# EDGAR Filing Document

**Accession Number:** 0001818093
**File Stem:** 0001628280-26-032326
**Filing Date:** 2026-5
**Character Count:** 176761
**Document Hash:** aab08a2d7cf30eb1388f1a13984dd1c1
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001628280-26-032326.hdr.sgml**: 20260507

**ACCESSION NUMBER**: 0001628280-26-032326

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 73

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260507

**DATE AS OF CHANGE**: 20260507

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SkinHealth Systems Inc.
- **CENTRAL INDEX KEY:** 0001818093
- **STANDARD INDUSTRIAL CLASSIFICATION:** SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
- **ORGANIZATION NAME:** 08 Industrial Applications and Services
- **EIN:** 851908962
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-39565
- **FILM NUMBER:** 26954885

**BUSINESS ADDRESS:**
- **STREET 1:** 3600 E. BURNETT STREET
- **CITY:** LONG BEACH
- **STATE:** CA
- **ZIP:** 90815
- **BUSINESS PHONE:** 800-603-4996

**MAIL ADDRESS:**
- **STREET 1:** 3600 E. BURNETT STREET
- **CITY:** LONG BEACH
- **STATE:** CA
- **ZIP:** 90815

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Beauty Health Co
- **DATE OF NAME CHANGE:** 20210504

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Vesper Healthcare Acquisition Corp.
- **DATE OF NAME CHANGE:** 20200714

?xml version='1.0' encoding='ASCII'? skin-20260331

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 10-Q**

☒ **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended March 31, 2026** 

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from __________ to __________.**

**Commission File Number: 001-39565** 

**SkinHealth Systems Inc.** 

**(Exact name of registrant as specified in its charter)**

---

| | |
|:---|:---|
| **Delaware** | **85-1908962** |
| (State or other jurisdiction of <br>incorporation or organization) | (I.R.S. Employer Identification No.) |

---

---

| | |
|:---|:---|
| **3600 E. Burnett Street**<br>**Long Beach, CA 90815** | **(800) 603-4996** |
| (Address of principal executive offices, including zip code) | Registrant's telephone number, including area code |

---

---

| |
|:---|
| **The Beauty Health Company**<br>**2165 Spring Street, Long Beach, CA 90806** |
| (Former name, former address and former fiscal year, if changed since last report) |

---

**Securities registered pursuant to Section 12(b) of the Act:** 

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| **Class A Common Stock, par value $0.0001 per share** | **SKIN** | **The Nasdaq Capital Market** |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated filer | ☒ |
| Non-accelerated filer | ☐ | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Smaller reporting company | ☐ |
| | | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Emerging growth company | ☐ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 5, 2026, there were 129,600,040 shares of Class A Common Stock, par value $0.0001 per share issued and outstanding.

------

**SKINHEALTH SYSTEMS INC.**

**FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2026**

**TABLE OF CONTENTS** 

---

| | | |
|:---|:---|:---|
| | | **Page** |
| PART I—FINANCIAL INFORMATION | PART I—FINANCIAL INFORMATION |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 1. | <u>[Financial Statements](#i5171fe1da80b407cb6ecd49cc32fd2a4_13)</u> | <u>[3](#i5171fe1da80b407cb6ecd49cc32fd2a4_13)</u> |
|  | <u>[Condensed Consolidated Balance Sheets (Unaudited)](#i5171fe1da80b407cb6ecd49cc32fd2a4_199)</u> | <u>[3](#i5171fe1da80b407cb6ecd49cc32fd2a4_199)</u> |
|  | <u>[Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)](#i5171fe1da80b407cb6ecd49cc32fd2a4_202)</u> | <u>[4](#i5171fe1da80b407cb6ecd49cc32fd2a4_202)</u> |
|  | <u>[Condensed Consolidated Statements of Stockholders' Equity (Unaudited)](#i5171fe1da80b407cb6ecd49cc32fd2a4_16)</u> | <u>[5](#i5171fe1da80b407cb6ecd49cc32fd2a4_16)</u> |
|  | <u>[Condensed Consolidated Statements of Cash Flows (Unaudited)](#i5171fe1da80b407cb6ecd49cc32fd2a4_208)</u> | <u>[6](#i5171fe1da80b407cb6ecd49cc32fd2a4_208)</u> |
|  | <u>[Notes to Condensed Consolidated Financial Statements (Unaudited)](#i5171fe1da80b407cb6ecd49cc32fd2a4_211)</u> | <u>[7](#i5171fe1da80b407cb6ecd49cc32fd2a4_211)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 2. | <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i5171fe1da80b407cb6ecd49cc32fd2a4_19)</u> | <u>[24](#i5171fe1da80b407cb6ecd49cc32fd2a4_19)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 3. | <u>[Quantitative and Qualitative Disclosures About Market Risk](#i5171fe1da80b407cb6ecd49cc32fd2a4_37)</u> | <u>[31](#i5171fe1da80b407cb6ecd49cc32fd2a4_37)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 4. | <u>[Controls and Procedures](#i5171fe1da80b407cb6ecd49cc32fd2a4_40)</u> | <u>[31](#i5171fe1da80b407cb6ecd49cc32fd2a4_40)</u> |
| PART II—OTHER INFORMATION | PART II—OTHER INFORMATION |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 1. | <u>[Legal Proceedings](#i5171fe1da80b407cb6ecd49cc32fd2a4_46)</u> | <u>[32](#i5171fe1da80b407cb6ecd49cc32fd2a4_46)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 1A. | <u>[Risk Factors](#i5171fe1da80b407cb6ecd49cc32fd2a4_49)</u> | <u>[40](#i5171fe1da80b407cb6ecd49cc32fd2a4_49)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 2. | <u>[Unregistered Sales of Equity Securities and Use of Proceeds](#i5171fe1da80b407cb6ecd49cc32fd2a4_52)</u> | <u>[40](#i5171fe1da80b407cb6ecd49cc32fd2a4_52)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 3. | <u>[Defaults Upon Senior Securities](#i5171fe1da80b407cb6ecd49cc32fd2a4_58)</u> | <u>[40](#i5171fe1da80b407cb6ecd49cc32fd2a4_58)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 4. | <u>[Mine Safety Disclosures](#i5171fe1da80b407cb6ecd49cc32fd2a4_61)</u> | <u>[40](#i5171fe1da80b407cb6ecd49cc32fd2a4_61)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 5. | <u>[Other Information](#i5171fe1da80b407cb6ecd49cc32fd2a4_64)</u> | <u>[40](#i5171fe1da80b407cb6ecd49cc32fd2a4_64)</u> |
| &nbsp;&nbsp;&nbsp;&nbsp;Item 6. | <u>[Exhibits](#i5171fe1da80b407cb6ecd49cc32fd2a4_67)</u> | <u>[41](#i5171fe1da80b407cb6ecd49cc32fd2a4_67)</u> |
| <u>[SIGNATURES](#i5171fe1da80b407cb6ecd49cc32fd2a4_70)</u> | <u>[SIGNATURES](#i5171fe1da80b407cb6ecd49cc32fd2a4_70)</u> |  |

---

------

**PART I— FINANCIAL INFORMATION**

**Item 1. Financial Statements.**

**SKINHEALTH SYSTEMS INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**(in thousands, except for share amounts)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **March 31, 2026** | **December 31, 2025** |
| **ASSETS** | | |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash, cash equivalents, and restricted cash | $204358 | $232673 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net of allowances for estimated credit losses of $4,988 and $6,022 at March 31, 2026 and December 31, 2025, respectively | 18615 | 21741 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 47693 | 48012 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax receivable | 1638 | 1696 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 5391 | 5395 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 277695 | 309517 |
| Property and equipment, net | 2336 | 2538 |
| Right-of-use assets, net | 20293 | 11570 |
| Intangible assets, net | 32798 | 35763 |
| Goodwill | 126246 | 126621 |
| Deferred income tax assets, net | 2413 | 1925 |
| Other assets | 11452 | 11869 |
| **TOTAL ASSETS** | $473233 | $499803 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of convertible senior notes, net | $102944 | $123959 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 15885 | 15631 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll-related expenses | 13031 | 24947 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease liabilities, current | 4158 | 5128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax payable | 462 | 1226 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued expenses | 18722 | 15384 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 155202 | 186275 |
| Lease liabilities, non-current | 18751 | 9238 |
| Deferred income tax liabilities, net | 393 | 393 |
| Convertible senior notes, net | 241276 | 240431 |
| Other long-term liabilities | 2371 | 2410 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 417993 | 438747 |
| Commitments and Contingencies (Note 6)  |  |  |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class A Common Stock, $0.0001 par value; 320,000,000 shares authorized; 129,144,801 and 127,520,823 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively | 13 | 13 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital | 581053 | 579961 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated other comprehensive loss | (1712) | (1434) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated deficit | (524114) | (517484) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 55240 | 61056 |
| **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | $473233 | $499803 |

---

The accompanying notes are an integral part of these unaudited financial statements.

------

**SKINHEALTH SYSTEMS INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)**

**(in thousands, except for share and per share amounts)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Three Months Ended March 31,** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Three Months Ended March 31,** |
| | **2026** | **2025** |
| **Net sales** | $64910 | $69580 |
| Cost of sales | 20471 | 21000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Gross profit** | 44439 | 48580 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and marketing | 23195 | 26040 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 1102 | 998 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 21943 | 33565 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 46240 | 60603 |
| **Loss from operations** | (1801) | (12023) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense | 6346 | 2498 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income | (1485) | (3028) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income, net | (1044) | (60) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liabilities |  | (349) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Foreign currency transaction loss (gain), net | 1196 | (1880) |
| **Loss before provision for income taxes** | (6814) | (9204) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax (benefit) expense | (184) | 892 |
| Net loss | (6630) | (10096) |
| **Comprehensive loss, net of tax:** |  |  |
| Foreign currency translation adjustments | (278) | 1128 |
| **Comprehensive loss** | $(6908) | $(8968) |
| Net loss per share |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | $(0.05) | $(0.08) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | $(0.05) | $(0.08) |
| Weighted average common stock outstanding  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic | 127792611 | 125079470 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted | 131399898 | 125079470 |

---

The accompanying notes are an integral part of these unaudited financial statements.

------

**SKINHEALTH SYSTEMS INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**

**(in thousands, except for share amounts)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Unaudited)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Additional Paid-in Capital** | **Accumulated Other Comprehensive Loss** | **Accumulated Deficit** | **Total Stockholders' Equity** |
| | **Shares** | **Amount** | **Additional Paid-in Capital** | **Accumulated Other Comprehensive Loss** | **Accumulated Deficit** | **Total Stockholders' Equity** |
| BALANCE, December 31, 2024 | 124924185 | $12 | $566709 | $(6953) | $(507965) | $51803 |
| Net loss |  |  |  |  | (10096) | (10096) |
| Issuance of common stock pursuant to equity compensation plan | 483396 |  |  |  |  |  |
| Shares withheld for tax withholdings on vested stock awards | (161295) |  | (250) |  |  | (250) |
| Share-based compensation |  |  | 3476 |  |  | 3476 |
| Foreign currency translation adjustments |  |  |  | 1128 |  | 1128 |
| BALANCE, March 31, 2025 | 125246286 | $13 | $569935 | $(5825) | $(518061) | $46062 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Common Stock** | **Common Stock** | **Additional Paid-in Capital** | **Accumulated Other Comprehensive Income (Loss)** | **Accumulated Deficit** | **Total Stockholders' Equity (Deficit)** |
| | **Shares** | **Amount** | **Additional Paid-in Capital** | **Accumulated Other Comprehensive Income (Loss)** | **Accumulated Deficit** | **Total Stockholders' Equity (Deficit)** |
| BALANCE, December 31, 2025 | 127520823 | $13 | $579961 | $(1434) | $(517484) | $61056 |
| Net loss |  |  |  |  | (6630) | (6630) |
| Issuance of common stock pursuant to equity compensation plan | 2469895 |  |  |  |  |  |
| Shares withheld for tax withholdings on vested stock awards | (845917) |  | (987) |  |  | (987) |
| Share-based compensation |  |  | 2079 |  |  | 2079 |
| Foreign currency translation adjustments |  |  |  | (278) |  | (278) |
| BALANCE, March 31, 2026 | 129144801 | $13 | $581053 | $(1712) | $(524114) | $55240 |

---

The accompanying notes are an integral part of these unaudited financial statements.

------

**SKINHEALTH SYSTEMS INC.**

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(in thousands)**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| **Cash flows from operating activities:** |  |  |
| Net loss | $(6630) | $(10096) |
| Adjustments to reconcile net loss to net cash from operating activities |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-based compensation | 2079 | 3476 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of intangible assets | 3558 | 3180 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation of property and equipment | 563 | 1856 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of other assets | 1215 | 1128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt issuance costs | 1010 | 786 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory write-down | 376 | 277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for estimated credit losses | 540 | 739 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liabilities |  | (349) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on repurchase of 2026 Notes | (1019) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (515) | (265) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other, net | 2406 | (663) |
| Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | 2491 | 3989 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (136) | 3761 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses, other current assets, and income tax receivable | 28 | 2906 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable, accrued expenses, and income tax payable | (9558) | (5730) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other, net | (1962) | (1999) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used for) provided by operating activities | (5554) | 2996 |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for intangible assets | (1425) | (1100) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for property and equipment | (224) | (45) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used for investing activities | (1649) | (1145) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repurchase of 2026 Notes | (20161) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of tax withholdings on vested stock awards | (745) | (250) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used for financing activities | (20906) | (250) |
| Net change in cash, cash equivalents, and restricted cash | (28109) | 1601 |
| Effect of foreign currency translation on cash | (206) | 1367 |
| Cash, cash equivalents, and restricted cash beginning of period | 232673 | 370063 |
| Cash, cash equivalents, and restricted cash end of period | $204358 | $373031 |

---

The accompanying notes are an integral part of these unaudited financial statements

------

**SKINHEALTH SYSTEMS INC.**

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**Note 1 — Description of Business** 

**Historical Information**

The Company (previously, The Beauty Health Company, and formerly, Vesper Healthcare Acquisition Corp.) was incorporated in the State of Delaware on July 8, 2020. On May 4, 2021, we consummated the business combination pursuant to that certain Agreement and Plan of Merger, dated December 8, 2020, by and among Vesper Healthcare Acquisition Corp., Hydrate Merger Sub I, Inc. ("Merger Sub I"), Hydrate Merger Sub II, LLC ("Merger Sub II"), LCP Edge Intermediate, Inc., the indirect parent of HydraFacial LLC, f.k.a. Edge Systems LLC ("Hydrafacial"), and LCP Edge Holdco, LLC ("LCP," or "Former Parent," and, in its capacity as the stockholders' representative, the "Stockholders' Representative") (the "Merger Agreement"), which provided for: (a) the merger of Merger Sub I with and into Hydrafacial, with Hydrafacial continuing as the surviving corporation (the "First Merger"), and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Hydrafacial with and into Merger Sub II, with Merger Sub II continuing as the surviving entity (the "Second Merger" and, together with the First Merger, the "Mergers" and, together with the other transactions contemplated by the Merger Agreement, the "Business Combination"). As a result of the First Merger, the Company owns 100% of the outstanding common stock of Hydrafacial and each share of common stock and preferred stock of Hydrafacial was cancelled and converted into the right to receive a portion of the consideration payable in connection with the Mergers. As a result of the Second Merger, the Company owns 100% of the outstanding interests in Merger Sub II. In connection with the closing of the Business Combination (the "Closing"), the Company owns, directly or indirectly, 100% of the stock of Hydrafacial and its subsidiaries and the stockholders of Hydrafacial as of immediately prior to the effective time of the First Merger (the "Hydrafacial Stockholders") hold a portion of the Company's Class A common stock, par value $0.0001 per share (the "Class A Common Stock").

**Basis of Presentation**

The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in, or presented as exhibits to, the Company's Annual Report on Form 10-K for the year ended December 31, 2025.

