Airsculpt Technologies, Inc.
For the period ended Mar 31, 2025. Filed May 2, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 2, 2025
AIRS$0.53-62.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001870940-24-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-02.
0001870940-25-000021
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 92 previous paragraphs and 92 current paragraphs.
49 unchanged; 26 reworded; 17 added; 11 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
In light of the decline in our revenue, we announced on March 14, 2025 an initiative to stabilize revenue growth through a number of strategic priorities, including:
Current report
•optimizing our marketing investment by spending on techniques that have proven successful for us in the past using a returns-based approach and testing new areas such as online video, and other social marketing channels under the direction of our new Chief Digital Officer;
Current report
•improving our go-to-market and sales strategies under our new Chief Sales Officer who is dedicated to strengthening our consultative sales model with enhanced training, improving our sales processes, and providing a greater focus on increasing lead generation, consultations, and case conversion;
Current report
•enhancing our customer experience to ensure we consistently provide premium results, with initiatives that are in development and expected to rollout in the second half of fiscal year 2025 and into fiscal year 2026;
Current report
•launching expanded consumer financing offerings across all of our centers by the end of the second quarter of fiscal year 2025; and
Current report
•focusing on new product innovation where we believe there is an opportunity to introduce new services that would allow us to expand our customer reach, leverage existing infrastructure and surgical expertise, and generate incremental revenues, including by launching a pilot skin tightening procedure as a standalone offering.
Current report
We have also implemented a cost reduction program that is estimated to eliminate approximately $3.0 million in annual overhead costs and contracted expenses, and have paused de novo center and new procedure room openings.
Current report
Our same-center case decline is primarily attributed to weaker than expected performance across the broader aesthetics industry.
Current report
Selling, General and Administrative Expenses—Selling, general and administrative expenses increased $6.0 million, or 38.2%, for the three months ended March 31, 2025 compared to the same period in 2024. This increase is related to an increase in stock compensation. During the three months ended March 31, 2024, we reversed stock compensation expense of approximately $10.4 million related to reassessing the probability of achieving the performance target on certain performance based stock unit awards. Selling, general and administrative expenses as a percent of revenue was at 55.3% and 33.1% for the three months ended March 31, 2025 and 2024, respectively.
Current report
We principally rely on cash flows from operations as our primary source of liquidity and, if needed, up to $5.0 million in revolving loans under our revolving credit facility. In March 2025, we filed a Registration Statement on Form S-3 (File No. 333-285825) which covers the offering, issuance and sale, for an aggregate initial offering price not to exceed $100.0 million, of shares of common stock and preferred stock; debt securities; warrants to purchase common stock, preferred stock and/or debt securities; and units. We also commenced an at-the-market offering program, with Leerink Partners LLC (“Leerink”) acting as sales agent. This at-the-market offering program provides us with additional access to capital, as needed, subject to market conditions.
Current report
Our primary cash needs are for payroll, marketing and advertisements, rent, debt service, as well as information technology and infrastructure, including our corporate office. Our cash flows are closely tied to the receipt of patient payments, and we have experienced revenue declines in the most recent year due to a decline in overall cases performed. In response, we have implemented initiatives to improve revenue growth, engaged in a cost reduction program that is estimated to eliminate approximately $3.0 million in annual overhead costs and contracted expenses, and paused de novo center and new procedure room openings. These initiatives may not realize anticipated benefits or savings from one or more of the various strategies and cost-savings initiatives undertaken as part of these efforts in full or in part or within the time periods expected. We also may not realize the increase in sales related to these initiatives. Our ability to improve operating results depends upon a significant number of factors, some of which are beyond our control. If we are unable to realize the anticipated savings or benefits, or otherwise fail to implement the growth strategies, the business operating results and liquidity may be adversely affected.
