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Airsculpt Technologies, Inc. 10-K Analysis & Summary – 3/14/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

AirSculpt Technologies, Inc.

Filing date:

03/14/2025

TLDR:

ELI5:

AirSculpt, a company that does minimally invasive body sculpting, had a tough year with less money coming in and some losses. They’re trying new strategies to get back on track, but face challenges like competition from weight-loss drugs and economic uncertainty.

Accession #:

0001870940-25-000008

Published on

Analyst Summary

  • AirSculpt Technologies experienced a 7.9% decrease in revenue, from $195.9 million in 2023 to $180.4 million in 2024.
  • Net loss increased from $4.5 million in 2023 to $8.3 million in 2024, indicating challenges in maintaining profitability.
  • Adjusted EBITDA margin significantly decreased from 22.1% in 2023 to 11.5% in 2024, reflecting reduced profitability.
  • Customer acquisition cost increased from $2,465 in 2023 to $3,130 in 2024, suggesting challenges in attracting new patients efficiently.
  • The company is implementing strategies to address the revenue decline, including optimizing marketing spend, improving sales processes, expanding financing options, and introducing new services.
  • A cumulative reversal of stock compensation expense of $10.4 million in Q1 2024 significantly impacted the net loss figure.
  • The Third Amendment to the Credit Agreement and the related Limited Guarantee from the Sponsor indicate potential financial strain and reliance on the Sponsor for support.
  • Gross profit margin decreased from 62.2% in 2023 to 60.4% in 2024.
  • Operating profit margin decreased significantly from 4.8% in 2023 to -1.0% in 2024.
  • Current ratio decreased from 0.79 in 2023 to 0.60 in 2024, indicating a decrease in short-term liquidity.
  • Debt-to-equity ratio increased from 1.43 in 2023 to 1.65 in 2024, indicating increased leverage.
  • Interest coverage ratio decreased from 2.46 in 2023 to 0.71 in 2024.
  • Asset turnover ratio decreased from 0.96 in 2023 to 0.86 in 2024.
  • Cases performed decreased from 14,932 in 2023 to 14,036 in 2024, a decrease of 6.0%.
  • Revenue per case decreased from $13,121 in 2023 to $12,849 in 2024, a decrease of 2.1%.

Opportunities and Risks

  • Macroeconomic Trends: Inflation and rising interest rates could negatively impact consumer spending and increase debt service costs.
  • Competition: Increased competition from traditional liposuction, other minimally-invasive techniques, and weight-loss drugs.
  • Reliance on Single Manufacturer: Dependence on Euromi for handpieces creates supply chain vulnerability.
  • Regulatory Changes: Changes in laws governing the corporate practice of medicine or fee-splitting could require restructuring.
  • Data Breaches: Potential security breaches could compromise sensitive patient information and lead to liability.
  • Leverage: High leverage could limit the company’s ability to raise additional capital and react to changes in the economy.
  • Going Concern: While management states there is no substantial doubt about the company’s ability to continue as a going concern, the negative working capital and reliance on the Sponsor’s Limited Guarantee warrant close monitoring.
  • Brand Awareness: Opportunity to increase brand awareness and adoption of AirSculpt procedures.
  • Sales Growth: Potential to drive sales growth in existing centers through improved efficiency, new procedures, and price increases.
  • Consumer Financing: Expanding consumer financing options could enhance affordability and attract a broader customer base.
  • New Product Innovation: Introducing new services, particularly in skin tightening, could expand customer reach and generate incremental revenues.
  • Weight Loss Drug Market: Increasing use of weight loss drugs may lead to increased demand for body contouring and skin tightening procedures.

Potential Implications

Company Performance

  • The company’s ability to stabilize revenue growth and improve profitability will be critical for its long-term success.
  • Effective cost management and optimization of marketing investments are essential to improve financial performance.
  • The impact of weight-loss drugs on the body contouring market needs to be closely monitored and strategies adjusted accordingly.
  • Maintaining adequate liquidity and managing leverage are important for financial stability.
  • Successful execution of turnaround strategies is necessary to reverse the recent decline in performance.

