Airsculpt Technologies, Inc.

NOTE 1 – ORGANIZATION AND SUMMARY OF KEY ACCOUNTING POLICIES

AirSculpt Technologies, Inc. (“AirSculpt” or the "Company"), was formed as a Delaware corporation on June 30, 2021. The Company's revenues are concentrated in the specialty, minimally invasive liposuction market. The Company and its consolidated subsidiaries are referred to collectively in these condensed consolidated financial statements as “we,” “our,” and “us.” Solely for convenience, some of the copyrights, trade names and trademarks referred to in these condensed consolidated financial statements are listed without their©,® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks.

The Company, through its wholly-owned subsidiaries, is a provider of practice management services to professional associations (“PAs”) located throughout the United States and Canada. The Company owns and operates non-clinical assets and provides its management services to the PAs through management services agreements (“MSAs”). Management services provide for the administration of the non-clinical aspects of the medical operations and include, but are not limited to, financial, administrative, technical, marketing, and personnel services. Pursuant to the MSA, the PA is responsible for all clinical aspects of the medical operations of the practice.

Principles of Consolidation

These consolidated financial statements present the financial position and results of operations of the Company, its wholly-owned domestic and international subsidiaries, and its variable interest in the managed PAs in the United States (the "Domestic PAs"), which are under the control of the Company and are considered variable interest entities in which the Company is the primary beneficiary.

All intercompany accounts and transactions have been eliminated in consolidation.

Interim Financial Statement Presentation

The accompanying condensed consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

Variable Interest Entities

The Company has a variable interest in the Domestic PAs where it has a long-term and unilateral controlling financial interest over their assets and operations. The Company has the ability to direct the activities that most significantly affect the Domestic PAs’ economic performance via the MSAs and related agreements. The Company is a practice management service organization and does not engage in the practice of medicine. These services are provided by licensed professionals at each of the Domestic PAs. Certain key features of the MSAs and related agreements enable the Company to assign the member interests of certain of the Domestic PAs to another member designated by the Company (i.e. “nominee shareholder”) for a nominal value in certain circumstances at the Company’s sole discretion. The MSA does not allow the Company to be involved in, or provide guidance on, the clinical operations of the Domestic PAs. The Company consolidates the Domestic PAs into the financial statements. All of the Company’s revenue is earned from services provided by the Domestic PAs and its wholly-owned foreign subsidiary in Canada. The only assets and liabilities held by the Domestic PAs included in the accompanying consolidated balance sheets are clinical related. The clinical assets and liabilities are not material to the Company as a whole.

Accounting 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, liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Concentration of Credit Risk

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. The Company’s revenues are concentrated in the specialty, minimally invasive liposuction market.

The Company maintains cash balances at financial institutions which may at times exceed the amount covered by the Federal Deposit Insurance Corporation. The Company has not experienced any losses in such accounts.

Deferred Financing Costs, Net

Loan costs and discounts are capitalized in the period in which they are incurred and amortized on the straight-line basis over the term of the respective financing agreement which approximates the effective interest method. These costs are included as a reduction of long-term debt on the condensed consolidated balance sheets. Total amortization of deferred financing costs was approximately $0.1 million and $0.1 million for the three months ended September 30, 2026 and 2025, respectively. Total amortization of deferred financing costs was approximately $0.4 million and $0.4 million for the nine months ended September 30, 2026 and 2025, respectively. Amortization of loan costs and discounts is included as a component of interest expense.

Long-Lived Assets

The Company accounts for impairment of long-lived assets in accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350, Intangibles – Goodwill and Otherand Topic 360, Impairment or Disposal of Long-Lived Assets. These standards require that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to future estimated cash flows expected to arise as a direct result of the use and eventual disposition of the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs to sell. Total loss on long lived assets was approximately $0 and $7.2 million for the nine months ended September 30, 2026 and 2025, respectively.

Loss on long-lived assets in the period ended September 30, 2025 were related to impairment of property, plant, and equipment at the closed London location of $2.3 million, and Salesforce software implementation project of $4.6 million.

Fair Value

ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosure requirements about fair value measurements.