Current report
At-the-Market Common Offering Program
Current report
On March 14, 2025, we entered into a sales agreement (the “ATM Agreement”) with Leerink, as sales agent, in connection with an at-the-market offering program under which we may offer and sell, from time to time in our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million at prices and on terms to be determined by market conditions at the time of offering. The $50.0 million of common stock that may be offered, issued and sold under the ATM Agreement is included in the $100.0 million of securities that may be offered, issued and sold by us under our Registration Statement on Form S-3 (File No. 333-285825). We and Leerink each have the right to suspend or terminate the ATM Agreement in each party’s sole discretion at any time.
Current report
In the quarter ended March 31, 2025, we sold the following quantities of our common stock pursuant to the ATM Agreement for total net proceeds of approximately $13 thousand:
Current report
On March 12, 2025, the Company entered the Third Amendment. Under the terms of the Third Amendment, the parties thereto agreed to modify certain financial condition covenants made by the Company under the term loan and revolving credit facility, such that (i) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of the Company and its subsidiaries as of the last day of the fiscal quarters ending March 31, 2025 and June 30, 2025 must be no less than 0.50x and 1.10x, respectively, and no less than 1.25x on the last day of the fiscal quarters ending September 30, 2025 and thereafter, instead of 1.10x as of March 31, 2025 and 1.25x as of June 30, 2025 and thereafter, as previously set forth in the Credit Agreement; (ii) the Consolidated Leverage Ratio (as defined in the Credit Agreement) of the Company and its subsidiaries as of the last day of the fiscal quarters ending March 31, 2025, June 30, 2025, September 30, 2025, December 31, 2025 and March 31, 2026, must not exceed 4:25x, 3.50x 3.25x, 3.25x, and 2.75x, respectively, and the Consolidated Leverage Ratio as of the last day of each fiscal quarter thereafter must not exceed 2.25x, instead of 3.25x as of March 31, 2025, 2.75x as of June 30, 2025, and 2.25x thereafter, as previously set forth in the Credit Agreement; (iii) the Company and its subsidiaries will be required to maintain minimum Liquidity (as defined in the Credit Agreement) of not less than (A) $3.0 million as of the last day of the month ending March 31, 2025, (B) $5.0 million as of the last day of the month ending April 30, 2025, and (C) $7.5 million as of the last day of the months ending May 31, 2025 and thereafter (or the last day of each fiscal quarter thereafter upon the satisfaction of certain financial tests described therein); and (iv) new liquidity and financial reporting requirements have been added.
Current report
In addition to revising the covenants listed above, the amendment revised or added new terms such that (i) for outstanding loans, beginning on or about July 1, 2025, the applicable per annum margin will be increased to 3.75% or 4.75% for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 3.00x, 3.50% or 4.50% for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 2.00x and less than 3.00x, and 3.25% or 4.25% for base rate or SOFR, respectively, if the Company's total leverage ratio is below 2.00x, (ii) the term loan and revolving credit facility will mature on May 11, 2027 (instead of November 7, 2027); (iii) Liquidity in excess of $3.0 million will be used to repay the outstanding funds drawn on the revolving credit facility on a monthly basis beginning April 30, 2025; (iv) revolver draws will be subject to compliance with the minimum Liquidity covenant; and (v) the Company will be required to reimburse SVB for certain fees and expenses relating to the engagement of a financial advisor, and (vi) 100% of first $10.0 million of any equity proceeds will be used to repay the term loan and revolving credit facility, subject to a carve-out of the first $3.0 million of equity proceeds and any equity proceeds received from Vesey Street Capital Partners, L.L.C., our private equity sponsor (“Sponsor”). In consideration of the Third Amendment, the Company paid a fee equal to 0.15% of the outstanding loans to consenting Lenders, and a $125,000 arrangement fee to SVB. On March 12, 2025, in connection with the Third Amendment, the Company, SVB and our Sponsor (through certain affiliated entities) entered into that certain Limited Guarantee by and among Vesey Street Capital Partners Healthcare
Current report
Fund, L.P., Vesey Street Capital Partners Healthcare Fund-A, L.P., SVB, and the Company (the "Limited Guarantee"), pursuant to which our Sponsor agreed to provide a $10.0 million limited guaranty of the Company’s obligations under the Credit Agreement. The Limited Guarantee is callable on June 15, 2025 (or upon the earlier occurrence of certain defaults described therein) if the Company has not prepaid the term loan (excluding regularly scheduled amortization) by $10.0 million as of such date. The Company will utilize proceeds from operations and potential equity raises to prepay the $10.0 million on the term loan. Under the terms of the Limited Guarantee, if our Sponsor is required to make any payment under the Limited Guarantee (other than as a result of a bankruptcy event), then our Sponsor will be deemed to have purchased shares of common stock of the Company having an aggregate value equal to the amount of such payment. The Company has agreed to issue a subordinated note to our Sponsor if a payment occurs under the Limited Guarantee, to the extent such payment does not result from the issuance of shares of common stock by the Company to our Sponsor.
