Beauty Health Cuts 2026 Revenue Guidance, Raises EBITDA Outlook

Beauty Health (NASDAQ: SKIN ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Beauty Health reported revenue of approximately $72 million for Q2 2026, at the lower end of guidance, with equipment sales as a major headwind due to cautious capital investments by providers. Despite revenue challenges, adjusted EBITDA was $17 million, exceeding expectations due to strong gross margins and disciplined cost management. S. to lower upfront investment barriers and expand its market, expecting it to increase the installed base without cannibalizing sales.

Beauty Health is focusing on three strategic priorities: strengthening the HydraFacial franchise, increasing the value of existing systems, and expanding into adjacent categories. The company lowered its full-year revenue guidance to $280-$290 million but raised its adjusted EBITDA outlook to $39-$46 million, reflecting strong margin performance. Management expressed confidence in long-term opportunities, citing the HydraFacial brand's recognition and clinical validation, and plans for a new device launch in 2027.

Gross margin improvements were driven by lower costs and a favorable shift towards consumables, although future margins are expected to be pressured by increased equipment sales and R&D investments. The company received notice from Nasdaq regarding its stock price and plans a reverse stock split to comply with listing requirements. Full Transcript OPERATOR Good afternoon, ladies and gentlemen, and welcome to the Beauty Health second quarter 2026 earnings call. At this time, all lines are in listen-only mode.

Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, August 6, 2026. I would now like to turn the conference over to Noberto Aha, Investor Relations.

Please go ahead. Noberto Aha, Investor Relations Thank you, operator, and good afternoon, everyone. Thank you for joining us today to review Beauty Health's 2026 second quarter results. We released our results earlier this afternoon, which can be found on our corporate website.

Joining me on the call today is Beauty Health Chief Executive Officer Pedro Malha, along with our Chief Financial Officer, Mike Monahan. Before we begin, I want to remind everyone of the company's safe harbor language. Management may make forward-looking statements, including guidance and underlying assumptions. Forward-looking statements are based on current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially.

Listeners are cautioned not to place undue reliance on any forward-looking statements. For further discussion of risks related to our business, please refer to the risk factors contained in the company's filings with the SEC. In addition, this call presents non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measure is available in the earnings press release, which was furnished to the SEC and available on our website.

Following management's prepared remarks, we will open the call for a question-and-answer session. With that, I would now like to turn the call over to our CEO, Pedro Malha. Please go ahead, Pedro. Pedro Malha, President & CEO Good afternoon, everybody, and thank you for joining us to discuss our second quarter results.

Let me start with the quarter at a high level. Overall, this was a mixed quarter. Revenue came in at approximately $72 million at the lower end of our guidance range. Equipment sales remained the biggest headwind as providers continue to take a cautious approach to capital investments.

Consumables proved a bit more resilient, supported by the continued growth of our installed base. Although treatment activity remained below expectations, this overall revenue pressure was evident across both our domestic and international businesses, with international markets remaining a bit more challenging. At the same time, profitability for the quarter was significantly stronger than we expected. Adjusted EBITDA came in at $17 million, well above our guidance range and driven by strong gross margins and continued discipline in how we manage the business.

In summary, we are not satisfied with our top-line performance, but the quarter reinforced an important point: even in a more demanding commercial environment, we are building a stronger company with better margins, greater operating discipline, and a more resilient financial model. As importantly, nothing we saw this quarter changed our strategic direction. If anything, it reinforces it. Let me spend a few minutes now on what we are seeing in the market, because it can provide an important context for both the quarter and the strategic choices we are making.

The long-term demand for skin health remains healthy. What is changing is how that demand is being distributed. Consumers have more treatment options than ever before, and providers are making more selective capital investment decisions as they evaluate a broader range of technologies. We believe that environment rewards companies with trusted brands, meaningful innovation, strong clinical evidence, and deep provider relationships.

And those are the areas where our company is best positioned to compete and where we continue to focus our investments. As we said last quarter, market conditions are only a part of this story. Our responsibility is to execute better, and that is exactly where our efforts are focused. We are strengthening our commercial capabilities, improving how we engage with customers, and becoming more effective at converting opportunities.