Stock Price

  • The company’s stock price may be negatively impacted by the revenue decline and net losses.
  • Positive developments in the company’s turnaround strategies and financial performance could lead to an increase in the stock price.
  • Market sentiment and investor confidence will play a significant role in determining the stock price.
  • Any adverse events, such as regulatory changes or data breaches, could negatively affect the stock price.

AirSculpt Technologies, Inc. (AIRS) – 10-K Report Analysis (Fiscal Year 2024)

Executive Summary

This report analyzes AirSculpt Technologies, Inc.’s 10-K filing for the fiscal year ended December 31, 2024. Key findings include a revenue decline of 7.9%, a net loss of $8.3 million, and a focus on stabilizing revenue growth through optimizing marketing investments, enhancing sales strategies, expanding consumer financing options, and adding new product lines. The company faces risks related to macroeconomic trends, competition (including weight-loss drugs), and regulatory changes. Opportunities exist in expanding brand awareness, driving sales growth in existing centers, and innovating new procedures. Overall assessment: Hold. Recommendations: Closely monitor the effectiveness of the company’s turnaround strategies, particularly regarding revenue stabilization and cost reduction. Further investigation into the impact of weight-loss drugs on the body contouring market is warranted.

Company Overview

AirSculpt Technologies, Inc. (AIRS) operates in the body contouring market, offering minimally invasive fat removal and fat transfer procedures. The company has 32 centers across 20 U.S. states, Canada, and the United Kingdom. Recent developments include the hiring of a new CEO and Chief Sales Officer, and the implementation of a cost reduction program.

Management’s Discussion and Analysis (MD&A)

Management acknowledges a recent decline in revenue and outlines strategies to address this, including optimizing marketing spend, improving sales processes, expanding financing options, and introducing new services. The tone is cautiously optimistic, emphasizing a focus on returning to revenue growth. A red flag is the significant revenue decline, requiring close monitoring of the effectiveness of the proposed strategies.

Financial Statement Analysis

Income Statement

Revenue decreased by 7.9% from $195.9 million in 2023 to $180.4 million in 2024. Net loss increased from $4.5 million in 2023 to $8.3 million in 2024. This indicates challenges in maintaining growth and profitability.

Key Ratios:

  • Revenue per case: $12,849 (2024) vs. $13,121 (2023) – A slight decrease.
  • Adjusted EBITDA Margin: 11.5% (2024) vs. 22.1% (2023) – A significant decrease, indicating reduced profitability.
  • Customer Acquisition Cost: $3,130 (2024) vs. $2,465 (2023) – Increased cost to acquire customers.

Balance Sheet

Cash and cash equivalents decreased from $10.3 million in 2023 to $8.2 million in 2024. Total assets increased slightly from $204.0 million to $209.9 million. Working capital is negative, indicating potential short-term liquidity concerns.

Cash Flow Statement

Net cash provided by operating activities decreased from $23.9 million in 2023 to $11.3 million in 2024. This decline reflects the decrease in revenue and increased marketing investments.

Uncommon Metrics

The report mentions cases performed, revenue per case, and same-center revenue growth. Customer acquisition cost is also highlighted. Further analysis of customer churn rate and lifetime value would provide additional insights.

Footnotes & Supplementary Disclosures

The footnotes reveal a cumulative reversal of stock compensation expense of $10.4 million in Q1 2024, related to reassessing the probability of achieving performance targets. This significantly impacted the net loss figure. The Third Amendment to the Credit Agreement and the related Limited Guarantee from the Sponsor are also important disclosures, indicating potential financial strain and reliance on the Sponsor for support.

Comparative & Trend Analysis

Compared to 2023, AirSculpt experienced a decline in revenue, profitability, and operating cash flow. The increase in customer acquisition cost suggests challenges in attracting new patients efficiently. The company’s performance lags behind its historical growth rates, indicating a need for effective turnaround strategies.