Removed paragraphs (11)
Previous report
Our same-store revenue decline is primarily attributed to weaker than expected performance across the broader aesthetics and high-end retail industries.
Previous report
(2) This amount relates to settlement costs for non-recurring litigation of $0.9 million for the three and nine months ended September 30, 2024. This amount is accrued in "Accrued and other current liabilities" as of September 30, 2024. See Note 9 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion.
Previous report
For the three months ended September 30, 2024 and 2023, pre-opening de novo and relocation costs were $0.7 million and $0.5 million, respectively. For the nine months ended September 30, 2024 and 2023, pre-opening de novo and relocation costs were $0.8 million and $3.3 million, respectively.
Previous report
(2) This amount relates to settlement costs for non-recurring litigation of $0.9 million for the three and nine months ended September 30, 2024. This amount is accrued in "Accrued and other current liabilities" as of September 30, 2024. See Note 9 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion.
Previous report
Cost of Service—Our cost of services decreased $0.4 million, or 2.3%, compared to the same period in 2023. The percentage decrease in cost of service is driven by the decrease in cases over the same period and offset by increases in nursing and medical supply expenses during the period. Cost of service was 41.8% and 38.8% as a percentage of revenue for the three months ended September 30, 2024 and 2023, respectively. This is primarily due to opening four de novo facilities in the quarter which caused a temporary 1% increase in cost of service as a percentage of revenue over the prior period as these facilities ramp up. The remaining increase was due to the decline in revenue and not being able to leverage certain fixed costs within cost of service like rent and certain nursing costs.
Previous report
Selling, General and Administrative Expenses—Selling, general and administrative expenses increased $0.5 million, or 1.9%, for the three months ended September 30, 2024 compared to the same period in 2023. This increase is related to the additional expenses we incurred for marketing and corporate support as we grow our center count through de novo expansion and providing support for our centers. We expect our marketing and corporate support costs to continue to increase on an absolute dollar basis as we open de novo centers. Selling, general and administrative expenses as a percent of revenue was at 59.9% and 53.5% for the three months ended September 30, 2024 and 2023, respectively. This increase is primarily driven by the decline in revenue and not being able to leverage certain fixed costs within selling, general and administrative costs.
Previous report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Previous report
Revenue—Our revenue decreased $7.1 million, or 4.8%, compared to the same period in 2023. The decrease is primarily attributed to weaker than expected performance across the broader aesthetics and high-end retail industries.
Previous report
Selling, General and Administrative Expenses—Selling, general and administrative expenses decreased $1.3 million, or 1.7%, for the nine months ended September 30, 2024 compared to the same period in 2023. This decrease is related to a decrease in our equity-based compensation expense (see Note 6 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion) partially offset by additional expenses we incurred for marketing and corporate support as we grow our center count through de novo expansion and providing support for our centers. We expect our marketing and corporate support costs to continue to increase on an absolute dollar basis as we open de novo centers. Selling, general and administrative expenses as a percent of revenue were 53.5% and 51.8% for the nine months ended September 30, 2024 and 2023, respectively.