------

**Note 2 — Balance Sheet Components**

Inventories consist of the following as of the periods indicated:

---

| | | |
|:---|:---|:---|
| **(in thousands)** | **March 31, 2026** | **December 31, 2025** |
| Raw materials | $19631 | $18546 |
| Finished goods | 28062 | 29466 |
| Total inventories | $47693 | $48012 |

---

Accrued payroll-related expenses consist of the following as of the periods indicated:

---

| | | |
|:---|:---|:---|
| **(in thousands)** | **March 31, 2026** | **December 31, 2025** |
| Accrued compensation and payroll taxes | $7586 | $17905 |
| Accrued sales commissions | 3216 | 4791 |
| Accrued benefits | 2229 | 2251 |
| Total accrued payroll-related expenses | $13031 | $24947 |

---

Other accrued expenses consist of the following as of the periods indicated:

---

| | | |
|:---|:---|:---|
| **(in thousands)** | **March 31, 2026** | **December 31, 2025** |
| Accrued interest | $7508 | $2929 |
| Sales and VAT tax payables | 2899 | 3571 |
| Royalty liabilities | 1318 | 1571 |
| Deferred revenue | 1101 | 1012 |
| Other | 5896 | 6301 |
| Total other accrued expenses | $18722 | $15384 |

---

As of March 31, 2026 and December 31, 2025, total warranty reserve was approximately $1 million, which was included in other accrued expenses on the Condensed Consolidated Balance Sheets.

As of March 31, 2026 and December 31, 2025, the Company has approximately $2 million in restricted cash held as collateral for the Company's credit cards, which was included in cash, cash equivalents and restricted cash on the Condensed Consolidated Balance Sheets.

During the three months ended March 31, 2026, the Company amended the terms of its principal executive office lease agreement to expire in November 2032, resulting in an increase of approximately $14 million in future operating lease payments and an approximately $10 million increase in lease-related balances on the Condensed Consolidated Balance Sheets.

------

**Note 3 — Property and Equipment, net**

Property and equipment, net consist of the following as of the periods indicated:

---

| | | | |
|:---|:---|:---|:---|
| **(in thousands)** | **Useful life**<br>**(years)** | **March 31, 2026** | **December 31, 2025** |
| Leasehold improvements | Shorter of remaining lease<br>term or estimated useful life | $11035 | $11080 |
| Machinery and equipment | 2-5 | 4565 | 4723 |
| Furniture and fixtures | 2-7 | 5438 | 5320 |
| Computers and equipment | 3-5 | 3566 | 3556 |
| Tooling | 5 | 541 | 541 |
| Autos and trucks | 5 | 61 | 61 |
| Construction in progress |  | 261 | 55 |
| Total property and equipment |  | 25467 | 25336 |
| Less: accumulated depreciation and amortization |  | (23131) | (22798) |
| Property and equipment, net |  | $2336 | $2538 |

---

**Note 4 — Goodwill and Intangible Assets, net**

*Goodwill*

The changes in the carrying value of goodwill for the three months ended March 31, 2026 are as follows (in thousands):

---

| | |
|:---|:---|
| December 31, 2025 | 126621 |
| Foreign currency translation impact | (375) |
| March 31, 2026 | $126246 |

---

*Intangible Assets, Net*

The gross carrying amount and accumulated amortization of the Company's intangible assets, net, as of March 31, 2026 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **(in thousands)** | **Gross <br>Carrying <br>Value** | **Accumulated <br>Amortization** | **Net Carrying <br>Value** | **Estimated <br>Useful Life <br>(Years)** |
| Developed technology | $91629 | $(80815) | $10814 | 3 - 10 |
| Capitalized software | 26732 | (16012) | 10720 | 3 - 5 |
| Customer relationships | 18944 | (18152) | 792 | 5 - 10 |
| Trademarks | 11802 | (7237) | 4565 | 15 |
| Non-compete agreement | 5895 | (3952) | 1943 | 3 |
| Patents | 5102 | (1138) | 3964 | 3 - 19 |
| Total intangible assets | $160104 | $(127306) | $32798 |  |

---

------

The gross carrying amount and accumulated amortization of the Company's intangible assets, net, as of December 31, 2025 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **(in thousands)** | **Gross <br>Carrying <br>Value** | **Accumulated <br>Amortization** | **Net Carrying <br>Value** | **Estimated <br>Useful Life <br>(Years)** |
| Developed technology | $91629 | $(79405) | $12224 | 3 - 10 |
| Capitalized software | 26260 | (15082) | 11178 | 3 - 5 |
| Customer relationships | 19112 | (17461) | 1651 | 5 - 10 |
| Trademarks | 11730 | (7019) | 4711 | 15 |
| Non-compete agreement | 5908 | (3711) | 2197 | 3 |
| Patents | 4855 | (1053) | 3802 | 3 - 19 |
| Total intangible assets | $159494 | $(123731) | $35763 |  |

---

**Note 5 — Long-Term Debt**

*Convertible Senior Secured Notes - 2028* 

On May 21, 2025, the Company entered into privately negotiated exchange agreements (the "Exchange Agreements") with certain holders (the "Exchanging Holders") of the 1.25% Convertible Senior Notes due October 1, 2026 (the "2026 Notes"). Pursuant to the Exchange Agreements, the Company exchanged and repurchased $413.2 million aggregate principal amount of the 2026 Notes. Of the $413.2 million aggregate principal amount of the 2026 Notes, $263.2 million principal amount were exchanged at a weighted-average price equal to 95% for $250.0 million principal amount of new 7.95% Convertible Senior Secured Notes due November 15, 2028 (the "2028 Notes", and together with the 2026 Notes, the "Notes"), and $150.1 million principal amount were repurchased at a weighted-average price equal to 95% for $142.6 million.

On May 27, 2025, the Company issued the 2028 Notes to the Exchanging Holders. The 2028 Notes were issued pursuant to, and are governed by, an indenture, dated as of May 27, 2025, between the Company, the guarantors party thereto, and U.S. Bank Trust Company, National Association, as trustee and collateral agent.

*Convertible Senior Notes - 2026*

On September 14, 2021, the Company issued an aggregate of $750.0 million in principal amount of its 2026 Notes pursuant to, and governed by, an indenture dated as of September 14, 2021, between the Company and U.S. Bank National Association, as trustee. Pursuant to the purchase agreement between the Company and the initial purchasers of the 2026 Notes, the Company granted the initial purchasers an option to purchase, for settlement within a period of 13 days from, and including, the date the 2026 Notes were first issued, up to an additional $100.0 million principal amount of 2026 Notes. The 2026 Notes issued on September 14, 2021 include the $100.0 million principal amount of 2026 Notes issued pursuant to the full exercise by the initial purchasers of such option.

During the three months ended March 31, 2026, the Company repurchased $21.3 million principal amount of its 2026 Notes at a weighted-average price equal to 94.875% for $20.2 million and recognized a net gain of $1.0 million, which includes $0.1 million of unamortized debt issuance costs. During the three months ended March 31, 2025, there were no repurchases related to the 2026 Notes. Since inception through December 31, 2025, the Company exchanged and repurchased in total $625.5 million principal amount of its 2026 Notes.

The net gain recognized related to the repurchase is included in other income, net in the Condensed Consolidated Statements of Comprehensive Income (Loss).

------

The following is a summary of the Company's Notes for the periods indicated:

---

| | | |
|:---|:---|:---|
| **(in thousands)** | **March 31, 2026** | **December 31, 2025** |
| 2026 Notes | $103235 | $124485 |
| 2028 Notes | 250000 | 250000 |
| Unamortized debt issuance costs | (9015) | (10095) |
| Total convertible senior notes, net | 344220 | 364390 |
| Current portion of convertible senior notes, net | (102944) | (123959) |
| Convertible senior notes, net | $241276 | $240431 |

---

As of March 31, 2026 and December 31, 2025, the estimated fair value of the Notes were $345.3 million (compared to a carrying amount of $353.2 million) and $383.1 million (compared to a carrying amount of $374.5 million), respectively. The estimated fair value of the Notes was determined based on the actual bid price of the Notes on March 31, 2026 and December 31, 2025, and are classified as Level 2 within the fair value hierarchy.

**Note 6 — Commitments and Contingencies**

The Company is a party to various lawsuits, claims, and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to commercial disputes, product liability, and employment related matters. In addition, the Company may bring claims or initiate lawsuits from time to time against various third parties with respect to matters arising out of the ordinary course of the Company's business, including but not limited to commercial and intellectual property related matters.

With respect to all such lawsuits, claims, and proceedings, if the Company determines a loss is probable and its amount can be reasonably estimated, the Company accrues an amount equal to the estimated loss. The assessment of whether a loss is probable or reasonably possible, and whether the loss or a range of loss is estimable, often involves a series of complex judgments about future events. In all instances, management has assessed the matter based on current information and made a judgment concerning its potential outcome, giving due consideration to the nature of the claim, the amount and nature of damages sought and the probability of success, and taking into account, among other things, negotiations with claimants, discovery, settlements and payments, judicial rulings, arbitration and mediation decisions, advice of internal and external legal counsel, and other information and events pertaining to a particular matter. Costs incurred for litigation are expensed as incurred.

For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

Except as otherwise disclosed below, we believe that none of our pending lawsuits, claims, and other proceedings are expected to have a material adverse effect on the Company's business, consolidated financial position, results of operations, or cash flows. However, management's judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.

------

*Securities Class Action* 

On November 16, 2023, a putative class action was filed in the United States District Court for the Central District of California against the Company, its then-current President and Chief Executive Officer, Andrew Stanleick, its former Chief Financial Officer, Liyuan Woo, and its current Chief Financial Officer, Michael Monahan (the "Defendants"). The complaint, styled Abduladhim A. Alghazwi, individually and on behalf of all others similarly situated, v. The Beauty Health Company, Andrew Stanleick, Liyuan Woo, and Michael Monahan, Case No. 2:23-cv-09733 (C.D. Ca.) (the "Securities Class Action"), asserted claims for violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 10b-5 promulgated thereunder against all defendants (First Claim), and violation of Section 20(a) of the Exchange Act against the individual defendants (Second Claim). The complaint alleged that, between May 10, 2022 and November 13, 2023, Defendants materially misled the investing public by publicly issuing false and/or misleading statements and/or omissions relating to Hydrafacial's business, operations, and prospects, specifically with respect to the performance of and demand for the Syndeo 1.0 and 2.0 devices. The relief sought in the complaint included a request for compensatory damages suffered by the plaintiff and other members of the putative class for damages allegedly sustained as a result of the alleged securities violations.

On January 16, 2024, putative class members Jeff and Kevin Brown (the "Browns"), Priscilla and Martjn Dijkgraaf (the "Dijkgraafs"), and Joseph Jou filed three competing motions for appointment as lead plaintiff under the Private Securities Litigation Reform Act ("PSLRA"), 17 U.S.C. § 78u-4(a)(3). On January 31, 2024, Joseph Jou filed a notice of non-opposition to the Browns' and Dijkgraafs' motions for appointment as lead plaintiff. On May 2, 2024, the Court granted the Dijkgraafs' motion for appointment as lead plaintiff and approved the Dijkgraafs' counsel, Hagens Berman, as lead counsel. On July 1, 2024, lead plaintiffs filed a consolidated amended class action complaint asserting the same causes of action as the original complaint. The Securities Class Action case was assigned to U.S. District Judge Sherilyn Peace Garnett. On September 30, 2024, Defendants filed a motion to dismiss the consolidated amended class action complaint in its entirety. Plaintiffs filed their opposition brief on November 22, 2024, and Defendants filed their reply brief on December 23, 2024. A hearing on the Defendants' motion to dismiss was scheduled for January 15, 2025. On January 10, 2025, the Court granted the parties' joint stipulation to adjourn the January 15, 2025 hearing. On January 17, 2025, the Court granted the parties' joint stipulation to withdraw briefing on Defendants' motion to dismiss without prejudice to refiling and to briefly stay proceedings so that the parties could complete a private mediation. The parties conducted the private mediation on March 27, 2025. The parties were unable to reach a settlement at the mediation. On May 5, 2025, the plaintiffs filed a second amended complaint (the "SAC"), pursuant to the parties' stipulation, which was so-ordered by the Court on April 16, 2025. On July 11, 2025, Defendants filed a motion to dismiss the SAC in its entirety. The Court scheduled a hearing on Defendants' motion for September 17, 2025. On September 15, 2025, the Court vacated the hearing *sua sponte*. On September 25, 2025, the Court denied Defendants' motion to dismiss. On November 24, 2025, each Defendant filed an answer to the SAC. On November 26, 2025, the parties filed a Fed. R. Civ. P. 26(f) joint report and proposed stipulated pretrial schedule. On December 15, 2025, the Court so-ordered the parties' stipulated pretrial schedule, set the final pretrial conference for November 17, 2027, and set trial for December 7, 2027. On the same day, the Court referred the parties to a private mediation before a private mediator of their choice, to be completed by October 13, 2027. On March 24, 2026, the parties entered into a stipulation to extend the case schedule by approximately three months to allow them to focus on mediation efforts. The Court approved the stipulation on March 25, 2026, resulting in a three-month extension of the case schedule, including all discovery deadlines. The parties have agreed to participate in a private mediation, which is currently scheduled to take place on May 20, 2026.

The Company believes that the claims asserted in the Securities Class Action have no merit and intends to vigorously defend them.

------

*Customer Class Action*

On October 24, 2024, Jason Davalos ("Jason Davalos"), Sonia Davalos ("Sonia Davalos", and collectively with Jason Davalos, the "Davaloses"), and Sol Tan Tanning & Spa LLC ("Sol Tan", and collectively with the Davaloses, the "Class Action Plaintiffs"), individually and on behalf of all others similarly situated, filed a putative class action complaint (the "Complaint") against Hydrafacial LLC d/b/a The Hydrafacial Company ("Hydrafacial") and The Beauty Health Company ("BHC" and collectively with Hydrafacial, the "Class Action Defendants") for alleged violations of New York consumer fraud statutes, breach of contract, and common law breach of implied warranties (the "Customer Class Action"). The case is captioned Jason Davalos, Sonia Davalos, Sol Tan Tanning & Spa LLC, on behalf of themselves and all others similarly situated v. Hydrafacial LLC dba The Hydrafacial Company, and The Beauty Health Company, Case No. 24-cv-8073 (S.D.N.Y.) (Caproni, J.) The Complaint alleged that all three versions of the Syndeo machine (Syndeo 1.0, Syndeo 2.0, and Syndeo 3.0) were defective and did not perform in the manner in which it had been represented by Class Action Defendants. Class Action Plaintiffs claim that Class Action Defendants made various misrepresentations in its marketing and sales of the Syndeo machines and, rather than provide a refund to customers for the defective machines, replaced them with another Syndeo machine that exhibited the same defects. Class Action Plaintiffs purported to bring claims on behalf of themselves, and all other similarly situated purchasers within the United States, of Class Action Defendants' Syndeo machines. The Complaint asserted five causes of action: (1) violations of N.Y. G.B.L., § 349, the state consumer production statute; (2) violations of N.Y. G.B.L., § 350, the state's false advertising statute; (3) breach of contract; (4) breach of the implied warranty of merchantability; and (5) breach of the implied warranty of fitness. The relief sought in the Complaint included monetary damages allegedly suffered by Class Action Plaintiffs and other members of the putative class as a result of Class Action Defendants' alleged violations and breaches, including a trebling of any money damages award for alleged violations of N.Y. G.B.L., § 349 and § 350.

On December 30, 2024, the Class Action Defendants filed a motion to dismiss the Complaint in its entirety. On January 3, 2025, the Class Action Defendants filed a motion to stay discovery during the pendency of their motion to dismiss. On January 8, 2025, the Davaloses voluntarily dismissed their claims against the Class Action Defendants pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i), leaving Plaintiff Sol Tan as the sole remaining Customer Class Action Plaintiff. Plaintiff Sol Tan filed their opposition brief on January 9, 2025, and the Class Action Defendants filed their reply brief on January 13, 2025. On January 16, 2025, the Court granted the parties' joint stipulation to adjourn the January 17, 2025 initial pretrial conference and stay the action pending the parties' completion of a private mediation. As part of its order, the Court also (1) adjourned Plaintiff Sol Tan's deadline to respond to the Class Action Defendants' motion to dismiss sine die pending the outcome of mediation; (2) denied as moot the Class Action Defendants' motion to stay discovery in light of the parties' agreement to stay discovery pending the outcome of mediation; and (3) directed the parties to (a) file a joint letter on or before February 7, 2025, indicating the date (not later than May 8, 2025) on which the mediation is scheduled to occur; and (b) within seven days after the mediation, either (i) file a joint letter indicating that settlement was reached; or (ii) file a revised proposed case management plan and a revised joint letter required by the Court's Notice of Initial Pretrial Conference. On February 7, 2025, the parties filed a joint letter notifying the Court that they had agreed to mediate before Greg Danilow of Phillips ADR Enterprises. The parties conducted the private mediation on April 29, 2025; however, the parties were unable to reach a settlement at the mediation. Pursuant to the parties' so-ordered January 16 joint stipulation, on May 7, 2025, the parties filed a revised proposed case management plan and a revised joint letter in accordance with the Court's Notice of Initial Pretrial Conference. On the same day, the Court endorsed the joint submission and ordered Plaintiff to file an amended complaint no later than June 2, 2025, and scheduled an initial pretrial conference for July 18, 2025.

