Airsculpt Technologies, Inc.

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 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.

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 April 6, 2026 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. 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 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

Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “AirSculpt,” “we,” “us” and “our” refer to AirSculpt Technologies, Inc. and its consolidated subsidiaries and the professional associations.

Current wording

Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report to the “Company,” “AirSculpt,” “we,” “us” and “our” refer to AirSculpt Technologies, Inc. and its consolidated subsidiaries and its related Professional Associations.

Previous wording

AirSculpt is an experienced 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 deliver our AirSculpt® procedures through a nationwide footprint of 31 centers across 20 states and Canada as of November 7, 2025.

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 31 centers across 20 states and Canada as of May 8, 2026.

Previous wording

Our case volumes in the table below, which are used for calculating revenue per case, represent one patient visit; notwithstanding that, a patient may have multiple areas treated during one visit. We believe this provides the best approach for assessing our revenue performance and trends.

Current wording

Our case volumes in the table below, which are used for calculating revenue per case, represent one patient visit although; a patient may have multiple areas treated during one visit. We believe this provides the best approach for assessing our revenue performance and trends.

Previous wording

For the three months ended September 30, 2025 and 2024, 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 three months ended September 30, 2025 and 2024, 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 three months ended September 30, 2025 in which such facilities were owned and operated during the three months ended September 30, 2024. We define same-center facilities and procedure rooms based on if a facility was owned or operated as of September 30, 2024. Beginning September 30, 2025, we have excluded the London facility from all periods presented due to the closure of the facility.

Current wording

For the three months ended March 31, 2026 and 2025, 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 three months ended March 31, 2026 and 2025, 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 three months ended March 31, 2026 in which such facilities were owned and operated during the three months ended March 31, 2025. We define same-center facilities and procedure rooms based on whether a facility was owned or operated as of March 31, 2025.

Previous wording

Our same-center case decline is primarily attributed to weaker than expected performance across the broader aesthetics industry.

Current wording

Our same-center case increase is primarily attributed to no new clinics being opened in fiscal year ended December 31, 2025 and stronger than expected performance across the broader aesthetics industry in the 2026 period.

Previous wording

We define Adjusted EBITDA as net loss excluding depreciation and amortization, net interest expense, income tax (benefit)/expense, restructuring and related severance costs, loss on impairment of long-lived assets, settlement costs for non-recurring litigation, and equity-based compensation.

Current wording

We define Adjusted EBITDA as net loss excluding depreciation and amortization, net interest expense, income tax benefit, restructuring and related severance costs, certain other non-recurring costs, unrealized (gain)/loss, and equity-based compensation.

Previous wording

We define Adjusted Net Income as net loss excluding restructuring and related severance costs, loss on impairment 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 excluding restructuring and related severance costs, equity-based compensation and the tax effect of these adjustments.

Previous wording

We include Adjusted EBITDA and Adjusted Net Income because they are important measures on which our management assesses and believes investors should assess our operating performance. We consider Adjusted EBITDA and Adjusted Net Income each to be an important measure because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis. Adjusted EBITDA has limitations as an analytical tool including: (i) Adjusted EBITDA does not include results from equity-based compensation and (ii) Adjusted EBITDA does not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments. Adjusted Net Income has limitations as an analytical tool because it does not include results from equity-based compensation.

Current wording

We include Adjusted EBITDA and Adjusted Net Income because they are important measures which our management uses and believes investors should use to assess our operating performance. We consider Adjusted EBITDA and Adjusted Net Income to be important measures because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis. However, Adjusted EBITDA has limitations as an analytical tool including that it: (i) does not include results from equity-based compensation and (ii) does not reflect interest expense on our debt or the cash requirements necessary to service interest or principal payments. Similarly, Adjusted Net Income has limitations as an analytical tool because it does not include results from equity-based compensation.

Previous wording

We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue. We define Adjusted Net Income per Share as Adjusted Net Income divided by weighted average basic and diluted shares. We included Adjusted EBITDA Margin and Adjusted Net Income per Share because they are important measures on which our management assesses and believes investors should assess our operating performance. We consider Adjusted EBITDA Margin and Adjusted Net

Current wording

We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of revenue. We define Adjusted Net Income per Share as Adjusted Net Income divided by weighted average basic and diluted shares. We included Adjusted EBITDA Margin and Adjusted Net Income per Share because they are important measures on which our management uses, and believes investors should use to assess our operating performance. We consider Adjusted EBITDA Margin and Adjusted Net Income per Share to be important measures because they help illustrate underlying trends in our business and our historical operating performance on a more consistent basis.

Previous wording

The following table reconciles Adjusted Net (Loss)/Income and Adjusted Net (Loss)/Income per Share to net loss, the most directly comparable GAAP financial measure:

Current wording

The following table reconciles Adjusted Net Loss and Adjusted Net Loss per Share to net loss, the most directly comparable GAAP financial measure:

Previous wording

(4) Diluted Adjusted Net Income Per Share is computed by dividing adjusted net income by the weighted-average number of shares of common stock outstanding adjusted for the dilutive effect of all potential shares of common stock.