Previous report
General and administrative expenses include employee-related expenses, including salaries and related costs (excluding physician and clinical cost included in cost of service), equity-based compensation, technology, operations, finance, legal, corporate office rent and human resources. General and administrative expense were approximately $41.5 million and $49.4 million for the nine months ended September 30, 2024 and 2023, respectively. This reduction is due to a decrease in equity-based compensation (see Note 6 to the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion).
Previous report
Interest Expense, net—Interest expense decreased to $4.6 million from $5.5 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease is due to the lower principal balance resulting from the Company's voluntary $10 million prepayment made in 2023.
Reworded paragraphs (26)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes and other financial information appearing in our Annual Report on Form 10-K dated February 27, 2024 filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). This discussion and analysis contains forward-looking statements that involve risk, uncertainties and assumptions. See the section entitled “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Our actual results could differ materially from those anticipated in the forward-looking statements.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes and other financial information appearing in our Annual Report on Form 10-K dated March 14, 2025 filed with the Securities and Exchange Commission (“SEC”) pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including those risks. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report. You should read this Quarterly Report completely, including Part II, Item 1A (Risk Factors) of this Quarterly Report and the section titled “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by our forward-looking statements contained in the following discussion and analysis. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Previous wording
AirSculpt is an experienced, fast-growing national provider of body contouring procedures delivering a premium consumer experience. We provide custom body contouring using our proprietary AirSculpt® method that removes unwanted fat and tightens skin in a minimally invasive procedure, producing dramatic results. We opened new centers in Kansas City, KS in July 2024, Columbus, OH in August 2024, Deerfield, IL and Birmingham, MI in September 2024. We deliver our AirSculpt® procedures through a growing nationwide footprint of 31 centers across 20 states, Canada and the United Kingdom as of November 8, 2024.
Current wording
AirSculpt is an experienced national provider of body contouring procedures delivering a premium consumer experience. At AirSculpt, we provide custom body contouring using our proprietary AirSculpt® method that removes unwanted fat in a minimally invasive procedure, producing dramatic results. We now deliver our AirSculpt® procedures through a nationwide footprint of 32 centers across 20 states, Canada, and the United Kingdom as of May 2, 2025.
Previous wording
For the three and nine months ended September 30, 2024, we performed 3,277 and 10,972 cases, respectively, compared to 3,426 and 11,252 for the three and nine months ended September 30, 2023, respectively. For the three and nine months ended September 30, 2024, we generated approximately $42.5 million and $141.2 million of revenue, respectively, compared to $46.8 million and $148.3 million for the three and nine months ended September 30, 2023, respectively. This represents approximately 9% decline in revenue for the three months ended September 30, 2024 over the same period in prior year and approximately 5% decline in revenue for the nine months ended September 30, 2024 over the same period in prior year.
Current wording
For the three months ended March 31, 2025, we performed 3,076 cases and generated approximately $39.4 million of revenue, compared to 3,746 cases and $47.6 million in revenue for the three months ended March 31, 2024. This represents approximately 17% decline in revenue for the three months ended March 31, 2025 over the same period in the prior year.
Previous wording
We define Adjusted EBITDA as net (loss)/income excluding depreciation and amortization, net interest expense, income tax expense, restructuring and related severance costs, loss/(gain) on disposal of long-lived assets, settlement costs for non-recurring litigation, and equity-based compensation.
Current wording
We define Adjusted EBITDA as net (loss)/income excluding depreciation and amortization, net interest expense, income tax (benefit)/expense, restructuring and related severance costs, loss on disposal of long-lived assets, and equity-based compensation.
Previous wording
We define Adjusted Net Income as net (loss)/income excluding restructuring and related severance costs, loss/(gain) on disposal of long-lived assets, settlement costs for non-recurring litigation, equity-based compensation and the tax effect of these adjustments.
Current wording
We define Adjusted Net Income as net (loss)/income excluding restructuring and related severance costs, loss on disposal of long-lived assets, equity-based compensation and the tax effect of these adjustments.
Previous wording
We generally expect our selling expenses to increase as we continue to grow our brand and expand our national footprint. We evaluate our selling expense as compared to growth in our sales volume and will invest accordingly to the extent we believe we can increase our growth without materially negatively impacting our Adjusted EBITDA Margins.