------

On June 2, 2025, Plaintiff and fifteen other alleged purchasers of the Syndeo machines ("Plaintiffs") filed an amended complaint (the "Amended Complaint") asserting: (1) violations of N.Y. G.B.L., § 349 (Count IV), the state consumer protection statute; (2) violations of N.Y. G.B.L., § 350 (Count V), the state's false advertising statute; (3) breach of the implied warranty of merchantability (Count I); (4) breach of express and implied contract and class-wide rescission (Count II); and (5) breach of express warranty (Count III). The relief sought in the Amended Complaint included monetary damages allegedly suffered by Class Action Plaintiffs and other members of the putative class as a result of Class Action Defendants' alleged violations and breaches, including a trebling of any money damages award for alleged violations of N.Y. G.B.L., § 349 and § 350. For Counts IV (violations of N.Y. G.B.L., § 349) and V (violations of N.Y. G.B.L., § 350), plaintiff Jennifer Skuratov d/b/a Spa Thirsty, Inc. ("Spa Thirsty"), sought certification of an alternative subclass of New York purchasers of Syndeo devices (the "Putative New York Subclass"). On June 23, 2025, Defendants moved to (i) dismiss Counts I, II, IV, and V in full; (ii) partially dismiss Count III to the extent it alleges design defects; (iii) dismiss all claims brought by plaintiff Spa Thirsty in full; (iv) dismiss all claims against BHC in full; and (v) dismiss Plaintiffs' claim for injunctive relief. On December 22, 2025, the Court granted Defendants' motion to dismiss in its entirety, except it denied Defendants' request that the claims brought by plaintiff Spa Thirsty be dismissed with prejudice. Specifically, the Court dismissed (i) all of Plaintiffs' claims against BHC; (ii) Plaintiffs' claims for breach of the implied warranty of merchantability (Count I), breach of express and implied contract and class-wide rescission based on fraudulent inducement (Count II), and violations of N.Y. G.B.L., §§ 349 and 350 (Counts IV and V), and their request for injunctive relief; and (iii) the Class Action Plaintiffs' claim for breach of express warranty (Count III) to the extent it arises out of alleged defects affirmatively identified as "design defects" in the amended complaint. In addition, the Court denied the Class Action Plaintiffs' request for leave to amend as to all of the dismissed causes of action except for plaintiff Spa Thirsty's claims pursuant to N.Y. G.B.L. §§ 349 and 350. The Court gave plaintiff Spa Thirsty until January 9, 2026 to move for leave to file a second amended complaint that addresses the deficiencies with plaintiff Spa Thirsty's §§ 349 and 350 claims. Those deficiencies included plaintiff Spa Thirsty's failure to allege that it "was aware of any of Defendants' purportedly deceptive statements 'before [it] purchased or came into possession' of the Syndeo."

On January 9, 2026, Class Action Plaintiffs filed a letter motion for leave to file a second amended complaint and for reconsideration of the Court's dismissal of Plaintiffs' claims for breach of express and implied contract and class-wide rescission based on fraudulent inducement (Count II). Class Action Plaintiffs appended a proposed second amended complaint (the "Second Amended Complaint") to their letter motion. The Second Amended Complaint alleged that plaintiff Spa Thirsty purchased a Syndeo in reliance on representations made by Hydrafacial to plaintiff Spa Thirsty at an aesthetic conference in New York, including that Syndeo was "top of the line," "hands free," "had superior cleanliness," "superior," "a major upgrade," "works great," and "yielded 'more than 15 uses per bottle of solution serum." The Second Amended Complaint alleged that those representations were deceptive in violation of N.Y. G.B.L. §§ 349 and 350 because the Syndeo allegedly lacked attributes Hydrafacial had represented to plaintiff Spa Thirsty and did not yield the promised treatments per bottle of solution serum. On January 23, 2026, Hydrafacial filed its opposition to Class Action Plaintiffs' letter motion. Hydrafacial argued that the Second Amended Complaint was futile because all of its alleged representations about the Syndeo were inactionable puffery, except for, arguably, the representation regarding the number of treatments per bottle of solution serum. For that representation, Hydrafacial argued that plaintiff Spa Thirsty did not allege that its Syndeo yielded fewer than 15 treatments per bottle and failed to allege other facts required to state §§ 349 and 350 claims. Hydrafacial also argued that Class Action Plaintiffs' request for reconsideration of the dismissal of Count II should be denied as untimely.

On January 27, 2026, the Court issued an order granting Class Action Plaintiffs' motion for leave to file the Second Amended Complaint but denied their request that the Court reconsider its order dismissing the claim for breach of contract in Count II of the Amended Complaint. Although the Court agreed with Hydrafacial that "many of the claims attributed to HydraFacial in the Second Amended Complaint are non-actionable puffery, the claim that the Syndeo 'yielded more than 15 uses per bottle of serum' is a verifiable statement of fact," and the Court could "infer that plaintiff Spa Thirsty's machine failed to yield the promised number of uses per bottle of serum …. From plaintiff Spa Thirsty's allegation that its 'machines run through serums faster than Defendant states it should.'" The Court denied reconsideration because Class Action Plaintiffs' request was both untimely and "would fail on the merits," as Class Action Plaintiffs "failed to allege the specific provisions of the contract upon which liability was predicated." Pursuant to the Court's order, Class Action Plaintiffs filed the Second Amended Complaint on January 29, 2026. As a result of the Court's ruling, the only claims still pending before the Court in the Customer Class Action are (i) the Class Action Plaintiffs' claim against Hydrafacial for breach of its express warranty against defects in materials and workmanship; and (ii) plaintiff Spa Thirsty's claim, asserted on behalf of itself and the Putative New York Subclass against Hydrafacial, for alleged violations of N.Y. G.B.L., § 349 and § 350.

On February 26, 2026, the parties jointly notified the Court that a settlement-in-principle had been reached and requested that all deadlines be stayed for sixty (60) days. On March 2, 2026, the Court ordered Class Action Plaintiffs to file the necessary motion papers for preliminary approval of the settlement on or before May 29, 2026, and canceled all other deadlines in the case.

------

The Company believes that the claims asserted in the Customer Class Action have no merit and it intends to vigorously defend them.

*Consolidated Derivative Action*

On February 8, 2024, a derivative complaint was filed in the Delaware Court of Chancery against the Company's former President and Chief Executive Officer, Andrew Stanleick; its former Chief Financial Officer, Liyuan Woo, and current members of the Company's Board of Directors (the "Board of Directors"): Brenton Saunders, Marla Beck, Michael Capellas, Julius Few, Desiree Gruber, Michelle Kerrick, Brian Miller, and Doug Schillinger, with the Company as the nominal defendant. The complaint, styled Margie Elstein, derivatively on behalf of The Beauty Health Company v. Brenton Saunders, Marla Beck, Michael Capellas, Julius Few, Desiree Gruber, Michelle Kerrick, Brian Miller, Doug Schillinger, Andrew Stanleick, and Liyuan Woo, C.A. No. 2024-0114-LWW (Del. Ch.) (the "Elstein Derivative Action"), asserts a single claim for breach of fiduciary duty against the individual defendants based on the alleged disclosure of knowingly false information and/or the alleged failure to respond to red flags relating to Hydrafacial's business, operations, and prospects, specifically with respect to the performance of and demand for the Syndeo 1.0 and 2.0 devices. The plaintiff-stockholder further maintains that no demand was made upon the Company's Board of Directors prior to the initiation of the Elstein Derivative Action based on allegations that a majority of the Board of Directors was not disinterested or independent with respect to the fiduciary duty claim, such that demand should be excused as futile. The relief sought in the complaint includes a finding of demand futility, a finding that the individual defendants are liable for breaching their fiduciary duties (as current/former officers and directors), and an award of compensatory damages for harm suffered by the Company and its stockholders for harm allegedly sustained as a result of the alleged fiduciary duty violation.

On May 1, 2024, a derivative complaint was filed in the Delaware Court of Chancery against the Company's former President and Chief Executive Officer, Andrew Stanleick; its former Chief Financial Officer, Liyuan Woo, and current members of the Company's Board of Directors: Brent Saunders, Marla Beck, Michael Capellas, Julius Few, Desiree Gruber, Michelle Kerrick, Brian Miller, and Doug Schillinger, with the Company as the nominal defendant. The complaint, styled Richard Montague, derivatively on behalf of The Beauty Health Company v. Andrew Stanleick, Liyuan Woo, Brent Saunders, Marla Beck, Michael Capellas, Julius Few, Desiree Gruber, Michelle Kerrick, Brian Miller, and Doug Schillinger, C.A. No. 2024-0463-LWW (Del. Ch.) (the "Montague Derivative Action"), asserts claims for (i) breach of fiduciary duty, (ii) gross mismanagement, (iii) waste of corporate assets, (iv) unjust enrichment, and (v) aiding and abetting against the individual defendants based on allegations that the individual defendants made materially false and/or misleading statements, as well as failing to disclose material adverse facts about the Company's business, operations, and prospects, specifically relating to the Syndeo 1.0 and 2.0 devices. The relief sought in the Montague Derivative Action includes (a) awarding damages for harm suffered by the Company allegedly sustained as a result of the individual defendants' alleged breach of fiduciary duties, gross mismanagement, waste of corporate assets, and unjust enrichment, (b) awarding damages for harm suffered by the Company allegedly sustained as a result of the Company's directors' alleged aiding and abetting of breaching their fiduciary duties, (c) directing the Company to reform and improve its corporate governance and internal procedures, to comply with its existing governance obligations and all applicable laws, and to protect its investors from a recurrence of the alleged damaging events, and (d) awarding the plaintiff-stockholder the costs and disbursements of the Montague Derivative Action, including reasonable attorneys' fees, accountants' and experts' fees, costs, and expenses.

------

On May 22, 2024, the parties to the Elstein Derivative Action and Montague Derivative Action submitted a Stipulation and Proposed Order Governing Consolidation, Appointment of Lead, and Deadline to Respond to Operative Complaint. On May 24, 2024, Vice Chancellor Will, who was assigned to both the Elstein Derivative Action and the Montague Derivative Action, entered the Stipulation and Order Governing Consolidation, Appointment of Lead, and Deadline to Respond to Operative Complaint (the "Consolidation Order"). Per the Consolidation Order, the Elstein Derivative Action and the Montague Derivative Action were consolidated into a single derivative action, styled In re The Beauty Health Company Consolidated Stockholder Derivative Litigation, C.A. No. 2024-0114-LWW (Del. Ch.) (the "Consolidated Derivative Action"). The Consolidation Order designated the law firms of Gainey McKenna & Egleston and Komlossy Law, P.A. as co-lead counsel for plaintiffs in the Consolidated Derivative Action, and designated the law firm of Cooch and Taylor, P.A. as Delaware counsel for plaintiffs in the Consolidated Derivative Action. Additionally, the Consolidation Order designated the complaint filed in the Elstein Derivative Action as the operative complaint for the Consolidated Derivative Action, further providing that defendants are not obligated to answer or otherwise respond to the complaint filed in the Montague Derivative Action. The Consolidation Order further provided that defendants shall answer or otherwise respond to the complaint filed in the Elstein Derivative Action by August 25, 2024. This response deadline was subsequently vacated, prior to plaintiffs' filing, on September 9, 2024, of their Verified Consolidated Amended Stockholder Derivative Complaint (the "Operative Complaint"). On September 16, 2024, defendants filed their Motion to Dismiss the Operative Complaint, or Alternatively, Stay the Proceedings (the "Motion to Dismiss"). Defendants filed their opening brief in support of their Motion to Dismiss and stay on February 28, 2025. Pursuant to a scheduling order entered by the court, Plaintiffs' answering brief was filed on May 2, 2025, and Defendants' reply brief was filed on June 3, 2025. The parties held a mediation on November 4, 2025 and reached agreement on terms of a mutually agreeable resolution. On February 9, 2026, the parties entered into a Stipulation of Settlement, which is subject to court approval. On February 20, 2026, the Delaware Court of Chancery entered a Scheduling Order with respect to Notice and Settlement Hearing, requiring the Company to file a copy of the Notice of Pendency and Proposed Settlement of Derivative Action as an exhibit to a Current Report on Form 8-K, which the Company filed on March 6, 2026. The Court has scheduled the settlement hearing for May 13, 2026.

*Securities and Exchange Commission (the "SEC") Subpoena* 

On January 11, 2024, the Company was informed that the SEC is conducting a formal investigation of the Company related to, among other things, the allegations brought against the Company in the Securities Class Action lawsuit. The Company has subsequently received subpoenas from the SEC for the production of documents and witness testimony related to its investigation. The Company is in the process of responding to the subpoenas and intends to continue to fully cooperate with the SEC investigation. We cannot predict the duration, scope, or outcome of this matter at this time.

------

**Note 7 — Related-Party Transactions**

*Registration Rights Agreement*

In connection with the consummation of the Business Combination, on May 4, 2021, the Company entered into that certain Amended and Restated Registration Rights Agreement (the "Registration Rights Agreement") with BLS Investor Group LLC and the Hydrafacial Stockholders.

Pursuant to the terms of the Registration Rights Agreement, (i) any outstanding shares of Class A Common Stock or any other equity securities (including the 9,333,333 warrants to purchase shares of the Company's Class A Common Stock at $11.50 per share (the "Private Placement Warrants") and including shares of Class A Common Stock issued or issuable upon the exercise of any other equity security) of the Company held by BLS Investor Group LLC (the "Sponsor") or the Hydrafacial Stockholders (together, the "Restricted Stockholders") as of the date of the Registration Rights Agreement or thereafter acquired by a Restricted Stockholder (including the shares of Class A Common Stock issued upon conversion of the 11,500,000 shares of Class B common stock (the "Founder Shares") that were owned by the Sponsor and converted into shares of Class A Common Stock in connection with the Business Combination and upon exercise of any Private Placement Warrants) and shares of Class A Common Stock issued as earn-out shares to the Hydrafacial Stockholders and (ii) any other equity security of the Company issued or issuable with respect to any such share of Class A Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise will be entitled to registration rights.

The Registration Rights Agreement provides that the Company will, within 60 days after the consummation of the Business Combination, file with the SEC a shelf registration statement registering the resale of the shares of Class A Common Stock held by the Restricted Stockholders and will use its reasonable best efforts to have such registration statement declared effective as soon as practicable after the filing thereof, but in no event later than 60 days following the filing deadline. The Company filed such registration statement on July 19, 2021 and it was declared effective by the SEC on July 26, 2021. The Hydrafacial Stockholders are entitled to make up to an aggregate of two demands for registration, excluding short form demands, that the Company register shares of Class A Common Stock held by these parties. In addition, the Restricted Stockholders have certain "piggy-back" registration rights. The Company will bear the expenses incurred in connection with the filing of any registration statements filed pursuant to the terms of the Registration Rights Agreement. The Company and the Restricted Stockholders agree in the Registration Rights Agreement to provide customary indemnification in connection with any offerings of Class A Common Stock effected pursuant to the terms of the Registration Rights Agreement.

