ONESPAWORLD HOLDINGS Ltd

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2025

1. Description of Business

OneSpaWorld Holdings Limited (“OneSpaWorld”, the “Company”, “we”, “us”, “our”) is an international business company incorporated under the laws of the Commonwealth of The Bahamas. OneSpaWorld is a global provider and innovator in the fields of health, wellness, aesthetics and fitness. In facilities on cruise ships and in land-based destination resorts, the Company strives to create a relaxing and therapeutic environment where guests can receive health, wellness, aesthetics and fitness services and experiences of the highest quality. The Company’s services include traditional and alternative massage, body and skin treatments, fitness, acupuncture, and medi-spa treatments, among others. The Company also sells premium quality health, wellness, aesthetics and fitness products at its facilities and through its timetospa.com website. The predominant business, based on revenues, is sales of services and products on cruise ships and in land-based destination resorts, followed by sales of products through thetimetospa.com website.

2. Summary of Significant Accounting Policies

Basis of Presentation, Principles of Consolidation and Principles of Combination

The accompanying consolidated financial statements include the consolidated balance sheet and statements of operations, comprehensive income (loss), equity, and cash flows of OneSpaWorld. All significant intercompany items and transactions have been eliminated in consolidation. In the opinion of management, the accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In the opinion of management, the consolidated financial statements reflect all adjustments (which are of a normal recurring nature) necessary to present fairly our financial position, results of operations and cash flows.

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. The Company maintains its cash and cash equivalents with reputable major financial institutions. Deposits with these banks exceed the Federal Deposit Insurance Corporation insurance limits or similar limits in foreign jurisdictions. While the Company monitors daily the cash balances in its operating accounts and adjusts the balances as appropriate, these balances could be impacted if one or more of the financial institutions with which the Company deposits funds fails or is subject to other adverse conditions in the financial or credit markets. To date, the Company has experienced no loss or lack of access to invested cash or cash equivalents; however, it can provide no assurance that access to invested cash and cash equivalents will not be impacted by adverse conditions in the financial and credit markets.

Restricted Cash

These balances include amounts held in escrow accounts, as a result of a legal proceeding related to a tax assessment. See Note 13-"Commitment and Contingencies" for further information. The following table reconciles cash, cash equivalents and restricted cash reported in our consolidated balance sheet as of December 31, 2025 and 2024, to the total amount presented in our consolidated statements of cash flows for years ended December 31, 2025 and 2024 (in thousands):

Inventories

Inventories, consisting principally of personal care products, are stated at the lower of cost, as determined on a first-in, first-out basis, or market. All inventory balances are comprised of finished goods used in aesthetics and health and wellness services or held for sale to customers. Inventory reserve is recorded to write down the cost of inventory to the estimated market value. No material inventory reserve was necessary during the years ended December 31, 2025 and 2024. During the year ended December 31, 2025, the Company recorded $0.3 million in inventory write-offs within cost of products associated with the exit of our land-based destination resort operations in Asia (See note 7- "Restructuring and asset impairment").

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Expenditures for maintenance and repairs, which do not add to the value of the related assets or materially extend their original lives, are expensed as incurred. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized in a straight-line basis over the shorter of the terms of the respective leases and the estimated useful lives of the respective assets.

Impairment of Long-Lived Assets Other than Goodwill and Indefinite-Lived Intangible Assets

The Company reviews long-lived assets including property and equipment and intangible assets with finite lives for impairment whenever events or changes in circumstances indicate, based on estimated future cash flows, that the carrying amount of these assets may not be fully recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset (asset group) to future undiscounted cash flows expected to be generated by the asset (asset group). An asset group is the lowest level of assets and liabilities for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When estimating future cash flows, the Company considers:

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only the future cash flows that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset group;

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potential events and changes in circumstances affecting key estimates and assumptions; and

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the existing service potential of the asset (asset group) at the date tested.

If an asset (asset group) is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset (asset group) exceeds its fair value. When determining the fair value of the asset (asset group), the Company considers the highest and best use of the assets from a market-participant perspective. The fair value measurement is generally determined through the use of independent third-party appraisals or an expected present value technique, both of which may include a discounted cash flow approach, which reflects assumptions of what market participants would utilize to price the asset (asset group).

Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Assets to be abandoned, or from which no further benefit is expected, are written down to zero at the time that the determination is made, and the assets are removed entirely from service.

Indefinite-Lived Intangible Assets

Trade name represents our identifiable intangible asset not subject to amortization and is assessed for impairment annually each October or more frequently, when events or circumstances dictate an interim test is necessary. The impairment assessment for trade name allows us to first assess qualitative factors to determine whether it is necessary to perform a more detailed quantitative trade name impairment test. We perform the quantitative test if our qualitative assessment determines it is more-likely-than-not that the fair value of the trade name is less than its carrying amount. This quantitative test generally utilizes the relief from royalty method, a form of the income approach. We may also elect to bypass the qualitative assessment and proceed directly to the quantitative test. The qualitative assessment evaluates factors including macro-economic conditions, industry and company-specific factors, and historical company performance in assessing fair value. Our trade name would be considered impaired if its carrying value exceeds its estimated fair value.

Definite-Lived Intangible Assets

The Company amortizes intangible assets with definite lives on a straight-line basis over their estimated useful lives. Definite-Lived Intangible Assets include our contracts with cruise lines and leases with hotels and resorts. Contracts with cruise lines are generally renewed every five years. The Company has the intent and ability to renew such contracts over the estimated useful lives of the assets. Costs incurred to renew contracts are capitalized and amortized to cost of revenues and operating expenses over the term of the contract.

Lease agreements with destination resorts in which the Company operates are generally renewed everyten years. The Company has the intent and ability to renew such contracts, except for the three destination resort health and wellness centers for which we recognized an impairment loss. See Note 15 – “Fair Value Measurements and Derivatives ” for further details.

Other Assets-Deferred Costs

Costs incurred to enter into new or to renew long-term contracts are capitalized and amortized to cost of revenues over the term of the contract. Deferred contract costs, which relate to fees accrued to cruise line partners, amounted to $20.8 million and $21.0 million as of December 31, 2025 and 2024, respectively, and is presented within other non-current assets in the accompanying consolidated balance sheets. Amortization of the deferred contract cost was $3.9 million, $3.7 million and $1.0 million for the years ended December 31, 2025, 2024 and 2023, respectively. Amortization of deferred costs are included in cost of services in the accompanying consolidated statements of operations.