Current wording
We evaluate our selling expense as compared to growth in our sales volume and will invest accordingly to the extent we believe we can position ourselves for future growth without materially negatively impacting our Adjusted EBITDA Margins.
Previous wording
General and administrative expenses include employee-related expenses, including salaries and related costs (excluding physician and clinical cost included in cost of service and the salaries and commissions of sales and marketing employees), equity-based compensation, technology, operations, finance, legal, corporate office rent and human resources. We expect our general and administrative expenses to increase over time due to the additional legal, accounting, insurance, investor relations and other costs that we will continue to incur as a public company. We also expect increases from other costs associated with continuing to grow our business. As we continue to expand the number of centers and procedures rooms, we anticipate general and administrative expenses to decrease as a percentage of revenue over time.
Current wording
General and administrative expenses include employee-related expenses, including salaries and related costs (excluding physician and clinical cost included in cost of service and the salaries and commissions of sales and marketing employees), equity-based compensation, technology, operations, finance, legal, corporate office rent and human resources.
Previous wording
Overview—Our financial results for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 reflect the addition of four de novo centers which increased our procedure rooms by eight.
Current wording
Overview—Our financial results for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 reflect the addition of five de novo centers which increased our procedure rooms by ten.
Previous wording
Revenue—Our revenue decreased $4.2 million, or 9.1%, compared to the same period in 2023. The decrease is primarily attributed to weaker than expected performance across the broader aesthetics and high-end retail industries.
Current wording
Revenue—Our revenue decreased $8.2 million, or 17.3%, compared to the same period in 2024. The decrease is primarily attributed to weaker than expected performance across the broader aesthetics industry.
Previous wording
Cost of Service—Our cost of service decreased $1.5 million, or 2.7%, compared to the nine months ended September 30, 2023. The percentage decrease in cost of service is driven by the decrease in cases over the same period and partially offset by increases in nursing and rent related to our new facility openings during the period. Cost of service was 38.7% and 37.9% as a percentage of revenue for the nine months ended September 30, 2024 and 2023, respectively. This is primarily due to the decline in revenue and not being able to leverage certain fixed costs within cost of service like rent and certain nursing costs.
Current wording
Cost of Service—Our cost of services decreased $2.1 million, or 11.6%, compared to the same period in 2024. The percentage decrease in cost of service is driven by the decrease in cases compared to the same period in 2024. Cost of service was 40.5% and 37.9% as a percentage of revenue for the three months ended March 31, 2025 and 2024, respectively. This is primarily due to not being able to leverage certain fixed costs within cost of service like rent and certain nursing costs.
Previous wording
Selling expenses consist of advertising costs for social, digital and traditional marketing and sales and marketing personnel. Total selling expenses were approximately $9.6 million and $9.4 million for the three months ended September 30, 2024 and 2023, respectively. Our customer acquisition costs were approximately $2,900 and $2,750 per customer in the three months ended September 30, 2024 and 2023, respectively. We intend to continue investing in our sales and marketing capabilities as we add new centers. Additionally, selling expenses as a percentage of revenue may fluctuate from quarter to quarter based on the timing and scope of our initiatives and the related impact to our revenue.
Current wording
Selling expenses consist of advertising costs for social, digital and traditional marketing and sales and marketing personnel. Total selling expenses were approximately $9.6 million and $11.2 million for the three months ended March 31, 2025 and 2024, respectively. This decrease is primarily related to a decrease in advertising spend associated with brand awareness initiatives. Our customer acquisition costs were approximately $3,130 and $2,990 per customer in the three months ended March 31, 2025 and 2024, respectively. Selling expenses as a percentage of revenue may fluctuate from quarter to quarter based on the timing and scope of our initiatives and the related impact to our revenue. We have also implemented a cost reduction program that is estimated to eliminate approximately $3.0 million in annual overhead costs and contracted expenses, and have paused de novo center and new procedure room openings, which is expected to have a favorable impact on selling expenses.