Pursuant to the Registration Rights Agreement, the Sponsor agreed to restrictions on the transfer of its securities issued in the Company's initial public offering, which (i) in the case of the Founder Shares is one year after the completion of the Business Combination unless (A) the closing price of the Class A Common Stock equals or exceeds $12.00 per share for 20 days out of any 30-trading-day period commencing at least 150 days following the Closing of the Business Combination or (B) the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company's stockholders having the right to exchange their shares of Class A Common Stock for cash, securities or other property, and (ii) in the case of the Private Placement Warrants and the respective Class A Common Stock underlying the Private Placement Warrants is 30 days after the completion of the Business Combination. The Sponsor and its permitted transferees will also be required, subject to the terms and conditions in the Registration Rights Agreement, not to transfer their Private Placement Warrants (as defined in the Registration Rights Agreement) or shares of Class A Common Stock issuable upon the exercise thereof for 30 days following the Closing.

As of March 31, 2026 and December 31, 2025, the Company had approximately 7 million Private Placement Warrants outstanding, which will expire in May 2026. The fair value of the Private Placement Warrants was immaterial as of March 31, 2026 and December 31, 2025.

------

*Investor Rights Agreement*

In connection with the consummation of the Business Combination, on May 4, 2021, the Company and LCP Edge Holdco, LLC entered into that certain Investor Rights Agreement (the "Investor Rights Agreement"). Pursuant to the Investor Rights Agreement, LCP has the right to designate a number of directors for appointment or election to the Company's Board of Directors as follows: (i) one director for so long as LCP holds at least 10% of the outstanding Class A Common Stock, (ii) two directors for so long as LCP holds at least 15% of the outstanding Class A Common Stock, and (iii) three directors for so long as LCP holds at least 40% of the outstanding Class A Common Stock. Pursuant to the Investor Rights Agreement, for so long as LCP holds at least 10% of the outstanding Class A Common Stock, LCP will be entitled to have at least one of its designees represented on the compensation committee and nominating committee and corporate governance committee of the Company's Board of Directors.

**Note 8 — Stockholders' Equity**

***Common Stock***

The Company is authorized to issue 320,000,000 shares of Class A Common Stock, par value of $0.0001 per share. Holders of Class A Common Stock are entitled to one vote for each share. As of March 31, 2026 and December 31, 2025, there were 129,144,801 and 127,520,823, respectively, of Class A Common Stock issued and outstanding. The Company has not declared or paid any dividends with respect to its Class A Common Stock.

***Preferred Stock***

The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company's Board of Directors. At March 31, 2026 and December 31, 2025, there were no shares of preferred stock issued or outstanding.

**Note 9 — Fair Value Measurements**

The following tables present information about the Company's assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025, and indicate the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.

The three levels of the fair value hierarchy are as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level 3: Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **As of March 31, 2026** | **As of March 31, 2026** | **As of March 31, 2026** | **As of March 31, 2026** |
| **(in thousands)** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Assets** | | | | |
| Cash, cash equivalents, and restricted cash: |  |  |  |  |
| Money market funds | $128303 | $— | $— | $128303 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** |
| **(in thousands)** | **Level 1** | **Level 2** | **Level 3** | **Total** |
| **Assets** | | | | |
| Cash, cash equivalents, and restricted cash: |  |  |  |  |
| Money market funds | $149927 | $— | $— | $149927 |

---

------

**Note 10 — Revenue**

Net sales consist of the sale of products to retail and wholesale customers through e-commerce and distributor sales. The Company generates revenue through manufacturing and selling its patented hydradermabrasion delivery systems ("Delivery Systems"). In conjunction with the sale of Delivery Systems, the Company also sells single-use tips, solutions, serums, and other products used to provide a Hydrafacial treatment (collectively "Consumables"). Original Consumables are sold solely and exclusively by the Company (and from authorized retailers) and are available for purchase separately from the purchase of Delivery Systems. For both Delivery Systems and Consumables, revenue is recognized upon transfer of control to the customer, which generally takes place at the point of shipment.

Net sales disaggregated by major product line were as follows for the periods indicated:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| **(in thousands)** | **2026** | **2025** |
| Delivery Systems | $18539 | $20218 |
| Consumables | 46371 | 49362 |
| Total net sales | $64910 | $69580 |

---

Net sales by geographic region were as follows for the periods indicated:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| **(in thousands)** | **2026** | **2025** |
| Americas | $44608 | $46257 |
| Europe, the Middle East and Africa | 13735 | 14987 |
| Asia-Pacific | 6567 | 8336 |
| Total net sales | $64910 | $69580 |

---

**Note 11 — Share-Based Compensation**

The Company has various stock compensation plans, which are more fully described in Part II, Item 8 "Financial Statements and Supplementary Data—Note 12 to the Consolidated Financial Statements—Share-Based Compensation" in the Company's 2025 Annual Report on Form 10-K. Under The Beauty Health Company 2021 Incentive Award Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalents, other stock or cash-based awards to eligible service providers.

Share-based compensation expense was as follows for the periods indicated:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| **(in thousands)** | **2026** | **2025** |
| Cost of sales | $118 | $150 |
| Selling and marketing | 565 | 217 |
| Research and development | 75 | 143 |
| General and administrative | 1321 | 2966 |
| Total share-based compensation | $2079 | $3476 |

---

------

*Restricted Stock Units ("RSU") and Performance-based Restricted Stock Units ("PSU")*

The following table summarizes the Company's RSU and PSU activity:

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | | **Weighted Average Grant Date Fair Value** | **Weighted Average Grant Date Fair Value** |
| |<br>**RSU Shares** |<br>**PSU Shares** | **RSU** | **PSU** |
| Outstanding - January 1, 2026 | 12311446 | 2154230 | $1.97 | $3.02 |
| &nbsp;&nbsp;&nbsp;Granted | 9007477 | 434068 | 1.14 | 1.86 |
| &nbsp;&nbsp;&nbsp;Vested | (2469895) |  | 2.11 |  |
| &nbsp;&nbsp;&nbsp;Forfeited | (1241717) | (378245) | 2.01 | 3.20 |
| Outstanding - March 31, 2026 | 17607311 | 2210053 | $1.52 | $2.76 |

---

As of March 31, 2026, total unrecognized compensation expense related to unvested RSU and PSU totaled $25.7 million and is expected to be recognized over a weighted-average period of 2.3 years.

*Stock Options*

The following table summarizes the Company's stock option activity:

---

| | | | |
|:---|:---|:---|:---|
| | **Shares** | **Weighted Average Exercise Price** | **Weighted Average Remaining Contractual Term (in years)** |
| Outstanding - January 1, 2026 | 2459920 | $13.51 | 5.37 |
| &nbsp;&nbsp;&nbsp;Granted |  |  |  |
| &nbsp;&nbsp;&nbsp;Exercised |  |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited |  |  |  |
| &nbsp;&nbsp;&nbsp;Expired |  |  |  |
| Outstanding - March 31, 2026 | 2459920 | 13.51 | 5.08 |
| Vested and Exercisable - March 31, 2026 | 2459920 | 13.51 | 5.08 |
| Options vested and expected to vest - March 31, 2026 | 2459920 | $13.51 | 5.08 |

---

*Cash Performance Awards*

During the three months ended March 31, 2026, cash performance awards with a total target value of $2.8 million were granted for which the final payout will range from 0% to 200% of the target value based on the total shareholder return of the Company's Class A Common stock relative to a defined peer group. The cash performance awards vest over a two to three-year period.

The cash performance awards can be settled in either cash or Class A Common Stock upon vesting at the Company's discretion. These awards are accounted for as liability awards under Accounting Standards Codification ("ASC") 718 and are measured at fair value through the end of the performance period using the Monte Carlo simulation model. For the three months ended March 31, 2026, the expense associated with the cash performance awards was immaterial. The estimated future cash payments of these awards are included within other long-term liabilities in the Condensed Consolidated Balance Sheets.

As of March 31, 2026, total unrecognized compensation expense related to unvested cash performance awards totaled $0.9 million and is expected to be recognized over a weighted-average period of 2.2 years.

------

**Note 12 — Income Taxes**

The Company is required to calculate its interim income tax provision using the estimated annual effective tax rate ("AETR") method prescribed by ASC 740-270, and as such, excludes losses in jurisdictions where the Company cannot benefit in computing its worldwide AETR. A separate AETR is computed and applied to ordinary losses in the U.S. and China as required by ASC 740-270-30-36(a). For the three months ended March 31, 2026, the Company recorded income tax benefit of $0.2 million.

The AETR differed from the U.S. federal statutory tax rate of 21% due primarily to a full valuation allowance against the Company's deferred tax assets in the U.S. and China, income in foreign jurisdictions that are taxed at higher rates than the U.S. federal rate, and the impact of discrete items that may occur in any given year but are not consistent from year to year.

For the three months ended March 31, 2025, the Company recorded income tax expense of $0.9 million. The estimated worldwide AETR differed from the U.S. federal statutory tax rate of 21% due primarily to a full valuation allowance against the Company's U.S. deferred tax assets, income in foreign jurisdictions that are taxed at higher rates than the U.S. federal rate, and the impact of discrete items that may occur in any given year but are not consistent from year to year.

The Company has established a valuation allowance against its deferred tax assets in the U.S. and China, because it is more likely than not that the deferred tax assets will not be realized. In determining whether deferred tax assets are realizable, the Company considers numerous factors including historical profitability, the amount of future taxable income and the existence of taxable temporary differences that can be used to realize deferred tax assets.

The Company applies ASC 740, the accounting standard addressing the accounting for uncertainty in income taxes, which prescribes rules for recognition, measurement and classification in the financial statements of tax positions taken or expected to be taken in a tax return. The Company has gross unrecognized tax benefits of $1.8 million and $1.7 million as of March 31, 2026 and December 31, 2025, respectively.

**Note 13 — Net Loss Attributable to Common Stockholders**

The following table sets forth the calculation of both basic and diluted net loss per share as follows for the periods indicated:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| **(in thousands, except share and per share amounts)** | **2026** | **2025** |
| Net loss available to common stockholders - basic | $(6630) | $(10096) |
| Adjustments related to the 2026 Notes <sup>(1)</sup> | (491) |  |
| Net loss available to common stockholders - diluted | $(7121) | $(10096) |
| Weighted average common stock outstanding - basic | 127792611 | 125079470 |
| Effect of dilutive shares: |  |  |
| &nbsp;&nbsp;&nbsp;2026 Notes | 3607287 |  |
| Weighted average common stock outstanding - diluted | 131399898 | 125079470 |
| Basic net loss per share: | $(0.05) | $(0.08) |
| Diluted net loss per share: | $(0.05) | $(0.08) |

---

<sup>(1)</sup> For the three months ended March 31, 2026, the adjustments related to the 2026 Notes include the net gain related to the repurchase offset by interest expense and amortization of debt issuance costs related to the 2026 Notes (net of taxes).

------

The following shares have been excluded from the calculation of the weighted average diluted shares outstanding as the effect would have been anti-dilutive:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| | **2026** | **2025** |
| 2026 Notes |  | 17559686 |
| 2028 Notes | 87412575 |  |
| RSUs | 17607311 | 15813008 |
| Stock Options | 2459920 | 3145320 |
| PSUs | 2210053 | 2845617 |

---

For the three months ended March 31, 2026 and 2025, income and shares related to the Private Placement Warrants were excluded from the calculation of diluted net loss per share of Class A Common Stock because their effect would be anti-dilutive.

**Note 14 — Segment Information**

The Company manages its business on the basis of one operating segment and one reportable segment. The chief operating decision maker ("CODM"), who is the Chief Executive Officer, assesses performance for the one operating segment and decides how to allocate resources based on consolidated net income (loss) and consolidated income (loss) from operations, which is also reported on the Condensed Consolidated Statements of Comprehensive Income (Loss).

Significant expenses within consolidated net (loss) income include cost of sales, total operating expenses, interest expense, interest income, other (income) expense, net, change in fair value of warrant liabilities, foreign currency transaction loss (gain), net, and income tax expense (benefit), all of which are each separately reported on the Condensed Consolidated Statements of Comprehensive Income (Loss).

The CODM also reviews the disaggregation of total operating expenses, of which significant segment expenses are related to personnel-related expenses, which includes sales commission and share-based compensation expense. Other segment expenses included in total operating expenses primarily consist of fees for professional services principally comprising legal, audit, tax and accounting services, depreciation and amortization expenses, advertising and marketing-related expenses, software, facilities-related costs, credit card and wire fees, and insurance.

The following summarizes the components of operating expenses for the periods indicated:

---

| | | |
|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| **(in thousands)** | **2026** | **2025** |
| Total operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personnel-related expenses | $22705 | $28819 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other segment expenses | 23535 | 31784 |
| Total operating expenses | $46240 | $60603 |

---

**Note 15 — New Accounting Pronouncements**

***Recently Adopted Accounting Pronouncements***

In November 2024, the Financial Standards Accounting Board ("FASB") issued Accounting Standards Update ("ASU") 2024-04 "Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments" which is intended to clarify requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. The Company adopted ASU 2024-04 on a prospective basis beginning January 1, 2026 and the adoption did not have a material impact on its consolidated financial statements and related disclosures.

------

In July 2025, the FASB issued ASU 2025-05 "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets" which simplifies the application of the current expected credit loss model for current accounts receivable and current contract assets under ASC 606. The Company adopted ASU 2025-05 on a prospective basis beginning January 1, 2026 and the adoption did not have a material impact on its consolidated financial statements and related disclosures.

***Accounting Pronouncements Not Yet Adopted***

In November 2024, the FASB issued ASU 2024-03 "Disaggregation of Income Statement Expenses" which expands interim and annual requirements to disclose about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, which was clarified in ASU 2025-01. The standard allows for early adoption of these requirements. The Company is currently evaluating the potential effect that the updated standard will have on its consolidated financial statement disclosures.

In September 2025, the FASB issued ASU 2025-06 "Intangibles: Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software" which modernizes the accounting for internal-use software to current development practices, clarifies when to begin capitalizing costs, and enhances disclosure requirements. ASU 2025-06 is effective for interim and annual reporting periods beginning after December 15, 2027, with early adoption permitted, and should be applied either prospectively, retrospectively, or under a modified prospective transition approach. The Company is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11 "Interim Reporting (Topic 270): Narrow Scope Improvements" which clarifies and reorganize GAAP interim reporting guidance to improve navigability, applicability, and consistency without changing the fundamental nature or volume of required interim disclosures. This amendment clarifies when ASC 270 is applicable, establishes a disclosure principle requiring disclosure of material events or changes occurring since the most recent annual reporting period, and consolidates into ASC Topic 270 a comprehensive list of interim disclosures required by other Codification Topics. The amendment also clarifies the form and content of interim financial statements, including guidance for condensed interim reporting. ASU 2025-11 is effective for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-12 "Codification Improvements" to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to GAAP. The update represents changes to the Codification that (1) clarify, (2) correct errors or (3) make minor improvements. ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the potential effect that the updated standard will have on its consolidated financial statements and related disclosures.

------

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.**

**Cautionary Note Regarding Forward-Looking Statements**

This Quarterly Report on Form 10-Q for the three months ended March 31, 2026 (the "Quarterly Report on Form 10-Q") contains "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements.

These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled Risk Factors of this filing and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the Securities and Exchange Commission (the "SEC") on March 12, 2026 (the "Annual Report on Form 10-K").

Important factors that may affect actual results or outcomes include, among others: the inability to recognize the benefits of the business combination consummated on May 4, 2021 pursuant to a certain Agreement and Plan of Merger entered into by and among the Company and other parties (the "Business Combination"); the Company's availability of cash for debt service and exposure to risk of default under debt obligations; the Company's ability to manage growth; the Company's ability to execute its business plan; potential negative reactions or outcomes related to the Company's name change in general and focused shift in operations; potential litigation involving the Company; changes in applicable laws or regulations; and the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and also with our audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K.

Unless the context otherwise requires, references to the "Company", "Hydrafacial", "we", "us", and "our" in this section are intended to mean the business and operations of SkinHealth Systems Inc. and its consolidated subsidiaries.