Current wording

(1) Diluted Adjusted Net Loss Per Share is computed by dividing adjusted net income by the weighted-average number of shares of common stock outstanding adjusted for the dilutive effect of all potential shares of common stock.

Previous wording

Cost of Service—Our cost of services decreased $2.9 million, or 16.3%, 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 42.5% and 41.8% as a percentage of revenue for the three months ended September 30, 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.

Current wording

Cost of Service—Our cost of services decreased $0.4 million, or 2.3%, compared to the same period in 2025. The decrease in cost of service is driven by a $0.4 million decrease in medical payroll compared to the same period in 2025. Cost of service was 39.6% and 40.5% as a percentage of revenue for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Selling, General and Administrative Expenses—Selling, general and administrative expenses decreased $6.0 million, or 23.4%, for the three months ended September 30, 2025 compared to the same period in 2024. This decrease relates to a $0.5 million reduction in advertising costs, $2.3 million decrease in stock compensation expense, $1.4 million reduction in legal and professional service costs, $0.6 million reduction in travel, as well as a $0.8 million reduction in legal settlement costs, offset by a $1.1 million increase in rent expense related to the accelerated amortization of the London facility right-of-use assets. Selling, general and administrative expenses as a percent of revenue was at 55.8% and 59.9% for the three months ended September 30, 2025 and 2024, respectively.

Current wording

Selling, general and administrative expenses as a percent of revenue was 57.3% and 55.3% for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Selling expenses consist of advertising costs for social, digital and traditional marketing and sales and marketing personnel. Total selling expenses were approximately $8.8 million and $9.6 million for the three months ended September 30, 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 $3,145 and $2,900 per customer in the three months ended September 30, 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 paused de novo center and new procedure room openings, which is expected to have a favorable impact on selling expenses.

Current wording

Selling expenses consist of advertising costs for social, digital and traditional marketing and sales and marketing personnel. Total selling expenses were approximately $10.5 million and $9.6 million for the three months ended March 31, 2026 and 2025, respectively. Our customer acquisition costs were approximately $3,397 and $3,130 per customer in the three months ended March 31, 2026 and 2025, 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.

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 $10.8 million and $15.9 million for the three months ended September 30, 2025 and 2024, respectively. This decrease relates to a $2.3 million decrease in stock compensation expense and $1.4 million decrease in legal and professional service costs. We have also implemented a cost reduction program that was estimated to eliminate approximately $3.0 million in annual overhead costs and contracted expenses during fiscal year 2025.

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 $12.2 million for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

Depreciation and Amortization—Depreciation and amortization increased to approximately $3.2 million for the three months ended September 30, 2025 compared to $3.0 million for the same period in 2024. This increase is the result of having five additional de novo centers during the three months ended September 30, 2025 as compared to the 2024 period.

Current wording

Depreciation and Amortization—Depreciation and amortization decreased to approximately $3.0 million for the three months ended March 31, 2026 compared to $3.2 million for the same period in 2025. This decrease is driven primarily by the net reduction of one clinic location and one office location during the three months ended March 31, 2026 as compared to the 2025 period.

Previous wording

Interest Expense, net—Interest expense was $1.4 million and $1.6 million for the three months ended September 30, 2025 and 2024, respectively.

Current wording

Interest Expense, net—Interest expense was $1.2 million and $1.6 million for the three months ended March 31, 2026 and 2025, respectively. The $0.4 million decrease was related to principal prepayments which reduced the outstanding balance.

Previous wording

Income Tax Expense— Our effective tax rate was 14.7% and (13.8)% for the three months ended September 30, 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.

Current wording

Income Tax Expense— Our effective tax rate was 16.2% and 11.4% for the three months ended March 31, 2026 and 2025, 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, subject to minimum liquidity draw requirements. 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 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, subject to minimum liquidity draw requirements. In March 2025, we filed a Registration Statement on Form S-3 (File No. 333-285825) which covers the offer, 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. During the quarter ended March 31, 2026, the Company sold approximately 5.9 million shares of common stock through its at-the-market offering program for total net proceeds of approximately $14.6 million. Additionally, during the quarter ended March 31, 2026, 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

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 was estimated to eliminate approximately $3.0 million in annual overhead costs and contracted expenses during fiscal year 2025, 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 wording

Our primary uses of cash are for payroll, marketing and advertisements, rent, debt service, 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 two most recent years due to a decline in overall cases performed. 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 of our growth strategies, or otherwise fail to implement those strategies successfully, the operating results and liquidity may be adversely affected.

Previous wording

As of September 30, 2025, we had $5.4 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, 2025.

Current wording

As of March 31, 2026, we had $16.7 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, 2026.

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 did 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 and no availability under our revolving credit facility. We did not have any letters of credit outstanding as of March 31, 2025.

