we started a pilot with three locations and what we are seeing is there is strong interest in skin tightening of you also know that we offered a compelling solution.

So in Q3, we've started a pilot in Q2, sorry, we started a pilot with three locations.

To your question.

We continue to see uncertainty with the consumer but we are seeing a lot of interest in leads are at record highs, we are seeing growth in consultations as well.

What we are seeing is there is strong interest in skin tightening of you also know that we offered a compelling solution.

It is too early to report on the results from the pilot, but we look forward to keep everyone appraised in the coming quarters as we expand the pilot and get learnings on how that interacts with the <unk>, one and how that will impact our <unk>.

But we have a consumer's hesitant to spend and pull the trigger in the back half so for the back half we continue to build a solid foundation for the business aligned with the five key priorities.

Expect those are going to do.

Revenue going forward.

Definitely help us stabilize revenue as you called out.

Okay, that's fair.

And all of our actions along with that on EBITDA cost management.

Thank you. Our next question comes from Whit Mayo with Leerink partners.

Reducing marketing spend will help drive EBITDA margin as well.

That's our expectation from the back half in order to meet guidance.

Hey, Good morning. This is Morgan Mccarthy.

Mayo.

I just wanted to say congratulations on your retirement Dennis Thanks for all the help over the years and we will really Miss working with you.

Just wanted to say congratulations on your retirement Dennis Thanks for all the help over the years and we will really Miss working with you.

Okay. That's helpful. And then just a follow up on the skin tightening offering and I'm curious maybe commentary versus.

My first question is as we approach the second half I believe beside centers you opened in 2020 wearable enter at the same store pool.

So my first question is.

What youre seeing in terms of people that are on <unk> are they coming in for bigger procedures, and then adding skin tightening or are they coming in just for skin tightening and then I think last quarter. You said that there was still no skin tightening expectations and guidance I'm just curious if that's still the case.

We approach the second half I believe the five centers you opened in 2020 wearable enter the same store pool.

Is there any more color you can share there on how those centers are performing relative to your expectations.

So is there any more color you can share there on how those centers are performing relative to your expectations.

Okay Alright.

And then within the guidance range.

Josh I'll answer your last question first yes, there's still no skin tightening standalone skin tightening expectations within our guidance.

And then within the guidance range.

Or are you actually assuming for same store case growth across the business in the second half and should we actually see some benefit in that metric from the 2024 facilities entering the same store pool as they continue to ramp.

What are you actually assuming for same store case growth across the business in the second half and should we actually see some benefit in that metric from the 2024 facilities entering the same store pool as they continue to ramp.

So in Q3, we've started a pilot in Q2, sorry, we started a pilot with three locations and.

What we are seeing is the strong interest in skin tightening of you also know that we offered a compelling solution.

Hey, Morgan this is Dennis.

I appreciate the kind words and Josh also thank you for the kind words as well as it relates to the 2024 class a de novo's theyre performing in line with our expectations. They are performing lower than historical simply because they are under similar pressures from the consumer environment is our existing footprint, but yes.

I appreciate the kind words and Josh also thank you for the kind words as well as it relates to the 2024 classes and then of those Theyre performing in line with our expectations. They are performing lower than historical simply because they are under similar pressures from the consumer environment is our existing footprint, but yes.

Our revenue going forward.

Okay, that's fair.

And your answer we will we will see some some modest help if you will from a same store.

And your answer will we will see some some modest help if you will from a same store.

Thank you. Our next question comes from Whit Mayo with Leerink partners.

Metric as those come into the to the same store calculation.

We will do expect.

Hey, Good morning, this is Michael Mccarthy.

We will do expect.

Again, a reduction in our same store declines still expect Q3 to be.

Mayo.

I just wanted to say congratulations on your retirement Dennis Thanks for all the help over the years and we will really Miss working with you.

Declining.

But not not a significant as Q1 and Q2 and then as we kind of exit into Q4, we will start to see.

But not not a significant as Q1 and Q2 and then as we kind of exit into Q4, we will start to see modest or I'll say modest significant improvement one because again the full complement of the new centers coming in and then secondly, some of the.

My first question is as.

As we approach the second half I believe Prasad centers you opened in 2020 wearable enter the same store pool.

Modest or I'll say modest significant improvement one because again the full complement of the new centers coming in and then secondly, some of the.

Is there any more color you can share there on how those centers are performing relative to your expectations.

And then within the guidance range.

The comps as you know from Q4 of last year were relatively.

Relatively lower.

Okay. That's helpful and then.

On seasonality is there anything we should consider entering the third quarter.

Any any flow through from some of the initiatives that you guys have been implementing or even around cash flow.

Hey, Morgan this is Dennis.