**Company Overview**

------

**Business and Macroeconomic Conditions**

During the three months ended March 31, 2026, we continued to strengthen the foundation of the business while expanding our footprint by selling and placing our patented hydradermabrasion delivery systems ("Delivery Systems") worldwide, driving consumables, which consist of single-use tips, solutions, serums, and other products used to provide a Hydrafacial treatment (collectively "Consumables"), investing in our community of providers, partners, and consumers, driving brand awareness, advancing our science-backed innovation product pipeline, and optimizing our global infrastructure. Although we believe we can be successful in our current operating environment, various factors may impact our business in unpredictable ways such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Global economic conditions, including inflation, recession, changes in foreign currency exchange rates, higher interest rates, and other changes in economic conditions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Market conditions, including increased competition and the interest rate environment, affecting the ability of potential customers to obtain credit on acceptable terms and longer sales cycles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The imposition of tariffs and/or trade restrictions, due to geopolitical tensions or otherwise, may impact material costs and pricing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Changes in applicable laws, regulations, regulatory interpretations, or enforcement policies in countries in which we operate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Disruptions in transportation and other supply chain related constraints, such as labor strife in the transportation industry or geopolitical tensions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Issues related to older models of Syndeo and our actions to remediate such issues.

We may be able to offset cost pressures through increasing the selling prices of some of our products, increasing value engineering efforts to optimize product costs, increasing the diversification of our suppliers and supplier contracts, increasing natural foreign currency hedging, as applicable, and reducing discretionary spending. However, our pricing actions could have an adverse impact on demand, and may in turn, cause our providers to halt or decrease Delivery Systems and/or Consumables spending, and our actions may not be sufficient to cover unexpected increased costs that we may experience.

Business and macroeconomic factors may also negatively impact, in the short-term or long-term, the global economy, the beauty health industry, our providers and their budgets with us, our business, the Company's brand reputation, financial condition, and results of operations. We remain attentive to these business and macroeconomic conditions that may materially impact our business, and we continue to explore and implement reporting and quality management systems and risk mitigation strategies in the face of these unfolding conditions to remain agile in adopting to changing circumstances.

------

**Comparison of Three Months Ended March 31, 2026 to Three Months Ended March 31, 2025**

The following tables set forth our consolidated results of operations in dollars and as a percentage of net sales for the periods presented. The period-to-period comparisons of our historical results are not necessarily indicative of the results that may be expected in the future. The results of operations data for the three months ended March 31, 2026 and March 31, 2025, have been derived from the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Amounts and percentages may not foot due to rounding.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| **(in millions)** | **2026** | **% of Net Sales** | **2025** | **% of Net Sales** |
| Net sales | $64.9 | 100.0% | $69.6 | 100.0% |
| Cost of sales | 20.5 | 31.5 | 21.0 | 30.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross profit | 44.4 | 68.5 | 48.6 | 69.8 |
| Operating expenses |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling and marketing | 23.2 | 35.7 | 26.0 | 37.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 1.1 | 1.7 | 1.0 | 1.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 21.9 | 33.8 | 33.6 | 48.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 46.2 | 71.2 | 60.6 | 87.1 |
| Loss from operations | (1.8) | (2.8) | (12.0) | (17.3) |
| Interest expense | 6.3 | 9.8 | 2.5 | 3.6 |
| Interest income | (1.5) | (2.3) | (3.0) | (4.4) |
| Other income, net | (1.0) | (1.6) | (0.1) | (0.1) |
| Change in fair value of warrant liabilities |  |  | (0.3) | (0.5) |
| Foreign currency transaction loss (gain), net | 1.2 | 1.8 | (1.9) | (2.7) |
| Loss before provision for income taxes | (6.8) | (10.5) | (9.2) | (13.2) |
| Income tax (benefit) expense | (0.2) | (0.3) | 0.9 | 1.3 |
| Net loss | $(6.6) | (10.2)% | $(10.1) | (14.5)% |

---

***Net Sales***

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
| **(in millions)** | **2026** | **2026** | **2025** | **2025** | **Amount** | **%** |
| Net sales |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delivery Systems | $| 18.5 | $| 20.2 | $(1.7) | (8.3)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumables | 46.4 | 46.4 | 49.4 | 49.4 | (3.0) | (6.1)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total net sales | $| 64.9 | $| 69.6 | $(4.7) | (6.7)% |
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Three Months Ended March 31,** |  |  |
| Percentage of net sales | **2026** | **2026** | **2025** | **2025** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delivery Systems | 28.6% | 28.6% | 29.1% | 29.1% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consumables | 71.4% | 71.4% | 70.9% | 70.9% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total | 100.0% | 100.0% | 100.0% | 100.0% |  |  |

---

Total net sales for the three months ended March 31, 2026 decreased $4.7 million, or 6.7%, compared to the three months ended March 31, 2025. Delivery Systems net sales for the three months ended March 31, 2026 decreased $1.7 million, or 8.3%, compared to the three months ended March 31, 2025, with decreases in the Americas and Europe, the Middle East, and Africa. Delivery Systems net sales were negatively impacted globally by unfavorable macroeconomic and credit conditions.

Consumables net sales for the three months ended March 31, 2026 decreased $3.0 million, or 6.1%, compared to the three months ended March 31, 2025, with decreases across all regions. Consumables net sales were negatively impacted by the transition to a distributor model in China, the timing of distributor orders, and promotions in the fourth quarter of 2025.

------

***Cost of Sales, Gross Profit, and Gross Margin***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
| **(in millions)** | **2026** | **2025** | **Amount** | **%** |
| Cost of sales | $20.5 | $21.0 | $(0.5) | (2.5)% |
| Gross profit | $44.4 | $48.6 | $(4.1) | (8.5)% |
| Gross margin | 68.5% | 69.8% |  |  |

---

Cost of sales for the three months ended March 31, 2026 decreased $0.5 million, compared to the three months ended March 31, 2025. Gross margin decreased to 68.5% for the three months ended March 31, 2026 from 69.8% for the three months ended March 31, 2025 primarily due to higher amortization expense.

***Operating Expenses***

***Selling and Marketing***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
| **(in millions)** | **2026** | **2025** | **Amount** | **%** |
| Selling and marketing | $23.2 | $26.0 | $(2.8) | (10.9)% |
| *As a percentage of net sales* | 35.7% | 37.4% |  |  |

---

Selling and marketing expense for the three months ended March 31, 2026 decreased $2.8 million, or 10.9%, compared to the three months ended March 31, 2025. The decrease is primarily driven by lower depreciation expense, sales commission expense, and marketing-related spend.

***Research and Development***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
| **(in millions)** | **2026** | **2025** | **Amount** | **%** |
| Research and development | $1.1 | $1.0 | $0.1 | 10.4% |
| *As a percentage of net sales* | 1.7% | 1.4% |  |  |

---

Research and development expense for the three months ended March 31, 2026 increased slightly compared to the three months ended March 31, 2025, reflecting increased investment in future product development.

***General and Administrative***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
| **(in millions)** | **2026** | **2025** | **Amount** | **%** |
| General and administrative | $21.9 | $33.6 | $(11.6) | (34.6)% |
| *As a percentage of net sales* | 33.8% | 48.2% |  |  |

---

General and administrative expense for the three months ended March 31, 2026 decreased $11.6 million, or 34.6%, compared to the three months ended March 31, 2025. The decrease is primarily driven by lower personnel-related expenses, including severance and share-based compensation expense, legal fees, and depreciation and amortization expense.

------

***Interest Expense, Interest Income, and Other Income, Net***

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Change** | **Change** |
| **(in millions)** | **2026** | **2025** | **Amount** | **%** |
| Interest expense | $6.3 | $2.5 | $3.8 | 154.0% |
| Interest income | $(1.5) | $(3.0) | $1.5 | (51.0)% |
| Other income, net | $(1.0) | $(0.1) | $(1.0) | N/M |
| N/M - Not meaningful |  |  |  |  |

---

Interest expense for the three months ended March 31, 2026 increased $3.8 million compared to the three months ended March 31, 2025, primarily due to interest and amortization of debt issuance costs related to the 7.95% Convertible Senior Secured Notes due November 15, 2028 (the "2028 Notes"), partially offset by lower outstanding balances related to the 1.25% Convertible Senior Notes due October 2026 (the "2026 Notes").

Interest income for the three months ended March 31, 2026 decreased $1.5 million compared to the three months ended March 31, 2025 primarily due to lower average invested balances and interest rates during the three months ended March 31, 2026.

Other income, net for the three months ended March 31, 2026 included $1.0 million net gain related to the repurchase of the 2026 Notes.

**Liquidity and Capital Resources** 

Our primary sources of capital have been (i) cash flow from operating activities, (ii) net proceeds received from the consummation of the Business Combination, (iii) net proceeds received from the Notes, and (iv) net proceeds received from the exercise of public and private placement warrants. As of March 31, 2026, we had cash, cash equivalents, and restricted cash of $204.4 million.

Our operating cash flows result primarily from cash received from sales of Delivery Systems and Consumables, offset primarily by cash payments made for products and services, employee compensation, payment processing and related transaction costs, operating leases, marketing expenses, and interest payments for our Notes. Cash received from our customers and other activities generally corresponds to our net sales.

Our sources of liquidity and cash flows are used to fund ongoing operations, research and development projects for new products, services, and technologies, and provide ongoing support services for our providers and customers. As part of our business strategy, we occasionally evaluate potential acquisitions of businesses and products and technologies. Accordingly, a portion of our available cash may be used at any time for the acquisition of complementary products, services, or businesses. Such potential transactions may require substantial capital resources, which may require us to seek additional debt or equity financing. We cannot assure you that we will be able to successfully identify suitable acquisition candidates, complete acquisitions, integrate acquired businesses into our current operations, or expand into new markets. Furthermore, we cannot provide assurances that additional financing will be available to us in any required time frame and on commercially reasonable terms, if at all.

Based on our sources of capital, management believes that we have sufficient liquidity to satisfy our anticipated working capital requirements for our ongoing operations and obligations for at least the next 12 months. However, we will continue to evaluate our capital expenditure needs based upon factors including, but not limited to, our rate of revenue growth, potential acquisitions, the timing and amount of spending on research and development, growth in sales and marketing activities, the timing of new product launches, timing and investments needed for international expansion, the continuing market acceptance of the Company's products and services, expansion, and overall economic conditions.

We may, from time to time, seek to redeem or repurchase our outstanding debt or equity securities through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.

------

If cash generated from operations is insufficient to satisfy our capital requirements, we may have to sell additional equity or debt securities or obtain expanded credit facilities to fund our operating expenses. The sale of additional equity would result in additional dilution to our stockholders. Also, the incurrence of additional debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations. In the event such additional capital is needed in the future, there can be no assurance that such capital will be available to us, or, if available, that it will be in amounts and on terms acceptable to us. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected. However, if cash flows from operations become insufficient to continue operations at the current level, and if no additional capital were obtained, then management would restructure the Company in a way to preserve our business while maintaining expenses within operating cash flows.

***Convertible Senior Notes, Net***

*Convertible Senior Secured Notes - 2028*

On May 21, 2025, the Company entered into privately negotiated exchange agreements (the "Exchange Agreements") with certain holders (the "Exchanging Holders") of the 2026 Notes. Pursuant to the Exchange Agreements, the Company exchanged and repurchased $413.2 million aggregate principal amount of the 2026 Notes. Of the $413.2 million aggregate principal amount of the 2026 Notes, $263.2 million principal amount were exchanged at a weighted-average price equal to 95% for $250.0 million principal amount of new 2028 Notes, and $150.1 million principal amount were repurchased at a weighted-average price equal to 95% for $142.6 million.

On May 27, 2025, the Company issued the 2028 Notes to the Exchanging Holders. The 2028 Notes were issued pursuant to, and are governed by, an indenture, dated as of May 27, 2025, between the Company, the guarantors party thereto, and U.S. Bank Trust Company, National Association, as trustee and collateral agent.

*Convertible Senior Notes - 2026*

On September 14, 2021, the Company issued an aggregate of $750.0 million in principal amount of its 2026 Notes pursuant to, and governed by, an indenture dated as of September 14, 2021, between the Company and U.S. Bank National Association, as trustee. Pursuant to the purchase agreement between the Company and the initial purchasers of the 2026 Notes, the Company granted the initial purchasers an option to purchase, for settlement within a period of 13 days from, and including, the date the 2026 Notes were first issued, up to an additional $100.0 million principal amount of 2026 Notes. The 2026 Notes issued on September 14, 2021 include the $100.0 million principal amount of 2026 Notes issued pursuant to the full exercise by the initial purchasers of such option.

During the three months ended March 31, 2026, the Company repurchased $21.3 million principal amount of its 2026 Notes at a weighted-average price equal to 94.875% for $20.2 million and recognized a net gain of $1.0 million, which includes $0.1 million of unamortized debt issuance costs. During the three months ended March 31, 2025, there were no repurchases related to the 2026 Notes. Since inception through December 31, 2025, the Company exchanged and repurchased in total $625.5 million principal amount of its 2026 Notes. For more information, see Part I, Item 1 "Financial Statements — Note 5 - "Long-term Debt" in this Quarterly Report on Form 10-Q.

***Known Trends or Uncertainties***

The majority of our customers operate within the medical industry (dermatologists and plastic surgeons), esthetician industry, and beauty retail industry. Although we have not seen any significant reduction in revenues to date due to consolidations, we have seen some consolidation in these industries during economic downturns. These consolidations have not had a negative effect on our total net sales; however, should consolidations and downsizing in the industries continue to occur, those events could adversely impact our revenues and earnings going forward.

In addition, we continue to face macroeconomic challenges such as the possibility of recession or financial market instability, and the impact of any governmental actions on the economy, such as tariffs and/or trade restrictions. Furthermore, the geopolitical landscape poses inherent risks that could significantly impact the operations and financial performance of the Company. In the event of a military conflict, supply chain disruptions, geopolitical uncertainties, and economic repercussions may adversely affect the Company's ability to develop, test and manufacture products, and distribute them globally. This could lead to delays in product development, interruptions in the supply of critical materials, thereby impeding the Company's commercialization plans. These factors may adversely impact consumers, business, and government spending as well as our customers' ability to pay for our products and services on an ongoing basis.

------

If economic and social conditions or the degree of uncertainty or volatility worsen, or the adverse conditions previously described are further prolonged, our revenues could be adversely affected. Furthermore, the impact of a conflict on global financial markets may result in increased volatility and uncertainty in the capital markets, thereby affecting the valuation of the Company's Class A Common Stock. Investor confidence, market sentiment, and access to capital could all be negatively influenced. Such geopolitical risks are outside the control of the Company, and the actual effects on the Company's business, financial condition and results of operations may differ from current estimates. Macroeconomic challenges and credit conditions have negatively impacted our revenues in 2026. We are continuing to monitor these and other risks that may affect our business so that we can respond appropriately. Negative trends in our financial performance or financial condition may result in a sustained decline in our stock price, which may result in a triggering event necessitating an interim goodwill impairment assessment and potential goodwill impairment.

**Cash Flows**

The following table summarizes the activities from our statements of cash flows. Amounts may not foot due to rounding.

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
| **(Dollars in millions)** | **2026** | **2025** |
| Cash, cash equivalents, and restricted cash at beginning of period | $232.7 | $370.1 |
| Operating activities: |  |  |
| Net loss | (6.6) | (10.1) |
| Non-cash adjustments | 10.2 | 10.2 |
| Changes in working capital | (9.1) | 2.9 |
| Net cash (used for) provided by operating activities | (5.6) | 3.0 |
| Net cash used for investing activities | (1.6) | (1.1) |
| Net cash used for financing activities | (20.9) | (0.3) |
| Net change in cash, cash equivalents, and restricted cash | (28.1) | 1.6 |
| Effect of foreign currency translation | (0.2) | 1.4 |
| Cash, cash equivalents, and restricted cash at end of period | $204.4 | $373.0 |

---

***Operating Activities***

Net cash used for operating activities for the three months ended March 31, 2026 was $5.6 million, as compared to net cash provided by operating activities of $3.0 million for the three months ended March 31, 2025. The change in cash used for operating activities was primarily related to changes in working capital and net loss.

***Investing Activities***

Net cash used for investing activities for the three months ended March 31, 2026 was $1.6 million, as compared to $1.1 million for the three months ended March 31, 2025. The change in cash used for investing activities was due to higher capital expenditures during the three months ended March 31, 2026.

***Financing Activities***

Net cash used for financing activities for the three months ended March 31, 2026 was $20.9 million, as compared to $0.3 million for the three months ended March 31, 2025. The cash used for financing activities for the three months ended March 31, 2026 was primarily related to the repurchase of the Company's 2026 Notes.