Revenue Recognition

Revenue is recognized when customers obtain control of goods and services promised by the Company. The amount of revenue recognized is based on the amount that reflects the consideration that is expected to be received in exchange for those respective goods and services. Amounts recognized are gross of commissions to cruise line or destination resort partners, which typically withhold commissions from customer payments. The Company has elected to present sales taxes on a net basis and, as such, sales taxes are excluded from revenue. Revenue is reported net of discounts and net of any estimated refund liability, which is determined based on historical experience. The Company also issues gift cards for future goods or services; revenue is recognized when they are redeemed; we also recognize revenue for breakage based on past experience for gift card amounts we expect to go unredeemed.

Cost of Revenues

Cost of services consists primarily of the cost of product consumed in the rendering of a service, an allocable portion of wages paid to shipboard employees, an allocable portion of payments to cruise lines (which are derived as a percentage of service revenues or a minimum annual rent or a combination of both), an allocable portion of staff-related shipboard expenses, costs related to recruitment and training of shipboard employees, wages paid directly to destination resort employees, payments to destination resort venue owners, and health and wellness facility depreciation.

Cost of products consists primarily of the cost of products sold through the Company’s various methods of distribution, an allocable portion of wages paid to shipboard employees, an allocable portion of payments to cruise lines (which are derived as a percentage of product revenues or a minimum annual rent or a combination of both), and an allocable portion of staff-related shipboard expenses.

Costs incurred to renew long-term contracts are capitalized and amortized to cost of services over the term of the contract.

Shipping and Handling

Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products are included in administrative expenses. Shipping and handling costs included in general and administrative expenses were $0.1 million for each of the years ended December 31, 2025, 2024, and 2023.

Advertising

Substantially all of the Company’s advertising costs are charged to expense as incurred, except costs that result in tangible assets, such as brochures, which are recorded as prepaid expenses and charged to expense as consumed. Advertising expenses included in cost of revenues in the accompanying consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023 were $3.7 million, $3.3 million and $3.8 million, respectively.

Stock-Based Compensation

The Company recognizes expense for our stock-based compensation awards using a fair-value-based method. Stock-based compensation expense is recognized over the requisite service period for awards that are based on a service period and not contingent upon any future performance. Stock-based compensation expense is included within salary, benefits and payroll taxes expense in the consolidated statements of operations. We elected to treat stock-based awards with only service conditions and graded vesting features as a single award and recognize stock-based compensation expense on a straight-line basis. Stock-based awards with performance and graded vesting features are expensed using the accelerated attribution method. We recognize forfeitures as they occur rather than estimating them over the life of the award. See Note 10 – “Stock Based Compensation” for further details.

Debt Issuance Costs

Debt issuance costs related to a recognized debt liability are presented in the consolidated balance sheets as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. These deferred issuance costs are amortized over the term of the loan agreement. The amortization of deferred financing fees is included in interest expense, net in the consolidated statements of operations.

Warrant Liabilities

We account for common stock warrants in accordance with applicable guidance provided in ASC Topic 815 as either liability or equity instruments depending on the specific terms of the warrant agreement. We evaluated the warrants under this guidance and concluded that they do not meet the criteria to be classified in shareholders’ equity during the periods in which they were outstanding. Accordingly, the warrants were classified as warrant liabilities and measured at fair value, with changes in fair value recognized as gains or losses in the Company’s consolidated statements of operations and comprehensive (loss) income. There wereno outstanding warrants as of December 31, 2025 and 2024.

Income Taxes

As part of the process of preparing the consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company’s actual current income tax exposure together with an assessment of temporary differences resulting from differing treatment of items for tax purposes and accounting purposes, respectively. These differences result in deferred income tax assets and liabilities which are included in the accompanying consolidated balance sheet as of December 31, 2025 and 2024. Deferred taxes are recorded using the currently enacted tax rates that applied in the periods that the differences are expected to reverse. The Company must then assess the likelihood that its deferred income tax assets will be recovered from future taxable income and, to the extent that the Company believes that recovery is not likely, the Company must establish a valuation allowance. With respect to acquired deferred tax assets, changes within the measurement period, under ASC Topic 805, Business Combinations, that result from new information about facts and circumstances that existed at the acquisition date shall be recognized through a corresponding adjustment to goodwill. Subsequent to the measurement period, all other changes shall be reported as a reduction or increase to income tax expense in the Company’s consolidated statement of operations for the years ended December 31, 2025, 2024 and 2023.

The Company believes a large percentage of its shipboard services income is foreign-source income, not effectively connected to a business it conducts in the U.S. and, therefore, not subject to U.S. income taxation.

The Company recognizes interest and penalties within the provision for income taxes in the consolidated statements of operations. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued, therefore, will be reduced and reflected as a reduction of the overall income tax provision.

The Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount of benefit, determined on a cumulative probability basis, which is more than 50% likely of being realized upon ultimate settlement.

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share is computed by dividing net income (loss) adjusted for the change in fair value of warrant liabilities, if the impact is dilutive, by the weighted average number of diluted shares of common stock outstanding, as calculated under the treasury stock method, which includes the potential effect of dilutive common stock equivalents, such as options and warrants to purchase common shares, and contingently issuable shares. If the entity reports a net loss, rather than net income for the period, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, if their effect is anti-dilutive.

The following table provides details underlying OneSpaWorld’s income (loss) per basic and diluted share calculation (in thousands, except per share data):

(a)During the year ended December 31, 2023, potential common shares under the treasury stock method were antidilutive because the Company reported a net loss in this period and the effect of the change in the fair value of warrants was antidilutive. Consequently, the Company did not have any adjustments in this period between basic and diluted loss per share related to stock options, warrants, deferred shares and restricted stock.

The table below presents the number of antidilutive potential common shares that are not considered in the calculation of diluted income (loss) per share (in thousands):

(b)

Includes all Public, Sponsor and 2020 PIPE Warrants.

Foreign Currency Transactions

For currency exchange rate purposes, assets and liabilities of the Company’s foreign subsidiaries are translated at the rate of exchange in effect at the balance sheet date. Equity and other items are translated at historical rates, and income and expenses are translated at the average rates of exchange prevailing during the year. The related translation adjustments are reflected in the accumulated other comprehensive income caption of the Company’s balance sheets. Foreign currency gains and losses resulting from transactions, including intercompany transactions, are included in results of operations. The transaction gains (losses) included in the administrative expenses caption of the consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023 were $0.1 million, $(0.2) million and $(0.04) million, respectively.

Fair Value Measurements

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Additionally, the inputs used to measure fair value are prioritized based on a three-level hierarchy.

The three levels of inputs used to measure fair value are as follows:

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Level 1—Value is based on quoted prices in active markets for identical assets and liabilities.

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Level 2—Value is based on observable inputs other than quoted prices included in Level 1. This includes dealer and broker quotations, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.