I appreciate the kind words and Josh also thank you for the kind words as well as it relates to the 2024 classes and then of those Theyre performing in line with our expectations. They are performing lower than historical simply because they're under similar pressures from the consumer environment is our existing footprint, but yes.

Yes, so what we think of in Q3 and Q4 as we typically see a little bit of softening in Q3 and.

And that begins to pick up a little bit more in Q4, I think as I'm modeling. It I'm looking really almost at an equal split maybe again with a little bit of softness in Q3 as it relates to how I'm, putting the revenues down or kind of looking toward those.

And your answer we will we will see some some modest help if you will from a same store.

Metric as those come into the to the same store calculation.

The initiatives that we've done the heavy portion of it that's going to impact the numbers are and the cost initiatives as yogi spoke of as well marketing and our SG&A spend that we've that we focused on reducing we'll get the full impact of that in the back half of the year both of the quarters should get similar impacted.

We will do expect.

Again, a reduction in our same store declines still expect Q3 to be.

Declining.

But not not a significant as Q1 and Q2 and then as we kind of exit into Q4, we will start to see.

As we said we are expecting a little over $3 million for the year didn't get full portion of that in Q1 saw significant improvement there on Q2 and expect the Q3 and Q4 to follow suit there on the cost equation.

Modest or I'll say modest significant improvement one because again the full complement of the new centers coming in and then secondly, some of the.

The comps as you know from Q4 of last year were relatively.

Okay, and if I could just squeeze one last one in there.

Okay, and if I could just squeeze one last one in there can you give us an update on how the London facility is progressing.

Can you give us an update on how the London facility is progressing and you guys have set up a slower start there but.

Relatively lower.

Okay. That's helpful and then.

Net of a slower start there but.

Seasonality is there anything we should consider entering the third quarter.

Do you think you have a better handle on that now or if you could just give us any more color on kind of the expectation that this facility moving forward.

Do you think you have a better handle on that now or if you could just give us any more color on kind of the expectation that this facility moving forward. Thank you.

Any flow through from some of the initiatives that you guys have been implementing or even around cash flow.

Yes.

Yes, Mark this is yoga.

Yes, Mark this is <unk>.

Yes, so what we think of in Q3 and Q4 as we typically see a little bit of softening in Q3 and.

<unk>.

As we've said before that.

As we've as we've said before that.

That's been off to a slow start having said that.

And that begins to pick up a little bit more in Q4, I think as I'm modeling. It I'm looking really almost at an equal split maybe again with a little bit of softness in Q3 as it relates to how im putting the revenues down or kind of looking forward at those.

For the last quarter, London outperformed.

The rest of the chain as it relates to comp sales. However, London continues to be cash flow negative.

We saw some encouraging signs in Q2, we remain focused on improving results over there.

We saw some encouraging signs in Q2, and we remain focused on improving results over there.

Okay.

Our next question comes from Sam <unk> with BP.

Our next question comes from Sam <unk> with BTG.

Hi, good morning.

Thanks for taking the questions and let me Echo my congratulations to Dennis here. Thank you for your help.

I'm, hoping that's got up to speed with the story.

Over the last year.

Maybe I can dive a little bit deeper on the state of the market.

You know obviously you discussed some of the challenging macroeconomic dynamics, but would love any more details you could share on consumer sentiment.

Okay, and if I could just squeeze one last one in there can you give us an update on how the London facility is progressing.

Some centers are perhaps doing better than others. If there's a dynamic where patients are maybe moving away toward independent plastic surgeons and.

If some centers are perhaps doing better than others. If there's a dynamic where patients are maybe moving away toward independent plastic surgeons and.

Net of a slower start there but.

Do you think you have a better handle on that now or if you could just give us any more color on kind of the expectation that this facility moving forward. Thank you.

If so does that present, an opportunity to win those patients back as some of these initiatives start start to fully ramp here.

Hey, Tom This is Jeremy. Thank you. Thank you again for the questions.

Yes.

Hey, Tom This is Jeremy. Thank you. Thank you again for the questions.

Yes, Mark this is yoga so.

We saw.

<unk>.

We saw the.

As we've as we've said before that.

Through the quarter, we saw the seasonal lift that's typical in our business at the beginning of the quarter.

That has not.

That's been off to a slow start having said that.

On the moderation that happens.

For the last quarter, London outperformed.

Towards the end of the quarter, which is also typical seasonality. What we are also seeing as we said leads are at record highs computations are strong.

Towards the end of the quarter, which is also typical seasonality what we are.

The rest of the chain as it relates to comp sales. However, London continues to be cash flow negative.

We're also seeing as we said leads are at record highs computations are strong.

We saw some encouraging signs in Q2, we remain focused on improving results over there.

But we are seeing the consumer continues to bring the best word I can use this choppiness in consumer behavior.