**Critical Accounting Policies and Estimates**

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with GAAP. In preparing the consolidated financial statements, we make estimates and judgments that affect the reported amounts of assets, liabilities, stockholders' equity/deficit, revenue, expenses, and related disclosures. We re-evaluate our estimates on an on-going basis. Our estimates are based on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because of the uncertainty inherent in these matters, actual results may differ from these estimates and could differ based upon other assumptions or conditions.

------

There have been no changes to our critical accounting policies since our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

**Recent Accounting Pronouncements**

See Part I, Item 1 "Financial Statements—Note 15 to the Consolidated Financial Statements—New Accounting Pronouncements" of this Quarterly Report on Form 10-Q.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk.**

Market risks relating to our operations result primarily from changes in interest rates, foreign currency, and inflation risk. There were no material changes to our market risks disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

**Item 4. Controls and Procedures.**

**Evaluation of Disclosure Controls and Procedures**

The Company conducted an evaluation, under the supervision and with the participation of the Company's management, including the Company's principal executive officer and principal financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures as defined in Rules 13a-15(e) and 15-d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") as of the end of the period covered by this Quarterly Report on Form 10-Q. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, the Company's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures were effective as of March 31, 2026.

**Changes in Internal Control Over Financial Reporting**

There have been no changes in our internal control over financial reporting (as such term is defined in the Exchange Act) that occurred during the three months ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

------

**PART II— OTHER INFORMATION**

**Item 1. Legal Proceedings.**

The Company is a party to various lawsuits, claims, and other legal proceedings that arise from time to time in the ordinary course of business, including but not limited to commercial disputes, product liability, and employment related matters. In addition, the Company may bring claims or initiate lawsuits from time to time against various third parties with respect to matters arising out of the ordinary course of the Company's business, including but not limited to commercial and intellectual property related matters.

For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies. Until the final resolution of such matters, if any of our estimates and assumptions change or prove to have been incorrect, we may experience losses in excess of the amounts recorded, which could have a material effect on our business, consolidated financial position, results of operations, or cash flows.

Except as otherwise disclosed below, we believe that none of our pending lawsuits, claims, and other proceedings are expected to have a material adverse effect on the Company's business, consolidated financial position, results of operations, or cash flows. However, management's judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.

*Cartessa Aesthetics, LLC*

On December 14, 2020, Hydrafacial LLC ("Hydrafacial") filed a complaint (the "Cartessa Complaint") against Cartessa Aesthetics, LLC ("Cartessa") in the United States District Court for the Eastern District of New York (the "New York Court"), captioned Edge Systems LLC v. Cartessa Aesthetics, LLC, Case No. 1:20-cv-6082 (the "Cartessa Case"), for patent infringement arising from Cartessa's sale of Cartessa's hydrodermabrasion system that Hydrafacial alleged has infringed five of Hydrafacial's patents on its device. Hydrafacial narrowed its allegation in the Cartessa Complaint to assert infringement of just four of its patents. On September 15, 2022, the New York Court granted Hydrafacial's Motion for Summary Judgment of No Unclean Hands and denied Cartessa's Motion for Summary Judgment of non-infringement on three of the four patents-in-suit. On June 6, 2023, the New York Court granted Hydrafacial's Motion for Summary Judgment of No Invalidity of the fourth patent-in-suit and granted Cartessa's Motion for Summary Judgment of non-infringement of that same patent. The parties agreed to dismiss the remaining claims without prejudice so that Hydrafacial can appeal the New York Court's grant of Cartessa's Motion for Summary Judgment. Final judgment was entered on October 15, 2024.

On October 8, 2024, Hydrafacial filed an appeal in the Federal Circuit Court of Appeals challenging the New York Court's final judgment and summary judgment decision of Cartessa's non-infringement regarding the fourth patent-in-suit. On November 13, 2024, Cartessa filed a cross-appeal challenging the New York Court's final judgment and summary judgment decision of granting Hydrafacial's motion for summary judgment of no invalidity regarding the fourth patent-in-suit. The parties exchanged their opening briefs on March 12, 2025 and June 20, 2025. Hydrafacial expects the hearing for this appeal to be scheduled in the later half of 2026.

On June 11, 2024, Hydrafacial filed a complaint against Cartessa and its foreign manufacturer, Eunsung Global Corp ("Eunsung"), in the United States International Trade Commission. A Notice of Institution of Investigation was issued on July 11, 2024, and the investigation was assigned investigation number 337-TA-1408 (the "ITC Cartessa Matter"). In the ITC Cartessa Matter, Hydrafacial has asserted that Cartessa and Eunsung infringe Hydrafacial's U.S. Patent No. 11,865,287, which relates to hydrodermabrasion systems but was not asserted in the Cartessa Case. Eunsung has consented to an exclusion order during the term of the Hydrafacial patent-in-suit. In the ITC Cartessa Matter, the parties concluded the evidentiary hearing on April 9-15, 2025. The parties filed post-hearing briefs in May 2025 and the judge issued an initial determination on August 26, 2025, finding that the patent is valid and infringed by Cartessa's products. The initial determination recommended an exclusion order and cease and desist order against Cartessa that would prevent importation or sale of Cartessa's hydrodermabrasion systems within the United States. The Commission issued its final determination on March 23, 2026, confirming infringement by Cartessa's products and validity of Hydrafacial's patent. On March 26, 2026, Cartessa filed a petition for review by the Federal Circuit Court of Appeals. Hydrafacial expects this appeal to be dismissed by the end of 2026.

------

*Cartessa Aesthetics, LLC - Second Complaint*

On June 14, 2024, Hydrafacial filed a complaint (the "Second Cartessa Complaint") against Cartessa in the New York Court, captioned HydraFacial LLC v. Cartessa Aesthetics, LLC, Case No. 2:24-cv-04253 (the "Second Cartessa Case"), for patent infringement arising from Cartessa's sale of Cartessa's hydrodermabrasion system that Hydrafacial alleged has infringed Hydrafacial's U.S. Patent No. 11,865,287. The Second Cartessa Case has been stayed pending resolution of the ITC Cartessa Matter. Although Cartessa filed a petition for review of the Commission's final determination in the ITC Cartessa Matter, Hydrafacial plans to file a motion to reopen the Second Cartessa Case in the second quarter of 2026 to vigorously pursue its claims against Cartessa and seek monetary damages because Hydrafacial believes and expects that Cartessa's appeal will likely be dismissed.

*Eunsung Global Corp (and Sinclair Pharma Ltd. and Aesthetic Management Partners, Inc.) - IPRs*

On September 30, 2024, Eunsung filed a Petition for inter partes review ("IPR"), IPR2024-01491, challenging the validity of Hydrafacial's U.S. Patent No. 11,865, 287 (the "'287 Patent"). On November 25, 2024, Sinclair Pharma Ltd and Aesthetic Management Partners, Inc. ("AMP") filed a similar IPR Petition, IPR2025-00145, challenging the same patent and relying on the same arguments. On January 10, 2025, Eunsung filed an IPR Petition, IPR2025-00445, challenging the validity of Hydrafacial's U.S. Patent No. 9,550,052 (the "'052 Patent"). On January 13, 2025, Eunsung filed an IPR Petition, IPR2025-00452, challenging the validity of Hydrafacial's U.S. Patent No. 12,053,607. On January 14, 2025, Eunsung filed an IPR Petition, IPR2025-00453, challenging the validity of Hydrafacial's U.S. Patent No. 11,446,477 (the "'477 Patent"). On April 11, 2025, the U.S.P.T.O. Board denied institution of the first IPR challenging the '287 Patent (IPR2024-01491). On June 2, 2025, the U.S.P.T.O. Board granted institution of the second IPR challenging the '287 Patent (IPR2025-00145). In July 2025, Sinclair and AMP filed copycat IPR Petitions challenging the '052 Patent and '477 Patent (IPR2025-01169 and IPR2025-01217, respectively) based on the same arguments as Eunsung's corresponding IPR Petitions. In July 2025, Eunsung terminated each of its IPR proceedings against Hydrafacial.

On February 12, 2026, the director of the U.S.P.T.O. de-instituted and denied the second IPR challenging the '287 Patent (IPR2025-00145). On April 20, 2026, the director denied Sinclair's request for rehearing of that de-institution decision. The only IPR proceedings still pending against Hydrafacial are the two copycat IPRs from Sinclair and AMP (IPR2025-01169 and IPR2025-01217, respectively), which have been stayed by the director in view of the pending Director Review of the institution decision in IPR2025-00145. Hydrafacial expects these two remaining copycat IPRs challenging the '052 Patent and '477 Patent to also be de-instituted given that they were stayed pending the decision on the '287 Patent, which has now been issued. Hydrafacial plans to continue vigorously defending its patents against each of these challenges.

*Medicreations LLC* 

On May 6, 2024, Hydrafacial filed a complaint against Medicreations LLC ("Medicreations") in the United States District Court for Nevada, Case Number 2:24-cv-00855 (the "Medicreations Case"), for patent infringement arising from Medicreations' sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed twelve of Hydrafacial's patents. On July 26, 2024, Medicreations filed a motion to dismiss the complaint. On March 3, 2025, the court issued an order dismissing a few of Hydrafacial's claims to specific remedies, but the majority of the case and claims will move forward. On May 13, 2025, Hydrafacial filed a Motion for Preliminary Injunction that was denied in October 2025. This case continued against Medicreations until the parties achieved a settlement on March 19, 2026, wherein Medicreations agreed to pay Hydrafacial $225,000 in past damages and a royalty of 35% of sales Medicreations made in February and March 2026. As a result, the Medicreations Case has been dismissed.

*Sinclair Pharma US, Inc*

On July 24, 2024, Hydrafacial filed a complaint against Sinclair Pharma US, Inc ("Sinclair"), and its distributor Viora, Inc ("Viora"), in the United States District Court for the Central District of California, Case No. 2:24-cv-06250 (the "Sinclair Case"), for patent infringement arising from Sinclair's sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial's patents on its device. The Sinclair Case was stayed pending the resolution of an ITC investigation against Sinclair. The ITC investigation was terminated in February 2025, and the district court judge lifted the stay for a short time before staying discovery again in view of the IPRs that were instituted and stayed. Hydrafacial expects for this stay to be lifted once the remaining IPRs are de-instituted. Hydrafacial plans to seek monetary damages and vigorously pursue its claims against Sinclair and Viora.

------

*Aesthetic Management Partners Inc.*

On July 8, 2024, Hydrafacial filed a complaint against AMP in the United States District Court for the Western District of Tennessee, Case No. 2:24-cv-02480-JPM-TMP (the "AMP Case"), for patent infringement arising from Aesthetic Management Partners' sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial's patents on its device. The AMP Case was stayed due to a corresponding ITC investigation. The ITC investigation was terminated in February 2025, and the judge lifted the stay.

On June 13, 2025, Hydrafacial filed a motion for preliminary injunction for which the judge held a hearing on July 25, 2025, but the judge has not yet issued an order. On June 23, 2025, AMP filed a partial motion to dismiss which only addresses a small portion of Hydrafacial's claims and remedies in this case, but a hearing has not been scheduled for this motion yet. The judge held a claim construction hearing on February 27, 2026. Discovery is proceeding as the parties await the judge's orders on the pending motions and claim construction. Hydrafacial will continue to seek monetary damages, and plans to vigorously pursue its claims against AMP.

*Medical Purchasing Resource, LLC*

On June 4, 2024, Hydrafacial filed a complaint against Medical Purchasing Resource, LLC ("Medical Purchasing Resource") in the United States District Court for the Central District of California, Case No. 2:24-cv-4655 (the "MPR Case"), for trademark infringement, false designation of origin, unfair competition, tortious interference, and other causes of action relating to Hydrafacial's trademark rights. On April 3, 2025, the parties participated in a mediation and came to a tentative agreement to settle the case. In the mediation, the parties reached a settlement agreement and ultimately agreed that Medical Purchasing Resource will stop using Hydrafacial's trademarks and any marks that are confusingly similar to those marks. Medical Purchasing Resource also agreed to stop the other activities identified by Hydrafacial in its complaint, including selling products to known Hydrafacial customers. Medical Purchasing Resource also agreed to take additional measures to ensure that customers are aware that Medical Purchasing Resource and its products have no relation or affiliation with Hydrafacial. Medical Purchasing Resource also agreed to pay Hydrafacial a total of $105,000 for past damages which will be paid to Hydrafacial in four quarterly payments of $26,250 starting in July 2025, and the parties filed a consent judgment with the court to end the lawsuit. As a result, the MPR Case has been dismissed.

*Luvo Medical Technologies Inc*

On August 16, 2024, Hydrafacial filed a complaint against Luvo Medical Technologies Inc ("Luvo"), Healthcare Markets, Inc ("Healthcare Markets"), and their foreign manufacturer Eunsung in the United States District Court of Utah, Case No. 2:24-cv-00587 (the "Luvo Case"), for patent infringement arising from Healthcare Markets' sale of Luvo's hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial's patents on its device. The Luvo Case was stayed due to the corresponding ITC Luvo Matter, but pursuant to the ITC settlement agreement, the parties filed a consent judgment in the Luvo Case that terminated the case as to Luvo and Healthcare Markets. This case continued against Eunsung until the parties achieved a settlement in July 2025, wherein Eunsung agreed to a consent judgment as well. As a result, the Luvo Case has been dismissed.

On August 7, 2024, Hydrafacial filed a complaint against Luvo, its distributor Healthcare Markets, Medical Purchasing Resource, eMIRAmed, and its manufacturer, MIRAmedtech, in the United States International Trade Commission. A Notice of Institution of Investigation was issued on September 16, 2024, and the investigation was assigned investigation number 337-TA-1417 (the "ITC Luvo Matter"). In the ITC Luvo Matter, Hydrafacial has asserted that Luvo, Healthcare Markets, Medical Purchasing Resource, and eMIRAmed USA, LLC ("eMIRAmed") infringe Hydrafacial's U.S. Patent No. 11,446,477, which is not asserted in the ITC Cartessa Matter or ITC Sinclair Matter, and relates to hydrodermabrasion systems. After a mediation between the parties, on March 17, 2025, Hydrafacial signed a settlement agreement with Luvo and Healthcare Markets. As a result, the ITC has terminated the investigation as to Luvo and Healthcare Markets, and issued default judgment against the remaining respondents.

------

*eMIRAmed USA, LLC*

On August 26, 2024, Hydrafacial filed a complaint against eMIRAmed USA, LLC ("eMIRAmed"), and its manufacturer MIRAmedtech UG ("MIRAmedtech"), in the United States District Court for the Central District of California, Case No. 2:24-cv-01865 (the "eMIRAmed Case"), for patent infringement arising from eMIRAmed's sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial's patents on its device. Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against eMIRAmed and MIRAmedtech. On January 22, 2025, Hydrafacial moved for default judgment against eMIRAmed and MIRAmedtech. On January 30, 2025, eMIRAmed filed notice of Chapter 7 bankruptcy. On March 21, 2025, the court granted default judgment against MIRAmedtech but denied default judgment against eMIRAmed due to its bankruptcy filing. As a result, the eMIRAmed Case has been closed.

*Med Spa Essentials, LLC*

On March 6, 2025, Hydrafacial filed a complaint against Med Spa Essentials, LLC ("MS Essentials") in the United States District Court for the Central District of California, Case No. 2:25-cv-01994 (the "MS Essentials Case"), for trademark infringement, false designation of origin, unfair competition, tortious interference, and other causes of action relating to Hydrafacial's trademark rights. Before filing any response to the complaint, MS Essentials agreed to shut down its business and stop all unlawful acts alleged in the complaint. The parties entered into a settlement agreement and filed a consent judgment, dismissing this case in July 2025.

*Candela Corp.*

On April 3, 2025, Hydrafacial filed a complaint against Candela Corp. ("Candela"), and its manufacturer Termosalud S.L. ("Termosalud"), in the United States District Court for the District of Delaware, Case No. 1:25-cv-00418-JLH (the "Candela Case"), for patent infringement arising from Candela's sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed five of Hydrafacial's patents on its device. Hydrafacial reached a settlement with Candela in April 2026 and will dismiss the case as to Candela by the end of May 2026. Hydrafacial has not reached a settlement with Termosalud yet, and as a result, Hydrafacial plans to vigorously pursue its claims against Termosalud, including monetary damages.

