Skinhealth Systems Inc. · NASDAQ:SKIN
Skinhealth Systems — Q2 2023 Earnings Presentation
42 slides from Skinhealth Systems's earnings presentation, Aug 9, 2023
Slide 1: Q2 2023 Earnings Presentation
BEAUTYHEALTH QO2 2023 Earnings Presentation August 9, 2023
Slide 2: Disclaimer
Disclaimer This Presentation contains certain forward-looking statements. These statements may relate to, but are not limited to, expectations of future operating results or financial performance of The Beauty Health Company (the "Company’), capital expenditures, the introduction of new products, ex
Slide 3: Today's agenda
Today's agenda mMARwWRDN => Opening Remarks | Andrew Stanleick President & Chief Executive Officer Q2 2023 Results | Liyuan Woo Chief Financial Officer H2 2023 Outlook | Andrew Stanleick President & Chief Executive Officer Innovation Pipeline | Brad Hauser Chief Operating Officer Q&A BEAUTYHEALTH
Slide 4: Welcoming new financial leadership
Welcoming new financial leadership 15 years as a CFO, 25 years in financial leadership Consumer goods and wellness market Public accounting experience Michael Monahan Chief Financial Officer Effective August 10, 2023 Previous experience Casper Nutrisystem’ ARTHUR AANDERSEN ~» BEAUTYHEALTH"
Slide 5: Q2 2023 performance takeaways
Q2 2023 performance takeaways Re-committing to our core Net sales Continued demand for Hydrafacial drives double-digit top- $117.5mm +32% YoY line growth +13% YoY Excl. trade-ups Incl. trade-ups . . Consumables net sales/ Aided brand Growing consumer engagement validated by consumables YOY growth aw
Slide 6: Our growth track record
Our growth track record Net sales Hydrafacial device install base ($mm) Number of delivery systems 29,670 25,336 20,399 15,689 13,872 10,524 $119 2018 2019 2020 2021 2022 2023E 2018 2019 2020 2021 2022 1H23 ~4x Expected net sales growth since 2020 ~ 2x Device footprint growth since 2020 6 ~ BEAUTYHE
Slide 7: Reflecting on key learnings
Reflecting on key learnings OPPORTUNITIES KEY ACTIONS Syndeo enhancements identified and Syndeo teething issues expected to be completed by early Q4 2023 New financial and operational leadership Inadequate forecasting processes in place to drive forecasting discipline and improved systems Premature
Slide 8: BeautyHealth is positioned for long-term success
BeautyHealth is posit tioned for long-term success DIFFERENTIATED PRODUCT & TECHNOLOGY Created hydramabrasion category with clinical efficacy and patented technology LEADER IN LARGE, ADDRESSABLE MARKET Omnichannel distribution and favorable global tailwinds provide structural advantages UNIQUE ECONO
Slide 9: Q2 2023 Performance Update
Q2 2023 Performance Update BEAUTYHEALTH’
Slide 10: Continued demand for Hydrafacial underpins our growth
Continued demand for Hydrafacial underpins our growth Net sales detail % YoY growth Delivery Systems Delivery Systems Total (mm) New Trade-Up _Alll Systems Cons. Total New Trade-Up All Systems Cons. incl, Trade-Up _ excl. Trade-Up Americas $26.3 $2.7; $28.4 $35.2 $63.6 7% (91%) (41%) +29% (16%) +18%
Slide 11: Adjusted EBITDA margin expansion partially offset by temporary gross margin headwinds
Adjusted EBITDA margin expansion partially offset by temporary gross margin headwinds Gross margin and adjusted gross margin’ 71.0% on 64.8% | Decrease due to unfavorable mix shift to ' refurbished 1 systems and ' duplicative production costs Q2 2022 Q2 2023 Q2 2022 Q2 2023 GAAP gross margin Adjuste
Slide 12: Generating operating leverage as scale increases
Generating operating leverage as scale increases Q2 2023 cost detail | pate % net sales Q2 Q2 Q2 Q2 AQ2 Q2 Q2 ($mm) 2023 20221 2023 2022! 2022 2023 2022 AQ2 2022 Cost of sales $49.6 $33.5 $41.3 $30.1 +$11.2 35.2% 29.0% +6.1% nee 1 i) Selling and marketing 43.0 44.9 36.0 40.1 (4.2) 30.6% 38.8% ! (8.2
Slide 13: Q2 2023 balance sheet highlights
Q2 2023 balance sheet highlights Cash and cash + Approximately $549.7 million cash and cash equivalents on balance sheet equivalents (4$17.4 million vs Q1 2023) Warrants » Approximately 7 million private warrants outstanding + $750 million 1.25% convertible notes due 2026 : » Use of proceeds: capped
Slide 14: H2 2023 Outlook