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Level 3—Value is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Derivative Instruments and Hedging Activities

The Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive (loss) income until the underlying hedged transactions are recognized in earnings.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates. Significant estimates include the assessment of net realizable value of inventories, the recovery of long-lived assets and other intangible assets, the determination of deferred income taxes including valuation allowances, the useful lives of definite-lived intangible assets, the fair value of warrants, contingencies and property and equipment.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. The Company maintains cash and cash equivalents with high quality financial institutions. Our accounts receivable consist of amounts due from cruise lines and destination resorts with whom we have long-term agreements. As of December 31, 2025, and 2024, the Company hadfour andthree cruise companies, respectively, that represented greater than 10% of accounts receivable. The Company does not normally require collateral or other security to support normal credit sales. The Company controls credit risk through credit approvals, credit limits, and monitoring procedures.

Accounts receivable are stated at amounts due from customers, net of an allowance for credit losses. The Company records an allowance for credit losses with respect to accounts receivable using historical collection experience, current and forecasted business conditions and generally, an account receivable balance is written off once it is determined to be uncollectible. Our expected credit losses are based on historical collection experience, current and forecasted business conditions and other facts and circumstances. The allowance for credit losses was $0.2 million as of each of December 31, 2025 and 2024. For the years ended December 31, 2025 and 2024 and 2023, allowance for credit losses expense amounted to $0.02 million, $0.02 million and $0.06 million, respectively. Allowance for credit losses expense is included within administrative operating expenses in the accompanying consolidated statements of operations.

The activity in the Company’s allowance for credit losses is summarized as follows (in thousands):

Adoption of Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09 ("ASU 2023-09"), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, the following for public business entities: (i) enhanced disclosures of specific categories of reconciling items included in the rate reconciliation, as well as additional information for any of these items meeting certain qualitative and quantitative thresholds; (ii) disclosure of the nature, effect and underlying causes of each individual reconciling item disclosed in the rate reconciliation and the judgment used in categorizing them if not otherwise evident; and (iii) enhanced disclosures for income taxes paid, which includes federal, state, and foreign taxes, as well as for individual jurisdictions over a certain quantitative threshold. The amendments in ASU 2023-09 eliminate the requirement to disclose the nature and estimate of the range of the reasonably possible change in unrecognized tax benefits for the 12 months after the balance sheet date. The provisions of ASU 2023-09 are effective for annual periods beginning after December 15, 2024; early adoption is permitted. Weadopted the new guidance for the fiscal year beginning January 1, 2025 on a prospective basis. See Note 12-"Income Taxes" for further details.

Recent Accounting Pronouncements

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance, to the Company. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement.

In November 2024, the FASB issued ASU No. 2024-03 ("ASU 2024-03"), Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40) amending existing income statement disclosure guidance, primarily requiring more detailed disclosure for expenses. The provisions of ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments can be applied on either a prospective or retroactive basis. The Company is currently assessing the expected impact of the future adoption of this guidance.

In September 2025, the FASB issued ASU No. 2025-06, ("ASU 2025-06"). Intangibles - Goodwill and Other - Internal - Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal - Use Software. This new guidance is intended to eliminate the use of project stages and introduces a principles-based framework for recognizing and capitalizing internal-use software costs. The ASU is effective for annual periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. The Company is currently assessing the expected impact of the future adoption of this guidance.

3. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands, except useful life):

Depreciation and amortization expense for the years ended December 31, 2025, 2024 and 2023 was $4.9 million, $4.0 million and $4.3 million, respectively. During the years ended December 31, 2025, 2024 and 2023, we recognized impairment losses of $0.6 million, $0.01 million and $0.5 million, respectively, related to property and equipment, net. See Note 15-"Fair Value Measurements and Derivatives" for further information.

4. Intangible Assets

Intangible assets consist of finite and indefinite life assets. The following is a summary of the Company’s intangible assets as of December 31, 2025 (in thousands, except amortization period):

The following is a summary of the Company’s intangible assets as of December 31, 2024 (in thousands, except amortization period):

The Company amortizes intangible assets with definite lives on a straight-line basis over their estimated useful lives. Amortization expense for the years ended December 31, 2025, 2024 and 2023 was $16.5 million, $16.6 million and $16.8 million, respectively.

Amortization expense is estimated to be $16.5 million in each of the next five years beginning in 2026.

During the years ended December 31, 2025, 2024 and 2023, we recognized impairment losses of $2.4 million, $0.4 million and $1.3 million, respectively, related to destination resorts agreements in our consolidated statement of operations. During the year ended December 31, 2025, we recognized $0.1 million of impairment losses in our consolidated statement of operations related to trade name. During the year ended December 31, 2023, we recognized $0.4 million of impairment losses in our consolidated statement of operations related to licensing agreement. See Note 15-"Fair Value Measurements and Derivatives" for further information.

5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

6. Leases

Nature of Leases

We have operating leases related to our destination resort agreements, office space and certain equipment. There are certain immaterial finance equipment leases recorded in the consolidated balance sheets. Certain of our leases include both lease and non-lease components. We have adopted the practical expedient which allows us to combine lease and non-lease components by class of asset. We have entered into a sublease agreement for certain leased office space; however, the sublease income from this agreement is immaterial.

Significant Assumptions and Judgments in Applying Leases (Topic 842)

The Company has entered into agreements of varying terms with the cruise lines under which services and products are paid for by cruise passengers. These agreements provide for the Company to pay the cruise line commissions for use of their shipboard facilities, as well as fees for staff shipboard meals and accommodations. These commissions are generally based on a percentage of revenue for most of the agreements and a minimum annual amount, or a combination of both for certain agreements. We believe that these agreements did not contain a lease since we concluded that we do not have the right to direct how and for what purpose the spa and fitness facilities or related equipment is used.

Most of our destination resort health and wellness centers generally require rent based on a percentage of revenues, with some locations having escalating percentages at different revenue amounts. In addition, as part of the rental arrangements for some of our destination resort health and wellness centers, the Company is required to pay a minimum annual rental regardless of whether such amount would be required to be paid under the percentage rent arrangement. Fixed or minimum payments and variable lease payments that depend on a rate or index are included in the calculation of the right-of-use asset. Other variable payments are excluded from the calculation and are recognized in the period in which the obligations for those payments is incurred.

Certain leases include renewal options ranging from three tofive years. The renewal options are included in the lease term only for those leases in which they are reasonably certain to be renewed.

As our leases do not have a readily determinable implicit rate, we used our weighted average cost of debt to determine the net present value of the lease payments at the adoption date. Our weighted average cost of debt is similar to the incremental borrowing rate we would have obtained if we had borrowed collateralized debt over the lease term to purchase the asset.