ASC Topic 820 defines three categories for the classification and measurement of assets and liabilities carried at fair value:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or observable inputs that are corroborated by market data.

Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions.

The fair value of financial instruments is generally estimated through the use of public market prices, quotes from financial institutions and other available information. Judgment is required in interpreting data to develop estimates of market value and, accordingly, amounts are not necessarily indicative of the amounts that could be realized in a current market exchange.

Short-term financial instruments, including cash, prepaid expenses and other current assets, accounts payable, and other liabilities, consist primarily of instruments without extended maturities, for which the fair value, based on management’s estimates, approximates their carrying values. Borrowings bear interest at what is estimated to be current market rates of interest, accordingly, carrying value approximates fair value.

Earnings Per Share

Basic earnings per share of common stock is computed by dividing net loss for the three and nine months ended September 30, 2026 and 2025 by the weighted-average number of shares of common stock outstanding during the same period. Diluted earnings per share of common stock is computed by dividing net loss for the three and nine months ended

September 30, 2026 and 2025 by the weighted-average number of shares of common stock adjusted to give effect to potentially dilutive securities.

Advertising Costs

Advertising costs are expensed in the period when the costs are incurred and are included as a component of selling, general and administrative costs. Advertising expenses were approximately $6.7 million and $6.4 million for the three months ended September 30, 2026 and 2025, respectively, and approximately $23.3 million and $20.9 million for the nine months ended September 30, 2026 and 2025, respectively.

Income Taxes

The Company applies the provisions of ASC 740-10, Accounting for Uncertain Tax Positions (“ASC 740-10”). Under these provisions, companies must determine and assess all material positions existing as of the reporting date, including all significant uncertain positions, for all tax years that are open to assessment or challenge under tax statutes. Additionally, those positions that have only timing consequences are analyzed and separated based on ASC 740-10’s recognition and measurement model.

As required by the uncertain tax position guidance, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the condensed consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company applied the uncertain tax position guidance to all tax positions for which the statute of limitations remained open and determined that there areno uncertain tax positions as of September 30, 2026 or December 31, 2025.

The Company has an effective tax rate of approximately (33.2)% and 14.7% for the three months ended September 30, 2026 and 2025, respectively, and approximately (12.9)% and 14.5% for the nine months ended September 30, 2026 and 2025, respectively, inclusive of all applicable U.S. federal and state income taxes.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities (PBEs) to disclose detailed breakdowns of specific expense captions (e.g. COGS, SG&A) in annual and interim notes. It mandates tabular, disaggregated information—such as employee compensation, depreciation, and amortization—to improve transparency for investors. The ASU is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is evaluating the impact of this ASU on its consolidated financial statements.

NOTE 2 – GOODWILL AND INTANGIBLES, NET

During the three months ended September 30, 2026, the Company identified a triggering event with respect to its finite-lived intangible assets, which consist of technology and know-how and trademarks and trade names and had a combined carrying amount of $33.3 million at September 30, 2026. The triggering event resulted from a current-period operating loss combined with a history of operating and net losses, lower case volumes and revenue in the third quarter of 2026 compared to the prior year, and a reduction in the Company’s expected 2026 financial results.

The Company evaluated the recoverability of the asset group that includes these intangible assets by comparing its carrying amount to the undiscounted cash flows expected to result from the use of the asset group over the remaining useful life of the primary asset, which is approximately seven years. Based on this evaluation, the Company concluded that the carrying amount of the asset group is recoverable and, accordingly, no impairment loss was recognized during the three and nine months ended September 30, 2026.

The Company had goodwill of $81.7 million at September 30, 2026 and December 31, 2025.

Intangible assets consisted of the following at September 30, 2026 and December 31, 2025 (in 000’s):

Amortization of intangible assets will be $4.8 million per year for each of the next five fiscal years.

Aggregate amortization expense on intangible assets was approximately $1.2 million for each of the three months ended September 30, 2026 and 2025, and $3.6 million for each of the nine months ended September 30, 2026 and 2025.

NOTE 3 – PROPERTY AND EQUIPMENT, NET

As of September 30, 2026 and December 31, 2025 property and equipment consists of the following (in 000’s):

Depreciation expense was approximately $1.7 million and $2.0 million for the three months ended September 30, 2026 and 2025, respectively, and $5.3 million and $6.1 million for the nine months ended September 30, 2026 and 2025, respectively.