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, 2025, our operating cash flow decreased by $3.0 million compared to the same period in 2024. The decrease is primarily attributed to weaker than expected revenue performance during the nine months ended September 30, 2025 as compared to the prior year period. At September 30, 2025, we had a working capital deficit of $(11.9) million compared to $(11.5) million at December 31, 2024.

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, 2026, our operating cash flow increased by $4.4 million compared to the same period in 2025. This improvement was primarily driven by favorable working capital changes and the benefits realized from cost savings initiatives implemented during the prior year. At March 31, 2026, we had a working capital deficit of $(8.2) million compared to $(12.4) million at December 31, 2025.

Previous wording

Net cash used in investing activities for the nine months ended September 30, 2025 and 2024 was $2.3 million and $10.5 million, respectively. Investing activities in the nine months ended September 30, 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 nine months ended September 30, 2024 were attributable to the preparation for the opening of our 2024 de novo locations.

Current wording

Net cash used in investing activities for the three months ended March 31, 2026 and 2025 was $0.1 million and $1.9 million, respectively. Investing activities in the three months ended March 31, 2026 relate primarily to maintenance capital expenditures. Investing activities during the three months ended March 31, 2025 relate primarily to final payments on our White Plains, NY location that opened in December 2024.

Previous wording

Net cash used in financing activities during the nine months ended September 30, 2025 was $6.1 million. During the nine months ended September 30, 2025, we received net proceeds of $14.0 million from an underwritten public offering, made principal payments on our debt of $12.9 million, payments for debt modification of $0.3 million and made payments of taxes withheld through vested equity-based compensation of $0.1 million.

Current wording

Net cash used in financing activities during the three months ended March 31, 2026 was $3.0 million. During the three months ended March 31, 2026, we received net proceeds of $14.6 million from the at-the-market offering, made principal payments on our debt of $11.4 million and made payments of taxes withheld through vested equity-based compensation of $0.2 million.

Previous wording

Net cash used in financing activities for the nine months ended September 30, 2024 was $2.4 million. For 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, 2025 was $1.6 million. For the three months ended March 31, 2025, we made principal payments on our debt of $1.1 million and made payments of taxes withheld through vested equity-based compensation of $0.1 million.

Previous wording

During the three and nine months ended September 30, 2025, we sold the following quantities of our common stock pursuant to the ATM Agreement for total net proceeds of approximately $0 and $264 thousand:

Current wording

For the quarter ended, March 31, 2026, we sold the following quantities of our common stock pursuant to the ATM Agreement for total net proceeds of approximately $14.6 million:

Previous wording

The carrying value of our total indebtedness was $56.9 million and $74.7 million, which includes unamortized deferred financing costs and issuance discount of $1.0 million and $1.0 million, and funds drawn on the revolving credit facility of $0.0 million and $5.0 million, as of September 30, 2025 and December 31, 2024, respectively.

Current wording

The carrying value of our total indebtedness was $44.8 million and $56.0 million, which includes unamortized deferred financing costs and issuance discount of $0.8 million and $0.9 million as of March 31, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

On November 7, 2022, the Company entered into the Term Loan and Revolving Credit Facility pursuant to the 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. Additionally, during the quarter-ended March 31, 2026, 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 March 12, 2025, the Company entered into the Third Amendment to the Credit Agreement (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 wording

On March 12, 2025, the Company entered into 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.

Previous wording

In addition to revising the covenants listed above, the Third 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; (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 thousand arrangement fee to Silicon Valley Bank. 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 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 was callable on June 15, 2025 (or upon the earlier occurrence of certain defaults described therein) if the Company had not prepaid the term loan (excluding regularly scheduled amortization) by $10.0 million as of such date. Under the terms of the Limited Guarantee, if our Sponsor was required to make any payment under the Limited Guarantee (other than as a result of a bankruptcy event), then our Sponsor would 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 agreed to issue a subordinated note to our Sponsor if a payment occurred under the Limited Guarantee, to the extent such payment did not result from the issuance of shares of common stock by the Company to our Sponsor.

Current wording

In addition to revising the covenants listed above, the Third 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; (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 our 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 thousand arrangement fee to Silicon Valley Bank. On March 12, 2025, in connection with the Third Amendment, the Company, SVB and our Sponsor (through certain affiliated entities) entered into 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 was callable on June 15, 2025 (or upon the earlier occurrence of certain defaults described therein) in the Company had not prepaid the Term Loan (excluding regularly scheduled amortization) by $10.0 million as of such date. On June 13, 2025, the Company made a $10.0 million principal payment on the term loan in accordance with the Third Amendment using proceeds from its underwritten public offering completed on June 11, 2025. The Limited Guarantee automatically terminated on March 12, 2026 following the prepayment of the Term Loan in an aggregate amount of $20.0 million since the date of the Limited Guarantee.

Previous wording

As of September 30, 2025, the interest rate under the Credit Agreement was 8.82%.

Current wording

As of March 31, 2026, the interest rate under the Credit Agreement was 8.42%.

Previous 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.

Current wording

A summary of significant accounting policies is disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025 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 since the date of that report.