We have adopted the practical expedient to exclude leases with terms of less than one year from being included on the balance sheet. Lease expense for agreements that are short-term were immaterial for the year ended December 31, 2025, 2024 and 2023, respectively. See Note 2- "Summary of Significant Accounting Policies", for further information on the adoption of ASC 842.

Supplemental Financial Statements Information

The components of lease expense were as follows (in thousands):

Lease balances were as follows (in thousands):

As of December 31, 2025, the Company’s operating leases have a weighted-average remaining lease term of 7.0 years and a weighted-average discount rate of 4.20%. Future minimum lease payments under all non-cancelable lease agreements as of December 31, 2025 are as follows (in thousands):

Supplemental cash flow information related to leases was as follows (in thousands):

7. Restructuring and Asset Impairment

During the fourth quarter of 2025, we finalized a realignment of certain support operations in the United Kingdom and Italy, which included the divestiture of two non-material subsidiaries to a former officer of one of the subsidiaries. Total consideration for the sale consisted of a receivable of $2.3 million, which is recorded within Other current assets on the Consolidated Balance Sheet as of December 31, 2025. The Company expects to collect the full $2.3 million carrying amount of the receivable during the first quarter of 2026. The Company recognized a gain on the transaction within Other expense in the Consolidated Statement of Operations of $0.4 million. As a result of this realignment, we incurred restructuring expenses of approximately $1.2 million, which are included in

"Restructuring expenses" in the Consolidated Statements of Operations andpr imarily consist of legal advisory and tax consulting services. Additionally, in the fourth quarter of 2025, management approved and initiated a strategic plan to exit the Company’s land-based destination resort operations in Asia. This decision aligns with our strategy to reallocate resources to higher-growth, higher-margin markets. Execution of the plan began in 2025 and is expected to continue into 2026, resulting in additional restructuring expenses of $1.5 million, which are included in "Restructuring expenses" in the Consolidated Statements of Operations. These expenses primarily consist of one-time employee termination benefits, with the remainder related to contract termination and other exit costs, including lease penalties, professional legal fees, and the write-off of deferred charges. As part of the ongoing execution of this plan, we recorded impairment charges of $2.8 million within Long-lived assets impairment in the consolidated statements of operations. These charges consisted of a $2.2 million impairment of intangible assets and a $0.6 million impairment of property and equipment and right-of-use-assets. The remaining portion of the total charge is further described in Note 15 - "Fair Value Measurements".

8. Long-term Debt

Long-term debt consisted of the following (in thousands, except interest rate):

On September 20, 2024 (the “Closing Date”), the Company and its subsidiaries, Dory Acquisition Sub, Inc. (“Dory Acquisition”) and OneSpaWorld (Maritime) Limited, formerly known as OneSpaWorld (Bahamas) Limited (“OneSpaWorld (Maritime)” and together with Dory Acquisition, the “Borrowers”), entered into a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and certain lenders party thereto, providing for senior secured credit facilities consisting of (x) a term loan facility of $100 million (of which $70 million was borrowed by Dory Acquisition and $30 million was borrowed by OneSpaWorld (Maritime) (the “Term Loan Facility”), which was fully drawn on the Closing Date, and (y) a revolving loan facility of up to $50 million (the “Revolving Facility” and, together with the Term Loan Facility, the “Credit Facilities”), which Revolving Facility remained undrawn as of December 31, 2025. The Revolving Facility includes borrowing capacity available for letters of credit up to $5 million. Any issuance of letters of credit reduces the amount available under the Revolving Facility. The Credit Facilities mature on September 20, 2029.

Loans outstanding under the Credit Facilities will accrue interest at a rate per annum equal to Term SOFR plus a margin of 1.90%, with three step ups to a maximum margin of 2.65% depending on the most recent consolidated leverage ratio of the Company and its restricted subsidiaries, and undrawn amounts under the Revolving Facility will accrue a commitment fee at a rate per annum of 0.25% on the average daily undrawn portion of the commitments thereunder, with three step ups to a maximum commitment fee of 0.40% depending on the most recent consolidated leverage ratio of the Company and its restricted subsidiaries.

The obligations under the Credit Facilities are guaranteed by the Company and each of its direct or indirect wholly-owned subsidiaries other than certain excluded subsidiaries (the “Subsidiary Guarantors”). The obligations of the Company, the Borrowers and the Subsidiary Guarantors under the Credit Facilities are secured by substantially all of their assets.

The Term Loan Facility requires the Borrowers to make certain mandatory prepayments, with (i)100% of net cash proceeds of all non-ordinary course asset sales or other dispositions of property, subject to the ability to reinvest such proceeds and certain other exceptions, and (ii)100% of the net cash proceeds of any debt incurrence, other than debt permitted under the definitive agreements (but excluding debt incurred to refinance the Credit Facilities). The Borrowers also are required to make quarterly amortization payments equal to 1.25% of the original principal amount of the Term Loan Facility commencing on March 31, 2025 (subject to reductions by optional and mandatory prepayments of the loans). The Borrowers may prepay the Credit Facilities at any time without premium or penalty, subject to payment of customary breakage costs. During the year ended December 31, 2025, we made $15.0 million in total principal payments on our Term Loan Facility. These payments consisted of $5.0 million in aggregate required quarterly amortization payments and a $10.0 million voluntary prepayment made during the third quarter. As a result of this voluntary prepayment, all upcoming scheduled amortization payments for 2026 and 2027 have been satisfied in full, as reflected in the table below.

The Credit Agreement contains a financial covenant requiring the Company and its restricted subsidiaries to maintain a maximum consolidated total leverage ratio of 4.00 to 1.00, subject to certain exceptions, and a minimum fixed charge coverage ratio of 1.25 to 1.00. Additionally, the Credit Agreement contains a number of customary negative covenants that restrict, among other things and in each case subject to specified exceptions, the Company's and its restricted subsidiaries' ability to: consummate consolidations, mergers and sales of assets; grant certain liens; incur additional debt; pay certain dividends; and engage in transactions with affiliates. As of December 31, 2025, the Company was in compliance with all of the covenants contained in the Credit Agreement.

The Credit Agreement also contains certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Credit Facilities are entitled to take various actions, including the acceleration of amounts due under the Credit Facilities and all actions permitted to be taken by a secured creditor.