NOTE 4 – DEBT

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 with 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. 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.

On March 12, 2025, the Company entered into an 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 in the Credit Agreement, 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 0.50 x and 1.10 x, respectively, and no less than 1.25 x on the last day of the fiscal quarters ending September 30, 2025 and thereafter, instead of 1.10 x as of March 31, 2025 and 1.25 x 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 4.25 x,3.50 x,3.25 x,3.25 x, and 2.75 x, respectively, and the Consolidated Leverage Ratio as of the last day of each fiscal quarter thereafter must not exceed 2.25 x, instead of 3.25 x as of March 31, 2025,2.75 x as of June 30, 2025, and 2.25 x 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.

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 would be increased to 3.75% or 4.75% for base rate or SOFR (as defined in the Credit Agreement), respectively, if the Company's total leverage ratio was equal to or greater than 3.00 x,3.50% or 4.50% for base rate or SOFR, respectively, if the Company's total leverage ratio was equal to or greater than 2.00 x and less than 3.00 x, and 3.25% or 4.25% for base rate or SOFR, respectively, if the Company's total leverage ratio was below 2.00 x, (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 Silicon Valley Bank ("SVB") for certain fees and expenses relating to the engagement of a financial advisor, and (vi)100% of the first $10.0 million of any equity proceeds will be used to repay the term loan and revolving credit facility, subject to the following carve-outs (A) the first $3.0 million of equity proceeds; and (B) any equity proceeds received from Vesey Street Capital Partners, L.L.C., our private equity sponsor (“Sponsor”). In consideration for the Third Amendment, the Company paid a fee equal to 0.15% of the outstanding loans to consenting Lenders (as defined in the Credit Agreement) and a $0.125 million 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 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 loans (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 loans 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 loans in an aggregate amount of $20.0 million since the date of the Limited Guarantee.

On August 7, 2026, the Company entered into a further amendment to the Credit Agreement (the "Fourth Amendment") to, among other things: (i) extend the maturity date of the term loan and revolving credit facility to November 15, 2027 (approximately asix-month extension from the previous May 11, 2027 maturity date); (ii) require the Company to make a $2.5 million payment to the Lenders upon signing of the Fourth Amendment; (iii) require the Company to make an additional $2.5 million payment on or before September 30, 2026; (iv) require that 50% of the net proceeds of any future equity issuances (other than issuances under our equity incentive plans) be applied to prepay the term loans, in addition to amounts otherwise required to be applied under the Credit Agreement; (v) require the Company to provide biweekly updates on a conference call with the Lenders with respect to the status of its efforts to refinance; and (vi) require the Company, if the refinance has not occurred by October 31, 2026, to retain one or more investment banks reasonably satisfactory to the Administrative Agent to assist the Company with a refinance, whether by obtaining replacement debt financing or otherwise.

Since the execution of the Fourth Amendment on August 7, 2026, the Company has made all required payments under the Credit Agreement, including the $2.5 million payment due upon signing and the additional $2.5 million payment due on or before September 30, 2026. The Company has also applied 50% of the net proceeds from equity issuances under its at-the-market (ATM) offering to prepay the term loans, as required by the Fourth Amendment. During the quarter ended September 30, 2026, the Company prepaid $0.7 million on the term loan from ATM net proceeds. On October 20, 2026, the Company made a prepayment of $1.7 million from ATM net proceeds.