BEAUTYH H2 2023 Outlook Andrew Stanleick EALTH President & Chief Executive Officer + BEAUTYHEALT RI Snees
Slide 15: Refining our 2023 and re-affirming long-term 2025 outlook
Refining our 2023 and re-affirming long-term 2025 outlook $460 - 480mm FY 2023E net sales Year-to-go net sales bridge ($mm) $146 -$156 $460 -$480 $110 -$120 $86.3 Q1.2023 Q2 2023 Q3 2023 Implied Q4 FY 2023E 2023 Reaffirming long-term 2025 financial guidance 18 -19% FY 2023E adjusted EBITDA! margin Y
Slide 16: Just Getting Started in an Untapped Market
BEAUT YHEALTH Just Getting Started in an Untapped Market
Slide 17: Unlocking a long-term, high-margin recurring revenue stream
Unlocking a long-term, high-margin recurring revenue stream with each system placement Consumables net sales by cohort based on N ea rly year of equipment purchase ($¢mm) h 3 If mPre-2017 m 2017 = 2018 » 2019 = 2020 m 2021 m 2022 Systems sold 8-10 $102 years ago still active? $80 gat $46 = O (4% = c
Slide 18: Penetration of global addressable market is <5%
Penetration of global addressable market is <5% Estimated market penetration Americas APAC EMEA Global Unpenetrated Il addressable market Penetrated {i addressable market Implied ~16% ~1% “T% <5% penetration Growth avenues + + + + + + Points of Number Treatment frequency Revenue International Produc
Slide 19: China: well positioned to capture significant growth
China: well positioned to capture significant growth Market tailwinds ~ Competitive advantages O 41% Gold standard 2 3 8 % Chinese consumers expecting to ; ; ; -omm increase spending on health and in preventative skin health + 1H23 revenue beauty products (vs global avg 29%)! consumer activation com
Slide 20: Generating sustained buzz and momentum
Generating sustained buzz and momentum 2023YTD Earned Media Value ($mm) nh es JUVEDERM | | $15 GD INMODE $1.1 DIAMOND GLOW $09 GLOFACIAL ff go.2 ~geneo ~ BEAUTYHEALTH’ influencer marketing metric to quantify the value of social media content.
Slide 21: Generating sustained buzz and momentum
Generating sustained buzz and momentum Worldwide Google search trends 100 +10% 80 YTD YoY growth E Hydrafacial = 60 3 5 4° 2 coolsculpting £ NN ON Ce JUVEDERM 20 DIAMOND GLOW ) — —— GLOFACIAL N N N N N N N N N N N N ~m o oO ~m oO o “geneo 21 Source: Google ~ BEAUTYHEALTH
Slide 22: Bolstering brand love with dynamic activations
Bolstering brand love with dynamic activations Dior powered by Hydrafacial GLOWvolution 2023 % VOGUE Dior’s Floating Spa in Paris Offers Facials While Cruising The Seine A multi-day residency and immersive brand experience for influencers, press, providers, prospects and qualified consumers. Kicked
Slide 23: Present wherever consumers seek beauty and health treatments
Present wherever consumers seek beauty and health treatments NEWS! Hydrafacial Expands to Sephora Australia / $ . . Now in Sephora Stores on Three Continents vdrafacial OMNI-CHANNEL PRESENCE Medical Spa Retail Hospitality 23 BEAUTYHEALTH
Slide 24: The treatment they ask for by name and recommend to friends
The treatment they ask ..and recommend for by name... to their friends RealSelf | “Worth It”Rating af { queer | | ee, | = s f t 55 awareness! Consumer Net Promoter Score? Conversion ————— More than B
Slide 25: Innovation pipeline
a Innovation pipeline Brad Hauser Chief Operating Officer ~~ BEAUTYHEALTH
Slide 26: Creating a future-ready organization
Creating a future-ready organization as we mature into a multi-brand ecosystem Previous experience -— Product U |__ Marketing soliton Brad Hauser Chief Operating Officer -—_ Operations > SOLTAMEDICAL*® Xe ZELTIO End-to-end product oversight, from innovation to go-to-market >» 26 ~ BEAUTYHEALTH’
Slide 27: Syndeo is a plug & play platform
Syndeo > is aplug & play platform BEAUTYHEALTH’
Slide 28: Allegro, the new entry level Hydrafacial
Allegro, connected. The new entry level Hydrafacial ~~ BEAUTYHEALTH
Slide 29: Channel and region-specific booster innovations
Me Channel Bnd, region-specitic booster innovations
Slide 30: Skincare at home
Skincare at home Aydrafacial Hydrafacial Image for illustrative purposes only. BEAUTYHEALTH™ Not actual final saleable product.