Borrowing Capacity:

As of December 31, 2025, our available borrowing capacity under the Revolving Facility was $50 million. Utilization of the borrowing capacity was as follows (in thousands):

The following are scheduled principal repayments on long-term debt as of December 31, 2025 for each of the next five years and thereafter (in thousands):

9. Equity

Common Stock

The Company is authorized to issue 250,000,000 common shares of common stock with a par value of $0.0001 per share. Pursuant to the Investment Agreement discussed below, we previously amended our Articles of Incorporation (the “Articles”) and created a new class of Non-Voting Common Stock, par value $0.0001 per share. Of the authorized shares,225,000,000 are “Voting Common Stock” and 25,000,000 are “Non-Voting Common Stock.” The Non-Voting Common Stock are of equal rank to the Voting Common Stock, in terms of dividends, liquidation, preferences and all other rights and features, with the following exceptions: (i) the Non-Voting Common Stock have no voting rights, except as may be required by law; and (ii) the Non-Voting Common Stock will automatically be converted to Voting Common Stock upon the occurrence of certain events set forth in the Articles. Holders of the Company’s voting common stock are entitled toone vote for each share. As of December 31, 2025, there were 101,390,002 voting common stocks andno non-voting common shares of OneSpaWorld issued and outstanding. As of December 31, 2024, there were 104,551,189 shares of voting common stock andno shares of Non-voting common stocks issued and outstanding.

Conversion of Non-Voting Common Stock to Voting Common Stock

Automatic Conversion

Each share of Non-Voting Common Stock will automatically convert intoone share of Voting Common Stock upon the occurrence of a Qualified Transfer of such share or with the prior consent of our Board. A “Qualified Transfer” means a transfer (x) to a third party that is not (1) an affiliate of such holder nor (2) a person whose ownership thereof would result in such shares being treated as constructively owned by such holder under Section 958(b) of the U.S. Tax Code, applicable Treasury Regulations and other official guidance (a Person described in this clause (x), an “Unrelated Person”), and (y) that is not otherwise prohibited under the Articles.

Elective Conversion

Upon the occurrence of a Contingent Conversion Triggering Event (as defined below), a number of Non-Voting Common Stocks as elected will be converted into an identical number of Voting Common Stock; provided that the number of Non-Voting Common Shares so converted may not exceed the number of Non-Voting Common Shares that, if converted, would reasonably be expected to (1) cause the Company to become a “CFC” (as defined in the Articles) as reasonably determined in good faith by the Company, upon the advice of its legal counsel, or (2) cause such holder, together with its affiliates, to hold voting power exceeding 44.9% (as reasonably determined in good faith by the Company). A “Contingent Conversion Triggering Event” shall mean (1) a decrease in the number of directors that the applicable holder has the right to designate for appointment or nomination or a decrease in the number of directors so designated by the applicable holder as a result of an irrevocable waiver of such rights, (2) the transfer of shares of Voting Common Stock by certain holders that participated in the 2020 Private Placement or any of their affiliates on or prior to the one year anniversary of the closing of the 2020 Private Placement (I) to an “Unrelated Person” (as defined in the Articles), and (II) that is not prohibited under the Articles, or (3) the exercise by the holder or its affiliates of a warrant to purchase shares of Non-Voting Common Stock (or a warrant for which such holder or such affiliate has previously agreed to receive shares of Non-Voting Common Stock upon exercise); provided that, with respect to clause (3), the number of shares designated for conversion shall not exceed the number of shares of Non-Voting Common Stock received upon exercise of such warrant. Each share of Non-Voting Common Stock that is converted into a share of Voting Common Stock shall be canceled by the Company and shall not be available for reissuance.

Dividends Declared Per Common Stock

During the year ended December 31, 2025, our Board of Directors declared and we paid quarterly cash dividends on our common stock totaling $17.5 million. These dividends consisted of a $0.04 per share dividend declared on February 12, April 23, and July 23, 2025, which were paid on March 26, June 4, and September 3, 2025, respectively; and a $0.05 per share dividend declared on October 22, 2025 and paid on December 3, 2025. All dividends were paid to shareholders of record as of the close of business on March 12, May 21, August 20, and November 19, 2025, respectively.

Share Repurchase Program

On April 23, 2024, the Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $50 million of its common stock (the "2024 Share Repurchase Program”). Share repurchases made under the 2024 Share Repurchase Program were funded through the Company’s available cash. During the first quarter of 2025, the Company purchased 2,094,498 shares of common stock at an aggregate cost of $37.9 million under the 2024 Share Repurchase Program. Upon settlement of the repurchases, the acquired common shares reverted to authorized but unissued shares. We allocated the excess of the repurchase price over the par value of the shares acquired between Additional paid-in capital and Accumulated deficit.

On April 23, 2025, the Board of Directors approved a new share repurchase program to repurchase up to $75.0 million of its common stock (the “2025 Share Repurchase Program”). As of the approval date, $900,000 remained available under the 2024 Share Repurchase Program, which was cancelled upon the adoption of the 2025 Share Repurchase Program. Repurchases under the 2025 Share Repurchase Program have been and will continue tobe funded through the Company’s available cash. The Company may repurchase shares of its outstanding common stock from time to time on the open market, including through Rule 10b5-1 plans, in privately negotiated transactions, through block purchases, or otherwise in compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of share repurchases will depend on a variety of factors, including business and market conditions. The 2025 Share Repurchase Program may be suspended, modified, or discontinued at any time and the Company has no obligation to repurchase any specific value or number of its common stock under the program. During the second, third and fourth quarters of 2025, the Company repurchased 1,784,375 shares of common stockat an aggregate cost of $37.5 million under the 2025 Share Repurchase Program. Upon settlement of the repurchases, the acquired common shares reverted to authorized but unissued shares. We allocated the excess of the repurchase price over the par value of the shares acquired between Additional paid-in capital and Accumulated deficit.

10. Stock-Based Compensation

2019 Equity Incentive Plan and Stock-Based Compensation

The Company’s Board and shareholders approved the 2019 Equity Incentive Plan (the “2019 Plan”) on March 18, 2019. The purpose of the 2019 Plan is to make available incentives that will assist the Company to attract, retain, and motivate employees, including officers, consultants and directors. The Company may provide these incentives through the grant of share options, share appreciation rights, restricted shares, restricted share units, performance shares and units and other cash-based or share-based awards. The 2019 Plan provides participants an option to defer compensation on a tax-deferred basis. Awards may be granted under the 2019 Plan to OneSpaWorld participants, including employees, officers, directors or consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. A total of 7,000,000 shares of Common stock have been authorized and reserved for issuance under the 2019 Plan.

