Airsculpt Technologies, Inc. Q3 FY2024 earnings call

• Back-to-basics priorities: improving lead-to-case conversion, ensuring de novo center success, and cost management. Converting leads to consultations is showing measured improvement with targeted advertising and historical lead engagement. De novo centers opened in Q3 (Kansas City, Columbus, Deerfield, Birmingham) are performing well, with 2023 de novo centers ahead of year one revenue objective. Cost savings goal: half of $1 million planned for the back half of the year achieved, with annualized savings of $2 million to be invested in marketing.
• Financials: Revenue down due to lower case and lead volume; average revenue per case $12,984 vs $13,658 YOY. Leads to consultation conversion improved; 53% of patients use financing. Balance sheet: cash $6 million, $5 million available on revolving credit facility, gross debt $71.3 million, leverage ratio 2.2x.

Revenue for the third quarter totaled $42.5 million, down 9.1% year-over-year with case volume down 4.3% from the prior year third quarter. Same-store cases declined 8.1% over the prior year but improved from the second quarter's 14% decline. Adjusted EBITDA was $4.7 million, or 11% of revenue, versus $9.1 million, or 19.4% of revenue, in the prior year quarter. Cost of service as a percentage of revenue was 41.8% versus 38.8% over the prior year period, with recent de novo openings reflecting a 130 basis point impact. Selling and general and administrative expenses increased $466,000 but had a $0.5 million reduction in corporate G&A cost offset by increased marketing spend.

• Revised revenue guidance for 2024 to $183 million to $189 million (preliminary sales release). Full year adjusted EBITDA guidance maintained at $23 million to $28 million. Strong pipeline of new centers, with 3 locations identified for 2025 and more expected in coming months.

Q: Joshua Raskin asked about new center ramp and Q4 contributions.

A: Dennis Dean said new centers opened in Q3 (Kansas City, Columbus, Deerfield, Birmingham) were in line, with improvement expected, and de novo centers opened last year performed above $4.5M revenue objective.

Q: Korinne Wolfmeyer asked about cost of service and SG&A.

A: Dennis Dean said cost of service ticked up due to de novo openings and fixed cost inflexibility, expecting improvement in Q4; SG&A had $4M+ marketing spend reduction, focusing on search marketing balance, with potential Q4 marketing spend uptick but not to Q2 levels, and $0.5M corporate G&A cost reduction continuing