Risk Assessment

  • Macroeconomic Trends: Inflation and rising interest rates could negatively impact consumer spending and increase debt service costs.
  • Competition: Increased competition from traditional liposuction, other minimally-invasive techniques, and weight-loss drugs.
  • Reliance on Single Manufacturer: Dependence on Euromi for handpieces creates supply chain vulnerability.
  • Regulatory Changes: Changes in laws governing the corporate practice of medicine or fee-splitting could require restructuring.
  • Data Breaches: Potential security breaches could compromise sensitive patient information and lead to liability.
  • Leverage: High leverage could limit the company’s ability to raise additional capital and react to changes in the economy.
  • Going Concern: While management states there is no substantial doubt about the company’s ability to continue as a going concern, the negative working capital and reliance on the Sponsor’s Limited Guarantee warrant close monitoring.

Opportunity Assessment

  • Brand Awareness: Opportunity to increase brand awareness and adoption of AirSculpt procedures.
  • Sales Growth: Potential to drive sales growth in existing centers through improved efficiency, new procedures, and price increases.
  • Consumer Financing: Expanding consumer financing options could enhance affordability and attract a broader customer base.
  • New Product Innovation: Introducing new services, particularly in skin tightening, could expand customer reach and generate incremental revenues.
  • Weight Loss Drug Market: Increasing use of weight loss drugs may lead to increased demand for body contouring and skin tightening procedures.

Conclusion & Actionable Insights

Overall Assessment: Hold

Recommendations:

  • Monitor Turnaround Strategies: Closely track the effectiveness of the company’s strategies to stabilize revenue growth, optimize marketing investments, and enhance sales processes.
  • Cost Management: Evaluate the success of the cost reduction program and identify further opportunities for efficiency improvements.
  • Competitive Landscape: Conduct thorough market research to understand the impact of weight-loss drugs on the body contouring market and adjust strategies accordingly.
  • Financial Stability: Monitor liquidity and leverage ratios closely, and explore options to improve financial flexibility.
  • Risk Mitigation: Implement robust cybersecurity measures to protect sensitive patient information and comply with privacy regulations.
  • Sponsor Relationship: Maintain a strong relationship with the Sponsor while ensuring independent decision-making and avoiding conflicts of interest.

Financial Analysis of AirSculpt Technologies, Inc. (AIRS)

1. Commentary

AirSculpt Technologies experienced a challenging year in 2024. Revenue decreased, leading to a net loss, although the loss was smaller than in 2022. Adjusted EBITDA decreased significantly, reflecting lower profitability. The company is managing its liquidity and debt obligations, as evidenced by amendments to its credit agreement.

2. Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin

    • Metric: (Revenue – Cost of Service) / Revenue
      • 2024: (180,350 – 71,382) / 180,350 = 60.4%
      • 2023: (195,917 – 74,012) / 195,917 = 62.2%
      • 2022: (168,794 – 62,781) / 168,794 = 62.8%
    • Trend: The gross profit margin decreased from 62.2% in 2023 to 60.4% in 2024, a decrease of 2.9%.
    • Industry: The medical spa industry typically has gross profit margins ranging from 50% to 70%. AirSculpt’s gross profit margin is within this range, but the decreasing trend is a concern.
  • Operating Profit Margin

    • Metric: (Loss)/income from operations / Revenue
      • 2024: ( -1,816 ) / 180,350 = -1.0%
      • 2023: 9,483 / 195,917 = 4.8%
      • 2022: ( -4,545 ) / 168,794 = -2.7%
    • Trend: The operating profit margin decreased significantly from 4.8% in 2023 to -1.0% in 2024.
    • Industry: The aesthetic medicine industry can see operating margins between 10-20% for well-managed practices. AirSculpt’s negative operating margin indicates operational inefficiencies or increased expenses.
  • Net Profit Margin

    • Metric: Net loss / Revenue
      • 2024: ( -8,251 ) / 180,350 = -4.6%
      • 2023: ( -4,479 ) / 195,917 = -2.3%
      • 2022: ( -14,679 ) / 168,794 = -8.7%
    • Trend: The net profit margin improved from -2.3% in 2023 to -4.6% in 2024.
    • Industry: The aesthetic medicine industry can see net profit margins between 5-15% for well-managed practices. AirSculpt’s negative net margin indicates operational inefficiencies or increased expenses.
  • Return on Assets (ROA)