*BQ Aesthetix & Co., LLC*

On June 24, 2025, Hydrafacial filed a complaint against BQ Aesthetix & Co., LLC d/b/a Bellatrix USA ("Bellatrix") in the United States District Court for the Southern District of Florida, Case No. 0:25-cv-61262-AHS (the "Bellatrix Case"), for patent infringement arising from Bellatrix's sale of hydrodermabrasion systems that Hydrafacial alleged to have infringed seven of Hydrafacial's patents on its device. The Bellatrix Case is in its early stages of discovery and Hydrafacial is seeking monetary damages and plans to vigorously pursue its claims against Bellatrix.

*Securities Class Action* 

On November 16, 2023, a putative class action was filed in the United States District Court for the Central District of California against the Company, its then-current President and Chief Executive Officer, Andrew Stanleick, its former Chief Financial Officer, Liyuan Woo, and its current Chief Financial Officer, Michael Monahan (the "Defendants"). The complaint, styled Abduladhim A. Alghazwi, individually and on behalf of all others similarly situated, v. The Beauty Health Company, Andrew Stanleick, Liyuan Woo, and Michael Monahan, Case No. 2:23-cv-09733 (C.D. Ca.) (the "Securities Class Action"), asserted claims for violation of Section 10(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule 10b-5 promulgated thereunder against all defendants (First Claim), and violation of Section 20(a) of the Exchange Act against the individual defendants (Second Claim). The complaint alleged that, between May 10, 2022 and November 13, 2023, Defendants materially misled the investing public by publicly issuing false and/or misleading statements and/or omissions relating to Hydrafacial's business, operations, and prospects, specifically with respect to the performance of and demand for the Syndeo 1.0 and 2.0 devices. The relief sought in the complaint included a request for compensatory damages suffered by the plaintiff and other members of the putative class for damages allegedly sustained as a result of the alleged securities violations.

------

On January 16, 2024, putative class members Jeff and Kevin Brown (the "Browns"), Priscilla and Martjn Dijkgraaf (the "Dijkgraafs"), and Joseph Jou filed three competing motions for appointment as lead plaintiff under the Private Securities Litigation Reform Act ("PSLRA"), 17 U.S.C. § 78u-4(a)(3). On January 31, 2024, Joseph Jou filed a notice of non-opposition to the Browns' and Dijkgraafs' motions for appointment as lead plaintiff. On May 2, 2024, the Court granted the Dijkgraafs' motion for appointment as lead plaintiff and approved the Dijkgraafs' counsel, Hagens Berman, as lead counsel. On July 1, 2024, lead plaintiffs filed a consolidated amended class action complaint asserting the same causes of action as the original complaint. The Securities Class Action case was assigned to U.S. District Judge Sherilyn Peace Garnett. On September 30, 2024, Defendants filed a motion to dismiss the consolidated amended class action complaint in its entirety. Plaintiffs filed their opposition brief on November 22, 2024, and Defendants filed their reply brief on December 23, 2024. A hearing on the Defendants' motion to dismiss was scheduled for January 15, 2025. On January 10, 2025, the Court granted the parties' joint stipulation to adjourn the January 15, 2025 hearing. On January 17, 2025, the Court granted the parties' joint stipulation to withdraw briefing on Defendants' motion to dismiss without prejudice to refiling and to briefly stay proceedings so that the parties could complete a private mediation. The parties conducted the private mediation on March 27, 2025. The parties were unable to reach a settlement at the mediation. On May 5, 2025, the plaintiffs filed a second amended complaint (the "SAC"), pursuant to the parties' stipulation, which was so-ordered by the Court on April 16, 2025. On July 11, 2025, Defendants filed a motion to dismiss the SAC in its entirety. The Court scheduled a hearing on Defendants' motion for September 17, 2025. On September 15, 2025, the Court vacated the hearing *sua sponte*. On September 25, 2025, the Court denied Defendants' motion to dismiss. On November 24, 2025, each Defendant filed an answer to the SAC. On November 26, 2025, the parties filed a Fed. R. Civ. P. 26(f) joint report and proposed stipulated pretrial schedule. On December 15, 2025, the Court so-ordered the parties' stipulated pretrial schedule, set the final pretrial conference for November 17, 2027, and set trial for December 7, 2027. On the same day, the Court referred the parties to a private mediation before a private mediator of their choice, to be completed by October 13, 2027. On March 24, 2026, the parties entered into a stipulation to extend the case schedule by approximately three months to allow them to focus on mediation efforts. The Court approved the stipulation on March 25, 2026, resulting in a three-month extension of the case schedule, including all discovery deadlines. The parties have agreed to participate in a private mediation, which is currently scheduled to take place on May 20, 2026.

The Company believes that the claims asserted in the Securities Class Action have no merit and intends to vigorously defend them.

*Customer Class Action*

On October 24, 2024, Jason Davalos ("Jason Davalos"), Sonia Davalos ("Sonia Davalos", and collectively with Jason Davalos, the "Davaloses"), and Sol Tan Tanning & Spa LLC ("Sol Tan", and collectively with the Davaloses, the "Class Action Plaintiffs"), individually and on behalf of all others similarly situated, filed a putative class action complaint (the "Complaint") against Hydrafacial LLC d/b/a The Hydrafacial Company ("Hydrafacial") and The Beauty Health Company ("BHC" and collectively with Hydrafacial, the "Class Action Defendants") for alleged violations of New York consumer fraud statutes, breach of contract, and common law breach of implied warranties (the "Customer Class Action"). The case is captioned Jason Davalos, Sonia Davalos, Sol Tan Tanning & Spa LLC, on behalf of themselves and all others similarly situated v. Hydrafacial LLC dba The Hydrafacial Company, and The Beauty Health Company, Case No. 24-cv-8073 (S.D.N.Y.) (Caproni, J.) The Complaint alleged that all three versions of the Syndeo machine (Syndeo 1.0, Syndeo 2.0, and Syndeo 3.0) were defective and did not perform in the manner in which it had been represented by Class Action Defendants. Class Action Plaintiffs claim that Class Action Defendants made various misrepresentations in its marketing and sales of the Syndeo machines and, rather than provide a refund to customers for the defective machines, replaced them with another Syndeo machine that exhibited the same defects. Class Action Plaintiffs purported to bring claims on behalf of themselves, and all other similarly situated purchasers within the United States, of Class Action Defendants' Syndeo machines. The Complaint asserted five causes of action: (1) violations of N.Y. G.B.L., § 349, the state consumer production statute; (2) violations of N.Y. G.B.L., § 350, the state's false advertising statute; (3) breach of contract; (4) breach of the implied warranty of merchantability; and (5) breach of the implied warranty of fitness. The relief sought in the Complaint included monetary damages allegedly suffered by Class Action Plaintiffs and other members of the putative class as a result of Class Action Defendants' alleged violations and breaches, including a trebling of any money damages award for alleged violations of N.Y. G.B.L., § 349 and § 350.

------

On December 30, 2024, the Class Action Defendants filed a motion to dismiss the Complaint in its entirety. On January 3, 2025, the Class Action Defendants filed a motion to stay discovery during the pendency of their motion to dismiss. On January 8, 2025, the Davaloses voluntarily dismissed their claims against the Class Action Defendants pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i), leaving Plaintiff Sol Tan as the sole remaining Customer Class Action Plaintiff. Plaintiff Sol Tan filed their opposition brief on January 9, 2025, and the Class Action Defendants filed their reply brief on January 13, 2025. On January 16, 2025, the Court granted the parties' joint stipulation to adjourn the January 17, 2025 initial pretrial conference and stay the action pending the parties' completion of a private mediation. As part of its order, the Court also (1) adjourned Plaintiff Sol Tan's deadline to respond to the Class Action Defendants' motion to dismiss sine die pending the outcome of mediation; (2) denied as moot the Class Action Defendants' motion to stay discovery in light of the parties' agreement to stay discovery pending the outcome of mediation; and (3) directed the parties to (a) file a joint letter on or before February 7, 2025, indicating the date (not later than May 8, 2025) on which the mediation is scheduled to occur; and (b) within seven days after the mediation, either (i) file a joint letter indicating that settlement was reached; or (ii) file a revised proposed case management plan and a revised joint letter required by the Court's Notice of Initial Pretrial Conference. On February 7, 2025, the parties filed a joint letter notifying the Court that they had agreed to mediate before Greg Danilow of Phillips ADR Enterprises. The parties conducted the private mediation on April 29, 2025; however, the parties were unable to reach a settlement at the mediation. Pursuant to the parties' so-ordered January 16 joint stipulation, on May 7, 2025, the parties filed a revised proposed case management plan and a revised joint letter in accordance with the Court's Notice of Initial Pretrial Conference. On the same day, the Court endorsed the joint submission and ordered Plaintiff to file an amended complaint no later than June 2, 2025, and scheduled an initial pretrial conference for July 18, 2025.

On June 2, 2025, Plaintiff and fifteen other alleged purchasers of the Syndeo machines ("Plaintiffs") filed an amended complaint (the "Amended Complaint") asserting: (1) violations of N.Y. G.B.L., § 349 (Count IV), the state consumer protection statute; (2) violations of N.Y. G.B.L., § 350 (Count V), the state's false advertising statute; (3) breach of the implied warranty of merchantability (Count I); (4) breach of express and implied contract and class-wide rescission (Count II); and (5) breach of express warranty (Count III). The relief sought in the Amended Complaint included monetary damages allegedly suffered by Class Action Plaintiffs and other members of the putative class as a result of Class Action Defendants' alleged violations and breaches, including a trebling of any money damages award for alleged violations of N.Y. G.B.L., § 349 and § 350. For Counts IV (violations of N.Y. G.B.L., § 349) and V (violations of N.Y. G.B.L., § 350), plaintiff Jennifer Skuratov d/b/a Spa Thirsty, Inc. ("Spa Thirsty"), sought certification of an alternative subclass of New York purchasers of Syndeo devices (the "Putative New York Subclass"). On June 23, 2025, Defendants moved to (i) dismiss Counts I, II, IV, and V in full; (ii) partially dismiss Count III to the extent it alleges design defects; (iii) dismiss all claims brought by plaintiff Spa Thirsty in full; (iv) dismiss all claims against BHC in full; and (v) dismiss Plaintiffs' claim for injunctive relief. On December 22, 2025, the Court granted Defendants' motion to dismiss in its entirety, except it denied Defendants' request that the claims brought by plaintiff Spa Thirsty be dismissed with prejudice. Specifically, the Court dismissed (i) all of Plaintiffs' claims against BHC; (ii) Plaintiffs' claims for breach of the implied warranty of merchantability (Count I), breach of express and implied contract and class-wide rescission based on fraudulent inducement (Count II), and violations of N.Y. G.B.L., §§ 349 and 350 (Counts IV and V), and their request for injunctive relief; and (iii) the Class Action Plaintiffs' claim for breach of express warranty (Count III) to the extent it arises out of alleged defects affirmatively identified as "design defects" in the amended complaint. In addition, the Court denied the Class Action Plaintiffs' request for leave to amend as to all of the dismissed causes of action except for plaintiff Spa Thirsty's claims pursuant to N.Y. G.B.L. §§ 349 and 350. The Court gave plaintiff Spa Thirsty until January 9, 2026 to move for leave to file a second amended complaint that addresses the deficiencies with plaintiff Spa Thirsty's §§ 349 and 350 claims. Those deficiencies included plaintiff Spa Thirsty's failure to allege that it "was aware of any of Defendants' purportedly deceptive statements 'before [it] purchased or came into possession' of the Syndeo."

------

On January 9, 2026, Class Action Plaintiffs filed a letter motion for leave to file a second amended complaint and for reconsideration of the Court's dismissal of Plaintiffs' claims for breach of express and implied contract and class-wide rescission based on fraudulent inducement (Count II). Class Action Plaintiffs appended a proposed second amended complaint (the "Second Amended Complaint") to their letter motion. The Second Amended Complaint alleged that plaintiff Spa Thirsty purchased a Syndeo in reliance on representations made by Hydrafacial to plaintiff Spa Thirsty at an aesthetic conference in New York, including that Syndeo was "top of the line," "hands free," "had superior cleanliness," "superior," "a major upgrade," "works great," and "yielded 'more than 15 uses per bottle of solution serum." The Second Amended Complaint alleged that those representations were deceptive in violation of N.Y. G.B.L. §§ 349 and 350 because the Syndeo allegedly lacked attributes Hydrafacial had represented to plaintiff Spa Thirsty and did not yield the promised treatments per bottle of solution serum. On January 23, 2026, Hydrafacial filed its opposition to Class Action Plaintiffs' letter motion. Hydrafacial argued that the Second Amended Complaint was futile because all of its alleged representations about the Syndeo were inactionable puffery, except for, arguably, the representation regarding the number of treatments per bottle of solution serum. For that representation, Hydrafacial argued that plaintiff Spa Thirsty did not allege that its Syndeo yielded fewer than 15 treatments per bottle and failed to allege other facts required to state §§ 349 and 350 claims. Hydrafacial also argued that Class Action Plaintiffs' request for reconsideration of the dismissal of Count II should be denied as untimely.

On January 27, 2026, the Court issued an order granting Class Action Plaintiffs' motion for leave to file the Second Amended Complaint but denied their request that the Court reconsider its order dismissing the claim for breach of contract in Count II of the Amended Complaint. Although the Court agreed with Hydrafacial that "many of the claims attributed to HydraFacial in the Second Amended Complaint are non-actionable puffery, the claim that the Syndeo 'yielded more than 15 uses per bottle of serum' is a verifiable statement of fact," and the Court could "infer that plaintiff Spa Thirsty's machine failed to yield the promised number of uses per bottle of serum …. From plaintiff Spa Thirsty's allegation that its 'machines run through serums faster than Defendant states it should.'" The Court denied reconsideration because Class Action Plaintiffs' request was both untimely and "would fail on the merits," as Class Action Plaintiffs "failed to allege the specific provisions of the contract upon which liability was predicated." Pursuant to the Court's order, Class Action Plaintiffs filed the Second Amended Complaint on January 29, 2026. As a result of the Court's ruling, the only claims still pending before the Court in the Customer Class Action are (i) the Class Action Plaintiffs' claim against Hydrafacial for breach of its express warranty against defects in materials and workmanship; and (ii) plaintiff Spa Thirsty's claim, asserted on behalf of itself and the Putative New York Subclass against Hydrafacial, for alleged violations of N.Y. G.B.L., § 349 and § 350.

On February 26, 2026, the parties jointly notified the Court that a settlement-in-principle had been reached and requested that all deadlines be stayed for sixty (60) days. On March 2, 2026, the Court ordered Class Action Plaintiffs to file the necessary motion papers for preliminary approval of the settlement on or before May 29, 2026, and canceled all other deadlines in the case.

The Company believes that the claims asserted in the Customer Class Action have no merit and it intends to vigorously defend them.

*Consolidated Derivative Action*

On February 8, 2024, a derivative complaint was filed in the Delaware Court of Chancery against the Company's former President and Chief Executive Officer, Andrew Stanleick; its former Chief Financial Officer, Liyuan Woo, and current members of the Company's Board of Directors (the "Board of Directors"): Brenton Saunders, Marla Beck, Michael Capellas, Julius Few, Desiree Gruber, Michelle Kerrick, Brian Miller, and Doug Schillinger, with the Company as the nominal defendant. The complaint, styled Margie Elstein, derivatively on behalf of The Beauty Health Company v. Brenton Saunders, Marla Beck, Michael Capellas, Julius Few, Desiree Gruber, Michelle Kerrick, Brian Miller, Doug Schillinger, Andrew Stanleick, and Liyuan Woo, C.A. No. 2024-0114-LWW (Del. Ch.) (the "Elstein Derivative Action"), asserts a single claim for breach of fiduciary duty against the individual defendants based on the alleged disclosure of knowingly false information and/or the alleged failure to respond to red flags relating to Hydrafacial's business, operations, and prospects, specifically with respect to the performance of and demand for the Syndeo 1.0 and 2.0 devices. The plaintiff-stockholder further maintains that no demand was made upon the Company's Board of Directors prior to the initiation of the Elstein Derivative Action based on allegations that a majority of the Board of Directors was not disinterested or independent with respect to the fiduciary duty claim, such that demand should be excused as futile. The relief sought in the complaint includes a finding of demand futility, a finding that the individual defendants are liable for breaching their fiduciary duties (as current/former officers and directors), and an award of compensatory damages for harm suffered by the Company and its stockholders for harm allegedly sustained as a result of the alleged fiduciary duty violation.