On November 5, 2026, the Company entered into a financing agreement (the "Blue Torch Financing Agreement") with a syndicate of lenders and Blue Torch Finance LLC ("Blue Torch"), as administrative agent and collateral agent, maturing on November 5, 2031. Under the Blue Torch Financing Agreement, there is a senior secured (i) term loan facility with an aggregate principal amount of $39.0 million, which was funded in full at closing, and (ii) revolving loan facility with an aggregate commitment of up to $5.0 million, none of which was drawn at closing. Pursuant to the Blue Torch Financing Agreement, borrowings bear interest at a rate of Term SOFR (as defined in the Blue Torch Financing Agreement) plus an applicable margin of 7.75%, which may be decreased to 6.75% based on leverage level. The lenders party to the Blue Torch Financing Agreement have been granted a first-priority security interest in substantially all assets of the Company. The Blue Torch Financing Agreement contains customary affirmative and negative covenants for transactions of this type, including limitations on indebtedness, liens, investments, restricted payments, asset sales, and affiliate transactions. The Blue Torch Financing Agreement also includes customary events of default and financial maintenance covenants, including (a) a maximum Leverage Ratio (as defined in the Blue Torch Financing Agreement) of 4.50:1.00 for each fiscal quarter ending December 31, 2026 through September 30, 2027, stepping down over time to 2.00:1.00 for each fiscal quarter ending December 31, 2030 and thereafter, (b) a minimum Fixed Charge Coverage Ratio (as defined in the Blue Torch Financing Agreement) of 1.00:1.00 for each fiscal quarter ending December 31, 2026 through September 30, 2027, increasing to 1.10:1.00 for each fiscal quarter ending December 31, 2027 through September 30, 2028 and 1.20:1.00 for each fiscal quarter ending December 31, 2028 and thereafter, and (c) minimum average weekly Liquidity (as defined in the Blue Torch Financing Agreement) of $7.5 million prior to September 30, 2027 and $5.0 million thereafter. The Blue Torch Financing Agreement requires mandatory prepayments of the loans from excess cash flow for each fiscal year beginning with fiscal year 2027, payable following delivery of the audited annual financial statements for that fiscal year, in percentages ranging from 0% to 75% depending on the Company's gross leverage ratio, and from the net proceeds of certain asset dispositions, incurrences of indebtedness and extraordinary receipts, and from the proceeds of equity issued to cure certain financial covenant defaults. Proceeds from the Blue Torch Financing Agreement were used to repay in full all indebtedness under, and terminate, the Credit Agreement and to pay fees and expenses related to the Blue Torch Financing Agreement.

As of September 30, 2026, the interest rate under the Credit Agreement was 8.15%.

Total borrowings as of September 30, 2026 and December 31, 2025 were as follows (in 000’s):

As of September 30, 2026 and December 31, 2025, the Company had $5.0 million available on the revolving credit facility.

The scheduled future maturities of long-term debt as of September 30, 2026 are as follows (in 000’s):

All borrowings under the Credit Agreement are cross collateralized by substantially all assets of the Company and are subject to certain restrictive covenants including quarterly total leverage ratio and fixed charge ratio requirements discussed above. The Company is in compliance with all covenants and hasno letter of credit outstanding as of September 30, 2026.

NOTE 5 – LEASES

The Company’s operating leases are primarily for real estate, including medical office suites and corporate offices. For the three months ended September 30, 2026 and 2025, the Company incurred rent expense of $1.3 million and $2.8 million, respectively, for its medical office suites. For the nine months ended September 30, 2026 and 2025, the Company incurred rent expense of $4.7 million and $6.3 million, respectively, related to its medical office suites. The Company’s rent expense related to its medical office suites is classified in cost of services within the Company’s condensed consolidated statements of operations. The Company incurred rent expense of $59,521 and $63,853 for the three months ended September 30, 2026 and 2025, respectively, and $189,596 and $218,809 for the nine months ended September 30, 2026 and 2025, respectively, related to the corporate offices which is classified in selling, general and administrative expenses. The Company currently does not have any finance leases.

Real estate lease agreements typically have initial terms offive toten years and may includeone or more options to renew. The useful life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. The Company’s lease agreements do not contain any material residual value guarantees, restrictions or covenants.

The following table presents supplemental cash flow information for the nine months ended September 30, 2026 and 2025 (in 000’s):

Future minimum rental payments under all non-cancellable operating lease agreements for the succeeding five years are as follows, excluding common area maintenance charges that may be required by the agreements (in 000’s):

NOTE 6 – STOCKHOLDERS' EQUITY AND EQUITY-BASED COMPENSATION

During the three and nine months ended September 30, 2026, the Company granted 0 and 2,103,098 restricted stock units ("RSUs") to executive officers and employees under the 2021 Equity Incentive Plan, respectively. During the three and nine months ended September 30, 2025, the Company granted 18,634 and 1,082,717 RSUs, respectively. These RSUs are not considered outstanding until vested. These RSUs have a time-based vesting condition. These units will vest one-third per year over three years. Vesting and payment of these RSUs are generally subject to continuing service of the employee or non-employee director over the requisite vesting periods beginningone year from the date of grant tothree years after the date of grant. The fair values of these RSUs were determined based on the closing price of the Company’s common stock on the trading date immediately prior to the grant date.