    • Metric: Net loss / Total Assets
      • 2024: ( -8,251 ) / 209,996 = -3.9%
      • 2023: ( -4,479 ) / 204,019 = -2.2%
    • Trend: ROA decreased from -2.2% in 2023 to -3.9% in 2024.
    • Industry: Average ROA for healthcare service companies can vary, but a negative ROA suggests the company is not efficiently using its assets to generate profit.
  • Return on Equity (ROE)

    • Metric: Net loss / Total Stockholders’ Equity
      • 2024: ( -8,251 ) / 79,290 = -10.4%
      • 2023: ( -4,479 ) / 83,992 = -5.3%
    • Trend: ROE decreased from -5.3% in 2023 to -10.4% in 2024.
    • Industry: A negative ROE indicates the company is not generating profits from shareholder investments.
  • Earnings Per Share (EPS)

    • Metric: Net loss / Weighted Average Shares Outstanding
      • Basic 2024: ( -8,251 ) / 57,688,906 = -$0.14
      • Diluted 2024: ( -8,251 ) / 57,688,906 = -$0.14
      • Basic 2023: ( -4,479 ) / 56,778,793 = -$0.08
      • Diluted 2023: ( -4,479 ) / 56,778,793 = -$0.08
      • Basic 2022: ( -14,679 ) / 55,684,701 = -$0.26
      • Diluted 2022: ( -14,679 ) / 55,684,701 = -$0.26
    • Trend: EPS decreased from -$0.08 in 2023 to -$0.14 in 2024.
    • Industry: Negative EPS reflects the company’s net losses.

Liquidity

  • Current Ratio

    • Metric: Total Current Assets / Total Current Liabilities
      • 2024: 17,117 / 28,609 = 0.60
      • 2023: 15,961 / 20,315 = 0.79
    • Trend: The current ratio decreased from 0.79 in 2023 to 0.60 in 2024, indicating a decrease in short-term liquidity.
    • Industry: A current ratio of 1.5 to 2.0 is generally considered healthy. AirSculpt’s current ratio below 1 suggests potential difficulties in meeting short-term obligations.
  • Quick Ratio (Acid-Test Ratio)

    • Metric: (Total Current Assets – Inventory) / Total Current Liabilities
      • Assuming inventory is negligible: 2024: 17,117 / 28,609 = 0.60
      • Assuming inventory is negligible: 2023: 15,961 / 20,315 = 0.79
    • Trend: The quick ratio decreased from 0.79 in 2023 to 0.60 in 2024.
    • Industry: A quick ratio of 1 or greater is generally considered acceptable. AirSculpt’s quick ratio suggests liquidity concerns.
  • Cash Ratio

    • Metric: (Cash and Cash Equivalents) / Total Current Liabilities
      • 2024: 8,235 / 28,609 = 0.29
      • 2023: 10,262 / 20,315 = 0.51
    • Trend: The cash ratio decreased from 0.51 in 2023 to 0.29 in 2024.
    • Industry: A cash ratio of 0.5 or higher is often preferred. AirSculpt’s cash ratio indicates limited immediate liquidity.

Solvency/Leverage

  • Debt-to-Equity Ratio

    • Metric: Total Liabilities / Total Stockholders’ Equity
      • 2024: 130,706 / 79,290 = 1.65
      • 2023: 120,027 / 83,992 = 1.43
    • Trend: The debt-to-equity ratio increased from 1.43 in 2023 to 1.65 in 2024, indicating increased leverage.
    • Industry: A debt-to-equity ratio above 1.5 may indicate higher financial risk.
  • Debt-to-Assets Ratio

    • Metric: Total Liabilities / Total Assets
      • 2024: 130,706 / 209,996 = 0.62
      • 2023: 120,027 / 204,019 = 0.59
    • Trend: The debt-to-assets ratio increased from 0.59 in 2023 to 0.62 in 2024.
    • Industry: A higher debt-to-assets ratio suggests a greater proportion of assets are financed by debt.
  • Interest Coverage Ratio (Times Interest Earned)

    • Metric: (Loss)/income from operations before interest and taxes / Interest Expense
      • 2024: ( -1,816 ) + 6,247 / 6,247 = 0.71
      • 2023: 9,483 + 6,485 / 6,485 = 2.46
    • Trend: The interest coverage ratio decreased from 2.46 in 2023 to 0.71 in 2024.
    • Industry: An interest coverage ratio below 1 indicates the company is not generating enough operating income to cover its interest expenses.