Previous wording
General and administrative expenses include employee-related expenses, including salaries and related costs (excluding physician and clinical cost included in cost of service), equity-based compensation, technology, operations, finance, legal, corporate office rent and human resources. General and administrative expenses were approximately $15.9 million and $15.6 million for the three months ended September 30, 2024 and 2023, respectively.
Current wording
General and administrative expenses include employee-related expenses, including salaries and related costs (excluding physician and clinical cost included in cost of service), equity-based compensation, technology, operations, finance, legal, corporate office rent and human resources. General and administrative expenses were approximately $12.1 million and $4.6 million for the three months ended March 31, 2025 and 2024, respectively. This increase is primarily due to the prior period reversal of $10.4 million in stock compensation expense.
Previous wording
Depreciation and Amortization—Depreciation and amortization increased to approximately $3.0 million for the three months ended September 30, 2024 compared to $2.6 million for the same period in 2023. This increase is the result of having four additional de novo centers during the three months ended September 30, 2024 as compared to the 2023 period.
Current wording
Depreciation and Amortization—Depreciation and amortization increased to approximately $3.2 million for the three months ended March 31, 2025 compared to $2.8 million for the same period in 2024. This increase is the result of having five additional de novo centers during the three months ended March 31, 2025 as compared to the 2024 period.
Previous wording
Interest Expense, net—Interest expense was $1.6 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively. The decrease is due to the voluntary prepayment of $10.0 million of the principal balance of the term loans under the Credit Agreement on September 29, 2023.
Current wording
Interest Expense, net—Interest expense was $1.6 million and $1.5 million for the three months ended March 31, 2025 and 2024, respectively.
Previous wording
Income Tax Expense— Our effective tax rate is (13.8)% and (89.2)% for the three months ended September 30, 2024 and 2023, respectively. The main driver of the difference between the effective and statutory rate is non-deductible executive compensation under Section 162(m) of the Internal Revenue Code.
Current wording
Income Tax Expense— Our effective tax rate is 11.4% and 36.4% for the three months ended March 31, 2025 and 2024, respectively. The main driver of the difference between the effective and statutory rate is non-deductible executive compensation under Section 162(m) of the Internal Revenue Code.
Previous wording
We principally rely on cash flows from operations as our primary source of liquidity and, if needed, up to $5.0 million in revolving loans under our revolving credit facility. Our primary cash needs are for payroll, marketing and advertisements, rent, capital expenditures associated with de novo locations and new procedure room additions, as well as information technology and infrastructure, including our corporate office. We believe that the cash expected to be generated from operations and the availability of borrowings under the revolving credit facility will be sufficient for our working capital requirements, liquidity obligations, anticipated capital expenditures relating to the opening of de novo centers, and payments due under our existing credit facilities for at least the next 12 months.
Current wording
We believe that the cash expected to be generated from operations and from our at-the-market offering program will be sufficient for our working capital requirements, liquidity obligations, and payments due under our existing credit facilities for at least the next 12 months.
Previous wording
As of September 30, 2024, we had $6.0 million in cash and cash equivalents and an available amount of $5.0 million under our revolving credit facility. We do not have any letters of credit outstanding as of September 30, 2024.
Current wording
As of March 31, 2025, we had $5.6 million in cash and cash equivalents with no availability under our revolving credit facility. We do not have any letters of credit outstanding as of March 31, 2025.
Previous wording
As of September 30, 2023, we had $10.3 million in cash and cash equivalents and an available amount of $5.0 million under our revolving credit facility. We did not have any letters of credit outstanding as of September 30, 2023.
Current wording
As of March 31, 2024, we had $11.0 million in cash and cash equivalents and an available amount of $5.0 million under our revolving credit facility. We did not have any letters of credit outstanding as of March 31, 2024.