Stock Based Compensation Cost

Stock based compensation cost, which is included as a component of salary, benefits and payroll taxes in the accompanying consolidated statements of operations for the years ended December 31, 2025, 2024 and 2023 was $10.1 million, $9.1 million and $10.1 million, respectively. During 2025, the Company accelerated the vesting of certain restricted stock units ("RSUs") and performance stock units ("PSUs"), including those related to a previously announced executive departure in March 2025, making them fully vested, resulting in incremental share-based compensation expense of $1.4 million. As of December 31, 2025, the Company had $16.1 million of total unrecognized compensation expense related to restricted stock units and performance stock units.

Restricted Stock Units

The Company’s restricted stock units (“RSUs”) have been issued to employees and directors with vesting periods ranging fromone year tothree years and vest based solely on service conditions. RSUs become unrestricted common stock upon vesting on a one-for-one basis. The cost of these awards is determined using the fair value of our common stock on the date of the grant, and compensation expense is recognized over the vesting period.

The following is a summary of RSUs activity for the years ended December 31, 2025, 2024 and 2023:

(2)

The aggregate intrinsic value is calculated based on the fair value of $20.74, $19.90 and $14.10 per share of the Company’s common stock on December 31, 2025, 2024 and 2023, respectively, due to the fact that the restricted stock units carry a $0 exercise price.

The total fair value of RSUs that vested in 2025, 2024 and 2023, based on the market price of the underlying shares on the day of vesting, was $7.7 million, $7.6 million and $11.1 million, respectively.

As of December 31, 2025, the Company had $9.2 million of total unrecognized compensation expense related to restricted stock award grants, which will be recognized over the weighted-average period of approximately 2.2 years.

Performance Stock Units

The Company grants certain executive officers and senior-level employees performance stock units that generally vest based on either performance and time-based service conditions (“Performance Condition-Based Awards”) or market and time-based service conditions (“Market Condition-Based Awards”) which are referred to herein as Performance Stock Units (“PSUs”). The number of shares of common stock underlying each award is determined at the end of the performance period. In order to vest, the employee must be employed by the Company, with certain contractual exclusions, at the end of the performance period.

Performance Condition-Based Awards

PSUs are converted into shares of common stock upon vesting on a one-for-one basis. The Company estimates the fair value of each performance stock unit when the grant is authorized, and the related service period has commenced. The Company recognizes compensation cost over the vesting period based on the probability of the performance conditions being achieved. If the specified service and performance conditions are not met, compensation expense is not recognized, and any previously recognized compensation expense will be reversed. As of December 31, 2025, we determined that the performance measures for the outstanding PSUs were probable.

Market Condition-Based Awards

The Company estimates the fair value of each PSU when the grant is authorized, and the related service period has commenced. Expense for these PSUs is recorded over the derived service period.

PSUs Activity

The following is a summary of PSUs activity for the years ended December 31, 2025, 2024 and 2023:

The total fair value of PSUs that vested in 2025, 2024 and 2023 was $5.5 million, $7.7 million and $11.4 million, respectively, based on the market price of the underlying shares on the day of vesting. As of December 31, 2025, there was total unrecognized compensation cost related to non-vested performance-based PSUs of $6.8 million. The costs are expected to be recognized over the weighted-average period of approximately 2.6 years. As of December 31, 2025, there wasno unrecognized compensation cost related to non-vested market-based PSUs. The aggregate intrinsic value of PSUs was $11.0 million and $11.8 million as of December 31, 2025 and December 31, 2024, respectively. The aggregate intrinsic value of PSUs is based on the number of nonvested PSUs and the market value of the Company’s common stock as of December 31, 2025 and 2024, respectively.

Stock Options

There wereno outstanding stock options as of December 31, 2025 and 2024. As of December 31, 2025, there wasno unrecognized compensation cost related to the share options granted or exercised under the 2019 Plan. No share options were granted during the years ended December 31, 2025, 2024 and 2023. No share options were exercisable as of December 31, 2025 and 2024.

11. Revenue Recognition

The Company's revenue generating activities include the following:

Service Revenues

Service revenues consist primarily of sales of health, wellness and aesthetics services, including a full range of massage treatments, facial treatments, nutritional/weight management consultations, teeth whitening, mindfulness services and medi-spa services to cruise ship passengers and destination resort guests. Each service or consultation represents a separate performance obligation and revenues are generally recognized immediately upon the completion of our service.

Product Revenues

Product revenues consist primarily of sales of health and wellness products, such as facial skincare, body care, hair care, orthotics and nutritional supplements to cruise ship passengers, destination resort guests andtimetospa.comcustomers. Our Shop & Ship program provides guests the ability to buy retail products onboard and have products shipped directly to their home. Each product unit represents a separate performance obligation. Our performance obligations are satisfied, and revenue is recognized, when the customer obtains control of the product, which occurs either at the point of sale for retail sales and at the time of shipping for Shop & Ship andtimetospa.com product sales. The Company provides no warranty on products sold. Shipping and handling fees charged to customers are included in net sales.

Gift Cards

The Company only offers no-fee, non-expiring gift cards to its customers. At the time gift cards are sold, no revenue is recognized; rather, the Company records a contract liability to customers. The liability is relieved, and revenue is recognized equal to the amount redeemed at the time gift cards are redeemed for products or services. The Company records revenue from an estimate of unredeemed gift cards (breakage) in net sales on a pro-rata basis over the time period gift cards are redeemed. At least three years of historical data, updated annually, is used to determine actual redemption patterns. The liability for unredeemed gift cards is included in “Other current liabilities” on the Company's consolidated balance sheets and was not material as of December 31, 2025 and December 31, 2024.

Customer Loyalty Rewards Program

The Company initiated a customer loyalty program during October 2019 in which customers earn points based on their spending ontimetospa.com. The Company recognizes the estimated net amount of the rewards that will be earned and redeemed as a reduction to net sales at the time of the initial transaction and as tender when the points are subsequently redeemed by a customer. The liability for customer loyalty programs was not material as of December 31, 2025 and 2024.

Contract Balances

Receivables from the Company’s contracts with customers are included within accounts receivables, net in the consolidated balance sheets. Such amounts are typically remitted to us by our cruise line or destination resort partners, except for online sales, and are net of commissions they withhold. Although paid by our cruise line partners, customers are typically required to pay with major credit cards, reducing our credit risk to individual customers. Amounts are billed immediately, and our cruise line and destination resort partners typically remit payments to us within 30 days. As of December 31, 2025, 2024 and 2023, our receivables from contracts with customers were $47.9 million, $46.3 million and $40.8 million, respectively. Our contract liabilities for gift cards and customer loyalty programs are described above.