Slide 31: Salon offering
enteand hair salons with a-custen Kepaviile cc + BEAUTYHEALTH’
Slide 32: Hydrafacial Connect: our ecosystem through loyalty
Hydrafacial C O Nn Nn e ct | N g Our ecosystem through loyalty Hey Amber! Earn as you glow > Skin Survey Hydrafacial a What's New 10pts Earn Rewards You're 5 points away from a Reward Treatment Recommendations t Home Lean Prep Book Image for illustrative purposes only. Not actual final app. ~~ BEAUT
Slide 33: Closing remarks; Investor Day date to be announced
Pi, ~ BEAUTYHEALTH Please join us Investor Day Closing “i028 remarks Date to be announced BEAUTYHEALTH’
Slide 34: BeautyHealth
34 » BEAUTYHEALTH™
Slide 35: Q2 2023 performance takeaways
Q2 2023 performance takeaways Re-committing to our core Net sales Continued demand for Hydrafacial drives double-digit top- $117.5mm +32% YoY line growth +13% YoY Excl. trade-ups Incl. trade-ups . . Consumables net sales/ Aided brand Growing consumer engagement validated by consumables YOY growth aw
Slide 36: Appendix
36 Appendix BEAUTYHEALTH
Slide 37: Reconciliation of GAAP to non-GAAP measures
Reconciliation of GAAP to non-GAAP measures Reconciliation of cost of sales to adjusted cost of sales and gross profit to adjusted gross profit Three months ended June 30, Six months ended June 30, Unaudited (¢ in millions) 2023 2022 2023 2022" Net sales M75 #1035 $203.8 $179.0 Cost of sales 49.6 33
Slide 38: Reconciliation of GAAP to non-GAAP measures (cont'd)
Reconciliation of GAAP to non-GAAP measures (cont’d) Reconciliation of selling and marketing expense to adjusted selling and marketing expense Three months ended June 30, Six months ended June 30, Unaudited (¢ in millions) 2023 2022" 2023 2022" Net sales $117.6 $103.6 $203.8 $179.0 Selling and marke
Slide 39: Reconciliation of GAAP to non-GAAP measures (cont'd)
Reconciliation of GAAP to non-GAAP measures (cont’d) Reconciliation of research and development expense to adjusted research and development expense Three months ended June 30, Six months ended June 30, Unaudited ($ in millions) 2023 2022" 2023 2022" Net sales $117.6 $103.6 $203.8 $179.0 Research an
Slide 40: Reconciliation of GAAP to non-GAAP measures (cont'd)
Reconciliation of GAAP to non-GAAP measures (cont’d) Reconciliation of general and administrative expense to adjusted general and administrative expense Three months ended June 30, Six months ended June 30, Unaudited (¢ in millions) 2023 2022) 2023 2022) Net sales $7.5 $103.5 $203.8 $179.0 General a
Slide 41: Reconciliation of GAAP to non-GAAP measures (cont'd)
Reconciliation of GAAP to non-GAAP measures (cont’d) Reconciliation of net income to adjusted EBITDA Three months ended June 30, Six months ended June 30, Unaudited ($ in millions) 2023 2022" 2023 2022" Net sales $7.5 $103.5 $203.8 $179.0 Net income (loss) $3.4 $6.3 ($16.9) $37.8 Net income (loss) m
Slide 42: BeautyHealth
+ BEAUTYHEALTH