Previous wording
The primary source of our operating cash flow is the collection of patient payments received prior to performing surgical procedures. For the nine months ended September 30, 2024, our operating cash flow decreased by $10.5 million compared to the same period in 2023. The decrease is primarily attributed to weaker than expected revenue performance and an increase in our marketing investments during the nine months ended September 30, 2024 as compared to the prior year period. At September 30, 2024, we had working capital of $(12.5) million compared to $(4.4) million at December 31, 2023.
Current wording
The primary source of our operating cash flow is the collection of patient payments received prior to performing surgical procedures. For the three months ended March 31, 2025, our operating cash flow decreased by $2.5 million compared to the same period in 2024. The decrease is primarily attributed to weaker than expected revenue performance during the three months ended March 31, 2025 as compared to the prior year period. At March 31, 2025, we had a working capital deficit of $(11.5) million compared to $(11.5) million at December 31, 2024.
Previous wording
Investing activities during both periods were attributable to the preparation for the opening of de novo locations and the relocation of multiple existing facilities. Net cash used in investing activities for the nine months ended September 30, 2024 and 2023 was $10.5 million and $8.1 million, respectively.
Current wording
Net cash used in investing activities for the three months ended March 31, 2025 and 2024 was $1.9 million and $1.6 million, respectively. Investing activities in the three months ended March 31, 2025 relate primarily to final payments on our White Plains, NY location that opened in December 2024 and maintenance capital expenditure. Investing activities during the three months ended March 31, 2024 were attributable to the preparation for the opening of our 2024 de novo locations.
Previous wording
Net cash used in financing activities for the nine months ended September 30, 2023 was $12.0 million. For the nine months ended September 30, 2023, we paid cash dividends to shareholders of $0.2 million and made principal payments on our debt of $11.6 million.
Current wording
Net cash used in financing activities during the three months ended March 31, 2025 was $1.6 million. During the three months ended March 31, 2025, we made principal payments on our debt of $1.1 million, payments for debt modification of $0.2 million and made payments of taxes withheld through vested equity-based compensation of $0.1 million.
Previous wording
Net cash used in financing activities during the nine months ended September 30, 2024 was $2.4 million. During the nine months ended September 30, 2024, we made principal payments on our debt of $1.6 million and made payments of taxes withheld through vested equity-based compensation of $0.5 million.
Current wording
Net cash used in financing activities for the three months ended March 31, 2024 was $1.1 million. For the three months ended March 31, 2024, we made principal payments on our debt of $0.5 million and made payments of taxes withheld through vested equity-based compensation of $0.4 million.
Previous wording
The carrying value of our total indebtedness was $70.1 million and $71.6 million, which includes unamortized deferred financing costs and issuance discount of $1.1 million and $1.2 million, as of September 30, 2024 and December 31, 2023, respectively.
Current wording
The carrying value of our total indebtedness was $73.5 million and $74.7 million, which includes unamortized deferred financing costs and issuance discount of $1.2 million and $1.0 million, and funds drawn on the revolving credit facility of $5.0 million and $5.0 million, as of March 31, 2025 and December 31, 2024, respectively.
Previous wording
On November 7, 2022, the Company entered into a credit agreement with a syndicate of lenders (the "Credit Agreement") maturing November 7, 2027. Pursuant to the Credit Agreement, there is (i) an $85.0 million aggregate principal amount of term loans and (ii) a revolving loan facility in an aggregate principal amount of up to $5.0 million. On September 29, 2023, the Company voluntarily pre-paid $10.0 million of the principal balance of the term loans under the Credit Agreement using cash on hand.
Current wording
On November 7, 2022, the Company entered into a credit agreement with a syndicate of lenders (the "Credit Agreement"), originally maturing November 7, 2027. Pursuant to the Credit Agreement, there is (i) an $85.0 million original aggregate principal amount of term loans and (ii) a revolving loan facility in an aggregate principal amount of up to $5.0 million. On September 29, 2023, the Company voluntarily pre-paid $10.0 million of the principal balance of the term loans under the Credit Agreement using cash on hand.