During the three and nine months ended September 30, 2026, the Company also granted 0 and 682,773 performance based stock units ("PSUs"), respectively, which have market-based vesting conditions. In the three and nine months ended September 30, 2025, the Company granted 0 and 899,919 PSUs, respe ctively. The vesting of the PSUs is based on achievement of a total shareholder return relative to a specified peer group (“rTSR”) within thethree year performance period. Based on the rTSR, the PSUs can settle in shares in a range from 0% to 200%. Additionally, during the three and nine months ended September 30, 2025, our CEO was granted 0 and 220,836 PSUs, respectively, with vesting conditioned on the attainment of a 60-day volume weighted average price ("VWAP") in relation to the per share closing price on the date of grant. These awards are structured with one-fourth vesting at 125% VWAP, one-fourth vesting at 175% VWAP, one-fourth vesting at 200% VWAP, and the final one-fourth vesting at 225% VWAP. In addition to the achievement of the performance conditions, all PSUs are generally subject to the continuing service of the employee over the requisite vesting period from the earned date continuing through the settlement of the shares, subject to exceptions (in whole or in part) upon certain qualifying terminations of service, as provided in the applicable award agreement. For these PSUs, the shares settle in the first quarter of the year following the year in which the vesting criteria are met. The performance criterion is based on the Company’s actual performance condition results as compared to the targets. These PSUs are not considered outstanding until settled. The fair values of PSUs with a market-based vesting condition were estimated using a Monte Carlo simulation model.

The Company recorded equity-based compensation expense of $1.1 million and $1.1 million for the three months ended September 30, 2026 and 2025, respectively, and $2.6 million and $3.7 million for the nine months ended September 30,

2026 and 2025, respectively, in selling, general and administrative expenses on the condensed consolidated statements of operations. Forfeitures are recognized as incurred.

At-the-Market Common Offering Program

On March 14, 2025, the Company entered into a sales agreement (the “ATM Agreement”) with Leerink Partners LLC ("Leerink"), as sales agent, in connection with an at-the-market offering program under which the Company 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). The Company and Leerink each have the right to suspend or terminate the ATM Agreement in each party’s sole discretion at any time. As of September 30, 2026, the Company had sold 11,504,516 shares of common stock under the ATM Agreement for gross proceeds of approximately $33.4 million, and approximately $16.6 million remained available for sale under the ATM Agreement.

In the three and nine months ended September 30, 2026, the Company sold the following quantities of our common stock pursuant to the ATM Agreement for total net proceeds of approximately $7.2 million and $26.7 million, respectively:

NOTE 7 – EARNINGS PER SHARE

Basic earnings per share of common stock is computed by dividing net loss for the three and nine months ended September 30, 2026 and 2025 by the weighted-average number of shares of common stock outstanding during the same period. Diluted earnings per share of common stock is computed by dividing net loss for the three and nine months ended September 30, 2026 and 2025 by the weighted-average number of shares of common stock adjusted to give effect to potentially dilutive securities.

A reconciliation of the numerator and denominator used in the calculation of basic and diluted net loss per share of common stock is as follows (in 000’s except for shares and per share figures):

The following number of potentially dilutive shares were excluded from the calculation of diluted loss per share because the effect of including such potentially dilutive shares would have been antidilutive.