Activity/Efficiency

  • Asset Turnover

    • Metric: Revenue / Total Assets
      • 2024: 180,350 / 209,996 = 0.86
      • 2023: 195,917 / 204,019 = 0.96
    • Trend: The asset turnover ratio decreased from 0.96 in 2023 to 0.86 in 2024.
    • Industry: A lower asset turnover ratio suggests the company is not efficiently utilizing its assets to generate revenue.

Valuation

  • Price-to-Earnings Ratio (P/E)

    • Metric: Stock Price / EPS
      • Stock Price: $2.86
      • EPS: -0.14
      • P/E Ratio: 2.86 / -0.14 = -20.43
    • Industry: A negative P/E ratio is not meaningful for comparison.
  • Price-to-Book Ratio (P/B)

    • Metric: Market Cap / Total Stockholders’ Equity
      • Market Cap: 2.86 * 58,369,138 = $166,938,735
      • Book Value: 79,290,000
      • P/B Ratio: 166,938,735 / 79,290,000 = 2.11
    • Industry: The P/B ratio suggests the market values the company at 2.11 times its book value.
  • Price-to-Sales Ratio (P/S)

    • Metric: Market Cap / Revenue
      • Market Cap: 2.86 * 58,369,138 = $166,938,735
      • Revenue: 180,350,000
      • P/S Ratio: 166,938,735 / 180,350,000 = 0.93
    • Industry: A P/S ratio of 0.93 suggests the market values the company at less than its annual sales.
  • Enterprise Value to EBITDA (EV/EBITDA)

    • Metric: (Market Cap + Total Debt – Cash) / Adjusted EBITDA
      • Market Cap: 2.86 * 58,369,138 = $166,938,735
      • Total Debt: 70,750,000
      • Cash: 8,235,000
      • Adjusted EBITDA: 20,726,000
      • EV/EBITDA: (166,938,735 + 70,750,000 – 8,235,000) / 20,726,000 = 11.07
    • Industry: An EV/EBITDA of 11.07 suggests the company is reasonably valued compared to its earnings.

Growth Rates

  • Revenue Growth

    • Metric: (Current Year Revenue – Previous Year Revenue) / Previous Year Revenue
      • 2024: (180,350 – 195,917) / 195,917 = -7.9%
    • Trend: Revenue decreased by 7.9% in 2024.
  • Net Income Growth

    • Metric: (Current Year Net Income – Previous Year Net Income) / Previous Year Net Income
      • 2024: (-8,251 – (-4,479)) / -4,479 = 84.2%
    • Trend: Net loss decreased by 84.2% in 2024.
  • EPS Growth

    • Metric: (Current Year EPS – Previous Year EPS) / Previous Year EPS
      • 2024: (-0.14 – (-0.08)) / -0.08 = 75%
    • Trend: EPS increased by 75% in 2024.

Other Relevant Metrics

  • Cases and Revenue per Case

    • Cases decreased from 14,932 in 2023 to 14,036 in 2024, a decrease of 6.0%.
    • Revenue per case decreased from $13,121 in 2023 to $12,849 in 2024, a decrease of 2.1%.
    • The decrease in both cases and revenue per case contributed to the overall revenue decline.
  • Adjusted EBITDA and Adjusted Net Income

    • Adjusted EBITDA decreased from $43,236 in 2023 to $20,726 in 2024.
    • Adjusted net income decreased from $16,289 in 2023 to $1,132 in 2024.
    • These non-GAAP metrics provide insights into the company’s underlying profitability by excluding certain non-cash and non-recurring items. However, the significant decrease in both metrics indicates a decline in core operating performance.
  • Debt Amendment

    • The Third Amendment to the Credit Agreement on March 12, 2025, indicates the company is actively managing its debt obligations.
    • The amendment likely involves changes to financial covenants, interest rates, or repayment terms to provide the company with greater financial flexibility.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️