Disaggregation of Revenue and Segment Reporting

The Company operates facilities on cruise ships and in destination resorts, where we provide health, wellness, aesthetics and fitness services and sell related products. The Company also sells health, wellness, aesthetics and fitness-related products through itstimetospa.com website, which is a post-cruise sales tool where guests may continue their wellness journey after disembarking. The Company’s Maritime and Destination Resorts operating segments are aggregated into a single reportable segment based upon similar economic characteristics, products, services, customers and delivery methods. See Note 17 – “Segment and Geographic Information” for further details regarding the Company's operating segments. The following table disaggregates the Company’s revenues by revenue source and operating segment (in thousands):

12. Income Taxes

Income (loss) before income tax expense (benefit) consists of (in thousands):

The income tax expense (benefit) consists of the following (in thousands):

A reconciliation of the difference between the expected income tax expense using the U.S. federal tax rate and our actual provision after the adoption of ASU 2023-09 is as follows:

(a) State taxes in Florida made up the majority (greater than 50%) of the tax effect in this category.

A reconciliation of the difference between the expected income tax expense (benefit) using the U.S. federal tax rate and our actual provision prior to the adoption of ASU 2023-09 is as follows (in thousands):

The difference between the expected provision for income taxes using the 21% U.S. federal income tax rate for 2025, 2024 and 2023, and the Company’s actual provision is primarily attributable to the foreign rate differential including income earned in jurisdictions not subject to income taxes and permanent differences.

A reconciliation of the beginning and ending amounts of uncertain tax positions, excluding interest and penalties, is as follows (in thousands):

As of December 31, 2025 and 2024, the Company accrued zero for uncertain tax positions. In the third quarter of 2023, the Company filed an application of tax amnesty with the revenue authority. The amnesty application was accepted and the contingency reversed.

Deferred income taxes consist of the following (in thousands):

Following is the activity of the valuation allowance (in thousands):

Income taxes paid, net of refunds received, disaggregated by jurisdiction were as follows(in thousands):

Income taxes paid, net of refunds received, exceeded 5% of total income taxes paid, net of refunds received, for the following individual jurisdictions(in thousands):

As of December 31, 2025, we had $3.4 million of foreign tax operating loss carryforwards expiring as follows (in millions):

The Company is subject to routine audits by U.S. federal, state, local and foreign tax authorities. These audits include questioning the timing and the amount of deductions and the allocation of income among various tax jurisdictions. Generally, tax years 2022-2025 remain subject to examination by taxing authorities throughout the world in major jurisdictions, such as the U.S.

13. Commitment and Contingencies

Cruise Line Agreements

A large portion of the Company’s revenues are generated on cruise ships. The Company has entered into agreements of varying terms with the cruise lines under which services and products are paid for by cruise passengers. These agreements provide for the Company to pay the cruise line commissions for use of their shipboard facilities, as well as fees for staff shipboard meals and accommodations. These commissions are based on a percentage of revenue, a minimum annual amount, or a combination of both. Some of the minimum commissions are calculated as a flat dollar amount while others are based upon minimum passenger per diems for passengers actually embarked on each cruise of the respective vessel. Staff shipboard meals and accommodations are charged by the cruise lines on a per staff per day basis. The Company recognizes all expenses related to cruise line commissions, minimum guarantees, and staff shipboard meals and accommodations, generally as they are incurred, and includes such expenses in cost of revenues and operating expenses in the accompanying consolidated statements of operations. For cruises in process at period end, an accrual is made to record such expenses in a manner that approximates a pro-rata basis. In addition, staff-related expenses such as shipboard employee commissions are recognized in the same manner.

Pursuant to agreements that provide for minimum commissions, the Company has guaranteed total minimum payments to certain cruise lines (excluding payments based on minimum amounts per passenger per day of a cruise applicable to certain ships served by us). Following are the minimum payments guarantee amounts to be paid in the year indicated based on the agreements in effect as of December 31, 2025 (in thousands):

The total minimum payments guarantee amounts referenced in the above calculation do not take into account canceled cruise voyages. Such canceled voyages would not be subject to guaranteed minimum payments to the cruise line.

Revenues from passengers of each of the following cruise line companies accounted for more than ten percent of the Company’s total revenues in 2025, 2024 and 2023, respectively: Carnival (including Carnival, Carnival Australia, Costa, Cunard, Holland America, P&O, Princess and Seabourn cruise lines):39.6%,41.2% and 41.1%; Royal Caribbean (including Royal Caribbean, Celebrity, and Silversea cruise lines):28.2%,27.9% and 27.9%; and Norwegian Cruise Line (including Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises):17.7%,16.8% and 16.4%.

Litigation

We are routinely involved in legal proceedings, disputes, regulatory matters, and various claims and lawsuits that have been filed or are pending against us, including as noted below, arising in the ordinary course of our business. Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability is typically limited to our deductible amount. Nonetheless, the ultimate outcome of those claims and lawsuits that are not covered by insurance cannot be determined at this time. We have evaluated our overall exposure with respect to all of our legal proceedings, threatened and pending litigation and, to the extent required, we have accrued amounts for all estimable probable losses associated with our deemed exposure. We are currently unable to estimate any other potential contingent losses beyond those accrued, as discovery is not complete and adequate information is not available to estimate such range of loss or potential recovery. However, based on our current knowledge, we do not believe that the aggregate amount or range of reasonably possible losses with respect to these matters will be material to our consolidated results of operations, financial condition or cash flows. We intend to vigorously defend our legal position on all claims and, to the extent necessary, seek recovery.

In February 2020, the Company received a formal assessment of $1.9 million by a foreign tax authority over how the value added tax (“VAT”) law was applied on the change in the ultimate beneficial ownership ofone of our subsidiaries as result of the business combination in March 2019. The Company is disputing the assessment and recorded an accrual of $1.2 million for this matter during the year ended December 31, 2020, which is included in “Accrued expenses” on the Company's consolidated balance sheets as of December 31, 2025 and 2024. The Company believes the ultimate outcome of this matter will not have a material adverse impact on the consolidated financial statements.

14. Changes in Accumulated Other Comprehensive (Loss) Income by Component

The following table presents the changes in accumulated other comprehensive (loss) income by component (in thousands):

(1)See Note 15.

15. Fair Value Measurements and Derivatives

Fair Value Measurements

Cash and cash equivalents at December 31, 2025 and December 31, 2024 are comprised of cash and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions. Restricted cash at December 31, 2025 and December 31, 2024 is comprised of amounts held in escrow accounts as a result of a legal proceeding related to a tax assessment and is categorized as a Level 1 instrument. The fair value of outstanding long-term debt as of December 31, 2025, and 2024 is estimated using a discounted cash flow analysis based on current market interest rates for debt issuances with similar remaining years-to-maturity and adjusted for credit risk, which represents a Level 3 measurement in the fair value hierarchy.