We are seeing the consumer continues to bring the best word I can use this choppiness in consumer behavior.

Okay.

We continue to see that consumers are tentative to pull the trigger on the purchase and that is broadly reflective of the macroeconomic situation that we are seeing and that is what we continue to hear.

Continue to see that consumers are.

Our next question comes from Sam <unk> with BTG.

Tentative to pull the trigger on the purchase and that is broadly reflective of the macroeconomic situation that we are seeing and digest, what we continue to hear so.

Hi, good morning.

Thanks for taking the questions and let me Echo my congratulations to Dennis here. Thank you for your help.

Helping us get up to speed with the story.

No.

That has not does not.

Over the last year.

Changed much through the quarter as we went through.

Changed much through the quarter as we went through we do believe you've called it out just the strength of our balance sheet.

Maybe I can dive a little bit deeper on the state of the market.

We do believe you've called it out just the strength of our balance sheet.

Obviously, you discussed some of the challenging macroeconomic dynamics, but would love any more details you could share on consumer sentiment.

Marketing and all the initiatives that we're putting together.

We believe position us.

If some centers are perhaps doing better than others. If there's a dynamic where patients are maybe moving away toward independent plastic surgeons and <unk>.

Well and much better than our competition, which predominantly consists of independent plastic surgeons.

While the environment is challenged we have the right initiatives in place and we anticipate improvement in the back half of the year.

So does that present, an opportunity to win those patients back as some of these initiatives start start to fully ramp here.

Okay. That's really helpful. Thank you yoga and then.

Hey, Tom This is Jeremy. Thank you. Thank you again for the question.

Okay. That's really helpful. Thank you yoga and then.

Love any thoughts on maybe what you need to see from the base business before you start thinking are evaluating.

Any thoughts on maybe what you need to see from the base business before you start thinking are evaluating.

We we saw through the quarter, we saw the seasonal lift that's typical in our business at the beginning of the quarter.

Expansion opportunities it still sounds like it's a lot of white space, especially in the U S right. So.

The moderation that happens.

Towards the end of the quarter, which is also typical seasonality. What we are also seeing as we said leads either.

Love any thoughts on what you need to see before exploring expansion again, thank you for taking the questions.

Record highs computations are strong.

Yes, absolutely.

Absolutely.

I'll start back.

But we are seeing the consumer continues to bring the best word I can use it.

Shedding your excitement we continue to be excited about the long term center opportunity. We have we believe that there is a lot of white space.

Shedding your excitement we continue to be excited about the long term center opportunity. We have we believe that there is a lot of white space and.

Choppiness in consumer behavior.

We continue to see that consumers are tendered.

We have a proven track record in opening de novo's and running them successfully so in the short term be are focused on improving our seems central sales growth, that's our highest priority.

We have a proven track record and are opening de novo's and running them successfully so in the short term be are focused on improving our seems central sales growth, that's our highest priority.

Tentative to pull the trigger on the purchase and that is broadly reflective of the macroeconomic situation that we are seeing and that is what we continue to hear so that has not does not change.

As we see.

As we see that as we see our same store sales.

As we see our same store sales.

Changed much through the quarter as we went through.

Get to growth.

Get to stability.

The stability and.

We do believe you've called it out just the strength of our balance sheet.

And we continue to see stability in our balance sheet, we would revisit that de Novo question after that.

We continue to see stability in our balance sheet, we would revisit that question after that.

The marketing and all the initiatives that we're putting together.

We believe position us well and much better.

And then our competition, which predominantly consists of independent plastic surgeons. So while the environment is challenged we have the right initiatives in place and we anticipate improvement in the back half of the year.

Thank you. This now concludes our question and answer session I would like to turn the floor back over to Yogi <unk> for closing comments.

Thank you again for joining us we look forward to speaking with you when we report third quarter results.

Okay. That's really helpful. Thank you yoga and then.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Love any thoughts on maybe what you need to see from the base business before you start thinking are evaluating.

Expansion opportunities it still sounds like it's a lot of white space, especially in the U S right. So.

Love any thoughts on what you need to see before exploring expansion again, thank you for taking the questions.

Yes, absolutely.

I'll start by.

Shedding your excitement we continue to be excited about the long term center opportunity. We have we believe that there is a lot of white space.

We have a proven track record.

Opening de novo's and running them successfully so in the short term we are focused on improving our seems central sales growth.

That's our highest priority.

As we see.

As we see our same store sales.

Get to growth.

Get to stability.

And we continue to see stability in our balance sheet, we would revisit that and one more question after that.

Thank you. This now concludes our question and answer session I would like to turn the floor back over to Yogi <unk> for closing comments.

Thank you again for joining us we look forward to speaking with you when we report third quarter results.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Yeah.

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