Those are the things we can control, and that is where our team is focused every day. We also continue to believe strongly in the long-term opportunity for this business. For more than 20 years, HydraFacial has built one of the most recognized and clinically validated brands in professional skin health. Today we serve more than 36,000 providers worldwide, have a large and growing installed base, and generate around 75% of our revenue from recurring consumables, which together build durable competitive advantage that position us to create long-term value.

Last quarter we discussed several of the investments we're making across the business, including consumable boosters and the next generation of the HydraFacial device. Today I want to explain how this work together to support our long-term strategy. Our strategy is built around three priorities. First, strengthening and growing the core HydraFacial franchise.

Second, increasing the value of every system already in the field. And third, leveraging our platform and provider relationships to expand into attractive adjacent categories. Together, these priorities are designed to accelerate sustainable growth by expanding our installed base, increasing treatment utilization, growing recurring revenue, and creating a more diversified business over time. Let me start with the first priority: strengthening and growing our core HydraFacial franchise.

A key part of strengthening the franchise is making the platform easier and accessible to a broader range of providers. As we discussed in prior quarters, capital constraints remain one of the most significant barriers of adoption. S. a new device rental program designed to lower the upfront investment by providers and make HydraFacial accessible to more practices.

We believe this will expand our addressable market and support growth of our installed base. The financial accounting for the program is similar to our existing sales program, with the revenue for the sales being booked up front upon shipment. Also, the program was built with a third-party financing partner who takes ownership of the devices and administers the program. Part of this strategy of strengthening and growing our core HydraFacial franchise is also the investment we are making in the next generation of HydraFacial platform.

As we discussed last quarter, this remains a multi-year development program targeting a 2028 launch. Our objective here with the next generation of the HydraFacial platform is to deliver a meaningful step forward in clinical outcomes, treatment experience, and provider workflow, while also creating a compelling reason for existing customers to upgrade and for new customers to choose HydraFacial. Moving now into our second strategic priority, increasing the value of every system already in the field. Our installed base is one of our company's greatest competitive advantages.

It gives us longstanding relationships with providers around the world and supports a highly recurring revenue model that few companies in our industry can match. As we discussed last quarter, improving utilization remains one of the largest and most immediate growth opportunities that we have. So our objective here is very clear: to help providers perform more treatments, deliver better clinical outcomes, and improve the value of every customer visit. And that is exactly what our investments in clinically validated boosters and treatment enhancements are designed to do.

To support that strategy, our next clinically validated booster is expected to launch globally in the fourth quarter, with additional launches planned throughout 2027. Finally, our third strategic priority, which is to use our platform and provider relationships that we built over the past two decades and leverage those to expand into adjacent categories where providers and consumers are increasingly investing. This strategy is intended to diversify our portfolio and create additional growth engines, and to do so by building on capabilities we already have. The Skin Stylus microneedling device is a good example of that strategy in action.

It gives us participation in one of the fastest-growing categories in aesthetics and continues to perform well. And recently we received FDA clearance for the improvement in the appearance of periorbital wrinkles. And more importantly, it also demonstrates our ability to introduce clinically differentiated technology through the provider relationships we already established. Hydrosculp is another example.

The reposition and relaunch of Keravive extends our presence into the growing scalp and hair wellness category while increasing the value of HydraFacial systems already in the field. Following its June relaunch, we are encouraged by how Hydroscop continues to gain traction. S. market in 2027.

This is not another HydraFacial device and reflects our broader strategy of building a platform of clinically differentiated skin health solutions that leverages the provider relationships and commercial infrastructure we spent more than two decades building. So before I turn the call over to Mike, let me leave you with two observations here. First, we are not satisfied with our current performance. Despite our current business environment remaining challenging, improving execution is our responsibility and remains our highest priority.

Secondly, we believe our company has exceptional assets and a clear path to using them more effectively. The rental program and the continued advancement of our next generation platform demonstrate that the strategy is moving from planning to execution. We know that there is still plenty of work to do, but we are in the process of building a stronger and more diversified company with multiple opportunities for long-term growth. And so with that, I'll turn the call over to Mike to review the financial results in more detail.