The carrying amounts and estimated fair values of the Company's cash, restricted cash and long-term debt were as follows (in thousands):

(a) The amounts above do not include the impact of the interest rate swap or debt issuance costs.

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company’s financial instruments recorded at fair value on a recurring basis (in thousands):

(1) Consists of an interest rate swap.

Derivatives

Market risk associated with the Company’s long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. These instruments are recorded on the balance sheet at their fair value and are designated as hedges. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged.

The Company assesses whether derivatives used in hedging transactions are “highly effective” in offsetting changes in the cash flow of its hedged forecasted transactions. The Company uses regression analysis for this hedge relationship and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. These agreements involve the receipt of variable-rate amounts in exchange for fixed-rate interest payments over the life of the respective agreement without an exchange of the underlying notional amount. The Company classifies derivative instrument cash flows from hedges of benchmark interest rate as operating activities due to the nature of the hedged item. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive income (loss) until the underlying hedged transactions are recognized in earnings. If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings.

The Company monitors concentrations of credit risk associated with financial and other institutions with which the Company conducts significant business. Credit risk, including, but not limited to, counterparty nonperformance under derivatives, is not considered significant, as the Company primarily conducts business with large, well-established financial institutions with which the Company has established relationships, and which have credit risks acceptable to the Company. The Company does not anticipate non-performance by its counterparty. The amount of the Company’s credit risk exposure is equal to the fair value of the derivative when any of the derivatives are in a net gain position.

In September 2024, the Borrowers entered intotwo floating-to-fixed interest rate swap agreements with a notional amount of $70 million and $30 million, respectively, with Bank of America, N.A. to make a series of payments based on a fixed interest rate of 3.341% and 3.564%, respectively, and receive a series of payments based on the 1 Month USD-SOFR CME term which is used to hedge the Company’s exposure to changes in cash flows associated with its variable rate Term Loan Facility and has designated this derivative as a cash flow hedge. The interest rate swap agreements expire on September 20, 2027 and December 20, 2026, respectively. As of December 31, 2025, the aggregate notional amount of the interest rate swap agreements was $86.2 million.

There was no ineffectiveness related to the interest rate swaps. The gain or loss on the derivatives is recorded as a component of accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. The Company expects to reclassify $0.02 million of income from accumulated other comprehensive income (loss) into interest expense within the next twelve months.

The fair value of the interest rate swap contracts is measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates

(forward curves) derived from observable market interest rate curves. The interest rate swap contracts were categorized as Level 2 in the fair value hierarchy. The Company is not required to post cash collateral related to these derivative instruments.

The effect of the interest rate swap contracts designated as cash flows hedging instruments on the consolidated financial statements was as follows (in thousands):

Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring Basis

Nonrecurring Fair Value Measurements

During the year ended December 31, 2025, we recorded impairment charges of $3.1 million within Long-lived assets impairment in theaccompanying consolidated statements of operations. These charges were primarily related to our decision to exit destination resort operations in Asia as further discussed in "Note 7"–"Restructuring and Asset Impairment", which, along with the non-renewal of certain U.S. destination resort agreements, caused us to evaluate the carrying value of the affected locations for impairment. We estimated the fair value of these assets using discounted cash flow analyses (Level 3 inputs). Considering that only short-term or minimal future revenue was reflected in our projections and indicated no expectations of profitable operations, we fully impaired the remaining carrying value of the definite-lived intangible assets, equipment and right-of-use assets related to these facilities.

During the year ended December 31, 2024, the closure of a destination resort health and wellness center caused us to evaluate the carrying value of the affected destination resort health and wellness center for impairment. We recognized a long-lived asset impairment loss of $0.4 million which was related to the closure in November 2024 of a destination resort health and wellness center as a result of the hotel operator deciding to no longer offer spa operations and reported in the Long-lived assets impairment line item of the accompanying consolidated statement of operations. We fully impaired the remaining carrying value of thedefinite-lived intangible assets and equipment related to this resort health and wellness center considering that no further revenue was reflected in the discounted cash flow analysis. We estimated the fair value of the related assets using discounted cash flow analyses and Level 3 valuation inputs including growth rates, a royalty rate and discount rates that reflected the risk profile of the underlying cash flows where the assets are located. Estimations of the growth rates were zero or negative percent. See “Note 3” – “Property and Equipment, and “Note 4” – “Intangible Assets” and"Note 7"–" Restructuring and Asset Impairment" for further detail.

16. Profit Sharing Plans

Eligible employees participate in the Company’s profit sharing retirement plans, which are qualified under Section 401(k) of the Internal Revenue Code. With respect to one of the profit sharing retirement plans, the Company makes discretionary annual matching contributions in cash based on a percentage of eligible employee compensation deferrals. The Contributions to the plans, which are included in salary, benefits, and payroll taxes in the consolidated statements of operations, were $0.5 million for the year ended December 31, 2025, and $0.4 million for each of the years ended December 31, 2024 and 2023.

17. Segment and Geographic Information

The Company operates health and wellness centers oncruise ships and in destination resorts, offering health and wellness services and selling health, wellness, aesthetics and fitness related products. The Maritime and Destination Resorts operating segments are aggregated into a single reportable segment due to their similar business and economic characteristics, operations, services offerings, product offerings and classes of customers. While separate financial information is available for the operating segments, the Chief Executive Officer (CEO), who serves as the Company’s Chief Operating Decision Maker (“CODM”), primarily reviews financial results and makes decisions on a consolidated basis. Our CODM utilizes consolidated financial information to evaluate performance, allocate resources, and make strategic decisions, including those related to capital expenditures and personnel. The CODM regularly analyzes net income (loss) and its components, as reported in the consolidated statements of operations, to assess operating trends, evaluate budget-to-actual variances, and inform strategic and operational decisions. All expense categories presented in the consolidated statements of operations are considered significant, with no additional segment expenses requiring disclosure.

As the Company operates as asingle reportable segment, all required financial information is included in theaccompanying consolidated financial statements. The CODM does not review segment assets beyond the consolidated level presented in the balance sheets. There are no intra-entity sales or transfers, and no significant expense categories are regularly provided to the CODM beyond those disclosed in the consolidated statements of operations. Additional information regarding the Company’s services and products is provided in Note 11 - "Revenue Recognition."

The basis for determining the geographic information below is based on the countries in which the Company operates. The Company is not able to identify the country of origin for the customers to which revenues from cruise ship operations relate. Geographic information is as follows (in thousands):

18. SUBSEQUENT EVENTS

The Company announced on February 18, 2026 that the Board of Directors approved a quarterly dividend payment of $0.05 per Common Share payable on March 25, 2026 to shareholders of record as of the close of business on March 11, 2026.