NOTE 8 – INCOME TAXES

The Company's income tax (benefit)/expense for the three months ended September 30, 2026 and 2025 was $1.8 million and $(1.6) million, respectively, and the income tax (benefit)/expense for the nine months ended September 30, 2026 and 2025 was $1.2 million and $(2.2) million, respectively. The 2026 amounts include $2.7 million of discrete income tax expense recorded in the third quarter related to an increase in the valuation allowance on federal and state net operating loss deferred tax assets. The effective tax rate for the three months ended September 30, 2026 and 2025 was (33.2)% and 14.7%, respectively. The effective tax rate for the nine months ended September 30, 2026 and 2025 was (12.9)% and 14.5%, respectively. The quarterly income tax expense is based on an updated projection of the Company’s annual effective tax rate. This updated annual effective tax rate is applied to the year-to-date consolidated pre-tax income to determine the interim provision for income taxes. The impact of any change in the projected annual effective tax rate from the prior quarter is reflected in the quarterly income tax expense. The change in the effective tax rate before discrete items each period is impacted by a number of factors, including adjustments to the valuation allowances. The actual year-end 2026 effective tax rate may vary from the currently projected tax rate due to changes in these factors.

The Company evaluates the realizability of its deferred tax assets each reporting period, considering all available positive and negative evidence, including cumulative losses in recent years, the expected timing of reversals of existing temporary differences, tax planning strategies, and projected future taxable income. During the three months ended September 30, 2026, the Company entered into a three-year cumulative loss position and had limited sources of future taxable income. Based on this evaluation, the Company concluded that it is more likely than not that a portion of its deferred tax assets will not be realized, and the Company recorded a valuation allowance against those deferred tax assets, including federal and state net operating loss carryforwards. The valuation allowance increased to $3.3 million as of September 30, 2026, compared tonone as of December 31, 2025.

Of the $3.3 million valuation allowance, $2.7 million relates to federal ($2.0 million) and state ($0.7 million) net operating loss deferred tax assets that existed as of December 31, 2025. Because this reflects a change in judgment about the realizability of beginning-of-year deferred tax assets, the $2.7 million portion of the valuation allowance increase was recognized discretely in the third quarter. The remaining $0.6 million relates to losses generated in 2026 and is reflected in the estimated annual effective tax rate.

There areno uncertain tax positions as of September 30, 2026.

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Professional Liability

In the ordinary course of business, the Company becomes involved in pending and threatened legal actions and proceedings, most of which involve claims of medical malpractice related to medical services provided by the PAs' employed and affiliated physicians. The Company may also become subject to other lawsuits which could involve large claims and significant costs. The Company believes, based upon a review of pending actions and proceedings, that the outcome of such legal actions and proceedings will not have a material adverse effect on its business, financial condition, results of operations, and cash flows. The outcome of such actions and proceedings, however, cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows.

Although the Company currently maintains liability insurance coverage intended to cover professional liability and certain other claims, the Company cannot assure that its insurance coverage will be adequate to cover liabilities arising out of claims asserted against it in the future where the outcomes of such claims are unfavorable. Liabilities in excess of the Company’s insurance coverage, including coverage for professional liability and certain other claims, could have a material adverse effect on the Company’s business, financial condition, results of operations, and cash flows.

NOTE 10 – SEGMENT INFORMATION

The Company hasone operating andone reportable segment: direct medical procedure services. This segment is made up of facilities and medical staff that provide the Company’s patented AirSculpt® procedures to patients. The accounting policies of the direct medical procedure services segment are the same as those presented in Note 1 - Organization and Summary of Key Accounting Policies. The Company’s chief operating decision maker (“CODM”) is the Company’s chief executive officer. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources. The Company’s CODM reviews revenue, gross profit, Adjusted EBITDA and net loss. The CODM uses Adjusted EBITDA as the primary profit metric to evaluate income generated from operations in deciding where to spend additional marketing dollars or allocate additional resources. Gross profit is defined as revenues less cost of service incurred and Adjusted EBITDA is defined as net loss excluding depreciation and amortization, net interest expense, unrealized loss, income tax expense/(benefit), restructuring and related severance costs, certain other non-recurring costs, and equity-based compensation. Segment information is presented below showing revenue, significant expenses and net loss (the closest GAAP measure to Adjusted EBITDA), in the same manner that the CODM reviews the operating results in assessing performance and allocating resources.

NOTE 11 – ACCRUED AND OTHER CURRENT LIABILITIES

As of September 30, 2026 and December 31, 2025 accrued and other current liabilities consist of the following (in 000’s):