Previous wording
On September 13, 2024, the Company amended the Credit Agreement to modify certain financial condition covenants. As such, for the period of September 13, 2024 through June 30, 2025, the applicable per annum margin is 2.5% or 3.5% for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 2.0x. If the Company's total leverage ratio is equal to or greater than 1.0x and less than 2.0x, the applicable per annum margin is 2.0% or 3.0% for base rate or SOFR, respectively. If the Company's total leverage ratio is below 1.0x, the applicable per annum margin is 1.5% or 2.5% for base rate or SOFR, respectively. As of September 30, 2024, the interest rate was 7.85%.
Current wording
On September 13, 2024, the Company amended the Credit Agreement to modify certain financial condition covenants and the applicable margins. As such, for the period of September 13, 2024 through June 30, 2025, the applicable per annum margin is 2.5% or 3.5% for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 2.0x. If the Company's total leverage ratio is equal to or greater than 1.0x and less than 2.0x, the applicable per annum margin is 2.0% or 3.0% for base rate or SOFR, respectively. If the Company's total leverage ratio is below 1.0x, the applicable per annum margin is 1.5% or 2.5% for base rate or SOFR, respectively. As of March 31, 2025, the interest rate was 7.82%.
Previous wording
A summary of significant accounting policies is disclosed in our Annual Report on Form 10-K dated February 27, 2024 filed with the SEC pursuant to Section 13 or 15d of the Exchange Act, as amended (the "Exchange Act") under the caption “Critical Accounting Policies and Estimates” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section. There have been no material changes in the nature of our critical accounting policies and estimates or the application of those policies from our Annual Report on Form 10-K dated February 27, 2024.
Current wording
A summary of significant accounting policies is disclosed in our Annual Report on Form 10-K dated March 14, 2025 filed with the SEC pursuant to Section 13 or 15d of the Exchange Act under the caption “Critical Accounting Policies and Estimates” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section. There have been no material changes in the nature of our critical accounting policies and estimates or the application of those policies from our Annual Report on Form 10-K dated March 14, 2025.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
For the nine months ended September 30, 2024 and 2023, we define same-center case and revenue growth as the growth in each of our cases and revenue at facilities that were owned and operated during the nine months ended September 30, 2024 and 2023, respectively. At facilities that were not owned or operated for the entirety of the prior year period, the current year period has been pro-rated to reflect only growth experienced during the portion of the nine months ended September 30, 2024 in which such facilities were owned and operated during the nine months ended September 30, 2023.We define same-center facilities and procedure rooms based on if a facility was owned or operated as of September 30, 2023.
Previous report — wording carried elsewhere
The following table and notes summarize certain results from the statements of operations for each of the periods indicated and the changes between periods. The table also shows the percentage relationship to revenue for the periods indicated:
Previous report — wording carried elsewhere
Overview— Our financial results for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 reflect the addition of four de novo centers which increased procedure rooms by eight.
Previous report — wording carried elsewhere
Selling expenses consist of advertising costs for social, digital and traditional marketing and sales and marketing personnel. Total selling expenses were approximately $34.0 million and $27.4 million for the nine months ended September 30, 2024 and 2023, respectively. Our customer acquisition costs were approximately $3,095 and $2,400 per customer in the nine months ended September 30, 2024 and 2023, respectively. We intend to continue investing in our sales and marketing capabilities as we add new centers. Additionally, selling expenses as a percentage of revenue may fluctuate from quarter to quarter based on the timing and scope of our initiatives and the related impact to our revenue.
Previous report — wording carried elsewhere
Depreciation and Amortization—Depreciation and amortization increased to approximately $8.7 million for the nine months ended September 30, 2024 compared to $7.5 million for the same period in 2023. This increase is the result of having four additional de novo centers during the nine months ended September 30, 2024 as compared to the 2023 period.
Previous report — wording carried elsewhere
Income Tax Expense—Our effective tax rate is (38.5)% and 96.4% for the nine months ended September 30, 2024 and 2023, respectively. The main driver of the difference between the effective and statutory rate is non-deductible executive compensation under Section 162(m) of the Internal Revenue Code.