Mike Monahan, CFO Thank you, Pedro. 8% versus the prior year. 4%, with 770 systems placed compared to 957 in the prior year. 5%, driven primarily by lower utilization and a tougher prior-year comparison that included booster launches.

8% year over year, and remains the foundation of our recurring revenue. Despite this continued top-line pressure, adjusted EBITDA came in above our projections. This was primarily driven by adjusted gross margin expansion, disciplined cost management, and timing of R&D investments and commercial initiatives. Sales performance by region is as follows.

2%. 4%, while delivery systems reflected the broader capital equipment pressure. 9 million, down 19%, driven by softness in both equipment and consumables. We've been actively addressing headwinds in the EMEA market.

We had personnel shortages in the region along with a shift of timing in distributor orders, which we expect to improve in the second half of the year. 4% during the second quarter. We transitioned Australia and New Zealand back to a distributor model from a direct model. We now have the entire APAC region being served by a distributor model.

We believe this approach better serves the region going forward. The 2026 financial impact of the Australia—New Zealand transition to a distributor model is a reduction of revenue of approximately 1 million. 8%. 9% in the prior year, representing a 500 basis point improvement.

The year-over-year improvement was primarily driven by three factors. First, lower cost of goods on equipment due to sell-through of trade-in units that pressured margins a year ago. Second, lower inventory-related charges and continued efficiency in operations as we realized the benefits of tightened inventory purchasing and disciplined cost management. And third, a favorable mix shift towards consumables.

8 million, reflecting lower personnel costs and improved efficiencies. 4 million. We expect R&D to step up in the second half of the year as our innovation initiatives ramp. 7 million in the prior year.

7 million a year ago. 1 million net gain related to the exchange and repurchases of our 2026 notes. 9 million in the prior year and above our guidance of 11 to 13 million. The year-over-year increase in adjusted EBITDA was largely driven by operating expense savings from lower selling and marketing expenses and lower professional service fees in G&A.

We ended the quarter with approximately 206 million in cash, cash equivalents and restricted cash. 5 million above our first-quarter ending cash position. Our October 2026 convertible maturity is approximately 103 million. Based on our current cash position and our expected second-half cash needs, we remain confident in our ability to address this maturity.

We will continue to evaluate options based on our cash needs and market conditions. As of today, our current plan is to repay the October 2026 maturity with cash on hand at the end of the third quarter. We are lowering our revenue outlook to 280 to 290 million by reducing the top end of the previous guide, reflecting continued pressure on year-over-year device sales. We are raising our adjusted EBITDA outlook to 39 to 46 million, from 35 to 45 million previously, reflecting the margin strength and cost discipline we delivered in the first half of the year.

Our second-half guidance reflects increased investment of 4 million in R&D and commercial initiatives versus the first half of the year. As a result, we are projecting our second-half adjusted EBITDA to decline relative to the first half. For the third quarter, we expect revenue of 65 to 70 million and adjusted EBITDA of 5 million to 7 million. Finally, I'd like to briefly address our Nasdaq listing.

As we disclosed, we received notice from Nasdaq that our stock had traded below the dollar minimum bid price requirement for 30 days. As outlined in our preliminary proxy statement filed last Friday, we will be asking stockholders to approve a reverse stock split at a special meeting scheduled for September 22. To remain compliant, the proxy provides a range of potential split ratios and, if approved, our Board will determine the specific ratio within that range it believes is appropriate based on market conditions and other relevant factors at the time of implementation. For more information, please read the definitive proxy statement that we will file with the SEC.

With that, I'll turn the call back to Pedro. Pedro Malha, President & CEO Thanks, Mike. Let me close with one final thought. This quarter did not change our view of the business.

The market remains demanding and we know that we need to continue improving on execution. But at the same time, we are making tangible progress against the strategic priorities that we laid out. The rental program is underway. Hydro Sculpt has been relaunched.

SkinStylus is taking good traction.