------

On May 1, 2024, a derivative complaint was filed in the Delaware Court of Chancery against the Company's former President and Chief Executive Officer, Andrew Stanleick; its former Chief Financial Officer, Liyuan Woo, and current members of the Company's Board of Directors: Brent Saunders, Marla Beck, Michael Capellas, Julius Few, Desiree Gruber, Michelle Kerrick, Brian Miller, and Doug Schillinger, with the Company as the nominal defendant. The complaint, styled Richard Montague, derivatively on behalf of The Beauty Health Company v. Andrew Stanleick, Liyuan Woo, Brent Saunders, Marla Beck, Michael Capellas, Julius Few, Desiree Gruber, Michelle Kerrick, Brian Miller, and Doug Schillinger, C.A. No. 2024-0463-LWW (Del. Ch.) (the "Montague Derivative Action"), asserts claims for (i) breach of fiduciary duty, (ii) gross mismanagement, (iii) waste of corporate assets, (iv) unjust enrichment, and (v) aiding and abetting against the individual defendants based on allegations that the individual defendants made materially false and/or misleading statements, as well as failing to disclose material adverse facts about the Company's business, operations, and prospects, specifically relating to the Syndeo 1.0 and 2.0 devices. The relief sought in the Montague Derivative Action includes (a) awarding damages for harm suffered by the Company allegedly sustained as a result of the individual defendants' alleged breach of fiduciary duties, gross mismanagement, waste of corporate assets, and unjust enrichment, (b) awarding damages for harm suffered by the Company allegedly sustained as a result of the Company's directors' alleged aiding and abetting of breaching their fiduciary duties, (c) directing the Company to reform and improve its corporate governance and internal procedures, to comply with its existing governance obligations and all applicable laws, and to protect its investors from a recurrence of the alleged damaging events, and (d) awarding the plaintiff-stockholder the costs and disbursements of the Montague Derivative Action, including reasonable attorneys' fees, accountants' and experts' fees, costs, and expenses.

On May 22, 2024, the parties to the Elstein Derivative Action and Montague Derivative Action submitted a Stipulation and Proposed Order Governing Consolidation, Appointment of Lead, and Deadline to Respond to Operative Complaint. On May 24, 2024, Vice Chancellor Will, who was assigned to both the Elstein Derivative Action and the Montague Derivative Action, entered the Stipulation and Order Governing Consolidation, Appointment of Lead, and Deadline to Respond to Operative Complaint (the "Consolidation Order"). Per the Consolidation Order, the Elstein Derivative Action and the Montague Derivative Action were consolidated into a single derivative action, styled In re The Beauty Health Company Consolidated Stockholder Derivative Litigation, C.A. No. 2024-0114-LWW (Del. Ch.) (the "Consolidated Derivative Action"). The Consolidation Order designated the law firms of Gainey McKenna & Egleston and Komlossy Law, P.A. as co-lead counsel for plaintiffs in the Consolidated Derivative Action, and designated the law firm of Cooch and Taylor, P.A. as Delaware counsel for plaintiffs in the Consolidated Derivative Action. Additionally, the Consolidation Order designated the complaint filed in the Elstein Derivative Action as the operative complaint for the Consolidated Derivative Action, further providing that defendants are not obligated to answer or otherwise respond to the complaint filed in the Montague Derivative Action. The Consolidation Order further provided that defendants shall answer or otherwise respond to the complaint filed in the Elstein Derivative Action by August 25, 2024. This response deadline was subsequently vacated, prior to plaintiffs' filing, on September 9, 2024, of their Verified Consolidated Amended Stockholder Derivative Complaint (the "Operative Complaint"). On September 16, 2024, defendants filed their Motion to Dismiss the Operative Complaint, or Alternatively, Stay the Proceedings (the "Motion to Dismiss"). Defendants filed their opening brief in support of their Motion to Dismiss and stay on February 28, 2025. Pursuant to a scheduling order entered by the court, Plaintiffs' answering brief was filed on May 2, 2025, and Defendants' reply brief was filed on June 3, 2025. The parties held a mediation on November 4, 2025 and reached agreement on terms of a mutually agreeable resolution. On February 9, 2026, the parties entered into a Stipulation of Settlement, which is subject to court approval. On February 20, 2026, the Delaware Court of Chancery entered a Scheduling Order with respect to Notice and Settlement Hearing, requiring the Company to file a copy of the Notice of Pendency and Proposed Settlement of Derivative Action as an exhibit to a Current Report on Form 8-K, which the Company filed on March 6, 2026. The Court has scheduled the settlement hearing for May 13, 2026.

*Securities and Exchange Commission (the "SEC") Subpoena* 

On January 11, 2024, the Company was informed that the SEC is conducting a formal investigation of the Company related to, among other things, the allegations brought against the Company in the Securities Class Action lawsuit. The Company has subsequently received subpoenas from the SEC for the production of documents and witness testimony related to its investigation. The Company is in the process of responding to the subpoenas and intends to continue to fully cooperate with the SEC investigation. We cannot predict the duration, scope, or outcome of this matter at this time.

------

**Item 1A. Risk Factors.**

Please carefully consider the information set forth in this Quarterly Report on Form 10-Q and the risk factors discussed in Part I, "Item 1A. Risk Factors" in the Annual Report on Form 10-K, which could materially affect our business, financial condition, or future results. The risks described in our Annual Report on Form 10-K, as well as additional risks and uncertainties not presently known to us or that we currently deem immaterial, could materially and adversely affect our business, results of operations, and financial condition, which in turn could materially and adversely affect the trading price of shares of our Class A Common Stock. As of the date of this Quarterly Report on Form 10-Q, there have been no material updates or changes with respect to the risk factors previously disclosed in our Annual Report on Form 10-K, other than as set forth below, which should be read in conjunction with the risks described in our Annual Report on Form 10-K.

***Our rebranding involves costs and may not be favorably received***

On April 22, 2026, we changed our name from "The Beauty Health Company" to "SkinHealth Systems Inc." We have incurred costs as a result of the rebranding and the SkinHealth Systems brand name may not achieve or maintain the brand name recognition or status of our former BeautyHealth brand. Our corporate structure and how we report on our financial results remains unchanged. Developing and maintaining awareness of our brand is important to retain and attract customers. The success of our new brand is integral to our growth strategy and the importance of brand recognition will increase as competition in our market increases. Successful promotion of our brand will depend on the effectiveness of our marketing efforts, our ability to provide a reliable and useful platform to meet the needs of our customers at competitive prices, our ability to maintain our customers' trust, our ability to continue to develop new functionality and solutions, and our ability to successfully differentiate our platform. Additionally, our partners' performance may affect our brand and reputation if customers do not have a positive experience. We rely on free and paid search engine marketing efforts to help drive traffic to our products, which efforts could be adversely affected by the rebranding initiative in the short and/or long term. Specifically, the rebranding could adversely affect the placement and ranking of our website within free and paid search results (as well as the pricing of paid search results), any or all of which could increase marketing costs (particularly if free traffic is replaced with paid traffic) and adversely affect the effectiveness of our marketing efforts overall. Even if our brand recognition and loyalty increases, this may not generate customer awareness or yield increased revenue and profitability. Even if they do, any increased revenue may not offset the expenses we incurred in building our brand. For these reasons, our rebranding may not produce the benefits expected, could adversely affect our ability to retain and attract customers, and may have a material adverse effect on our results of operations, cash flows and financial condition.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

*Unregistered Sales of Equity Securities*

During the three months ended March 31, 2026, the Company did not issue any shares of its Class A Common Stock or other equity securities that were not registered under the Securities Act of 1933, as amended.

*Purchase of Equity Securities by Issuer and Affiliated Purchasers*

During the three months ended March 31, 2026, the Company and its affiliated purchasers did not make any purchases of the Company's equity securities.

**Item 3. Defaults Upon Senior Securities.**

None.

**Item 4. Mine Safety Disclosures.**

Not Applicable.

**Item 5. Other Information.**

*Rule 10b5-1 Trading Plans*

During the three months ended March 31, 2026, no director or officer of the Company adopted, modified, or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

------

**Item 6. Exhibits**

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** |
| **No.** | **Description of Exhibit** | **Form**  | **File No.** | **Exhibit**  | **Filing Date** | **Filed Herewith** |
| <u>[2.1](https://www.sec.gov/Archives/edgar/data/1818093/000121390020041690/ea131234ex2-1_vesperhealth.htm)</u> | <u>[Agreement and Plan of Merger, dated as of December 8, 2020, by and among Vesper Healthcare Acquisition Corp., Hydrate Merger Sub I, Inc., Hydrate Merger Sub II, LLC, LCP Edge Intermediate, Inc. and LCP Edge Holdco, LLC, in its capacity as the Stockholders' Representative](https://www.sec.gov/Archives/edgar/data/1818093/000121390020041690/ea131234ex2-1_vesperhealth.htm)</u> | 8-K | 001-39565 | 2.1 | December 9, 2020 |  |
| <u>[3.1](https://www.sec.gov/Archives/edgar/data/1818093/000162828026026555/ex31-certificateofamendmen.htm)</u> | <u>[Third Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of The Beauty Health Company](https://www.sec.gov/Archives/edgar/data/1818093/000162828026026555/ex31-certificateofamendmen.htm)</u> | 8-K | 001-39565 | 3.1 | April 22, 2026 |  |
| <u>[3.2](https://www.sec.gov/Archives/edgar/data/1818093/000162828026026555/ex32-restatedcertificateof.htm)</u> | <u>[Restated Certificate of Incorporation of SkinHealth Systems Inc.](https://www.sec.gov/Archives/edgar/data/1818093/000162828026026555/ex32-restatedcertificateof.htm)</u> | 8-K | 001-39565 | 3.2 | April 22, 2026 |  |
| <u>[3.3](https://www.sec.gov/Archives/edgar/data/1818093/000162828026026555/ex33-secondamendedandresta.htm)</u> | <u>[Second Amended and Restated Bylaws of SkinHealth Systems Inc.](https://www.sec.gov/Archives/edgar/data/1818093/000162828026026555/ex33-secondamendedandresta.htm)</u> | 8-K | 001-39565 | 3.3 | April 22, 2026 |  |
| <u>[4.1](https://www.sec.gov/Archives/edgar/data/1818093/000181809321000062/exhibit41-convdebtclosing.htm)</u> | <u>[Indenture, dated as of September 14, 2021, between The Beauty Health Company and U.S. Bank National Association, as trustee](https://www.sec.gov/Archives/edgar/data/1818093/000181809321000062/exhibit41-convdebtclosing.htm)</u> | 8-K | 001-39565 | 4.1 | September 14, 2021 |  |
| <u>[4.2](https://www.sec.gov/Archives/edgar/data/1818093/000181809321000062/exhibit41-convdebtclosing.htm)</u> | <u>[Form of certificate representing the 1.25% Convertible Senior Notes due 2026 (included as Exhibit A to Exhibit 4.1)](https://www.sec.gov/Archives/edgar/data/1818093/000181809321000062/exhibit41-convdebtclosing.htm)</u> | 8-K | 001-39565 | 4.2 | September 14, 2021 |  |
| <u>[4.3](https://www.sec.gov/Archives/edgar/data/1818093/000121390020030149/ea127784ex4-1_vesper.htm)</u> | <u>[Warrant Agreement, dated September 29, 2020, between the Company and Continental Stock Transfer & Trust Company, as warrant agent](https://www.sec.gov/Archives/edgar/data/1818093/000121390020030149/ea127784ex4-1_vesper.htm)</u> | 8-K | 001-39565 | 4.1 | October 5, 2020 |  |
| <u>[4.4](https://www.sec.gov/Archives/edgar/data/1818093/000162828025038993/beautyhealth-indenturedate.htm)</u> | <u>[Indenture, dated May 27, 2025, between The Beauty Health Company, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent](https://www.sec.gov/Archives/edgar/data/1818093/000162828025038993/beautyhealth-indenturedate.htm)</u> | 10-Q | 001-39565 | 4.4 | August 7, 2025 |  |
| <u>[4.5](https://www.sec.gov/Archives/edgar/data/1818093/000162828025038993/beautyhealth-indenturedate.htm)</u> | <u>[Form of Note representing the 7.95% Convertible Senior Secured Notes due 2028 (included as Exhibit A to Exhibit 4.4)](https://www.sec.gov/Archives/edgar/data/1818093/000162828025038993/beautyhealth-indenturedate.htm)</u> | 10-Q | 001-39565 | 4.5 | August 7, 2025 |  |
| <u>[4.6](https://www.sec.gov/Archives/edgar/data/1818093/000168316825006690/skin_ex0401.htm)</u> | <u>[Supplemental Indenture No. 1, dated September 4, 2025, among The Beauty Health Company, the guarantors party thereto and U.S. Bank Trust Company, National Association, as trustee and collateral agent](https://www.sec.gov/Archives/edgar/data/1818093/000168316825006690/skin_ex0401.htm)</u> | 8-K | 001-39565 | 4.1 | September 4, 2025 |  |
| <u>[4.7](https://www.sec.gov/Archives/edgar/data/1818093/000162828025012407/exhibit44-descriptionofsec.htm)</u> | <u>[Description of Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934](https://www.sec.gov/Archives/edgar/data/1818093/000162828025012407/exhibit44-descriptionofsec.htm)</u> | 10-K | 001-39565 | 4.4 | March 12, 2025 |  |
| <u>[31.1](ex311-2026q110q.htm)</u> | <u>[Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex311-2026q110q.htm)</u> |  |  |  |  | X |
| <u>[31.2](ex312-2026q110q.htm)</u> | <u>[Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](ex312-2026q110q.htm)</u> |  |  |  |  | X |
| <u>[32.1\*](ex321-2026q110q.htm)</u> | <u>[Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex321-2026q110q.htm)</u> |  |  |  |  | X |
| <u>[32.2\*](ex322-2026q110q.htm)</u> | <u>[Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ex322-2026q110q.htm)</u> |  |  |  |  | X |
| 101.INS\*\* | Inline XBRL Instance Document |  |  |  |  | X |
| 101.SCH\*\* | Inline XBRL Taxonomy Extension Schema Document |  |  |  |  | X |

---

------

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** | **EXHIBIT INDEX** |
| **No.** | **Description of Exhibit** | **Form**  | **File No.** | **Exhibit**  | **Filing Date** | **Filed Herewith** |
| 101.CAL\*\* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  | X |
| 101.DEF\*\* | Inline XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  | X |
| 101.LAB\*\* | Inline XBRL Taxonomy Extension Labels Linkbase Document |  |  |  |  | X |
| 101.PRE\*\* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  | X |
| 104\*\* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 attachments) |  |  |  |  |  |

---

_______________

\*&nbsp;&nbsp;&nbsp;&nbsp;These certifications are being furnished solely to accompany this quarterly report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

\*\*&nbsp;&nbsp;&nbsp;&nbsp;The XBRL related information in Exhibit 101 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

† &nbsp;&nbsp;&nbsp;&nbsp;Confidential portions of this exhibit were redacted pursuant to Item 601(b)(10) of Regulation S-K, and the Company agrees to furnish to the SEC a copy of any omitted schedule and/or exhibit upon request.

#&nbsp;&nbsp;&nbsp;&nbsp;Management contract or compensatory plan or arrangement.

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
| | | **SKINHEALTH SYSTEMS INC.** | **SKINHEALTH SYSTEMS INC.** |
| Date: | May 7, 2026 | By: | /s/ Pedro Malha |
|  |  | Name: | Pedro Malha |
|  |  | Title: | Chief Executive Officer |
|  |  |  | (Principal Executive Officer) |
| Date: | May 7, 2026 | By: | /s/ Michael Monahan |
|  |  | Name: | Michael Monahan |
|  |  | Title: | Chief Financial Officer |
|  |  |  | (Principal Accounting Officer and Financial Officer) |

---

## Exhibit 31.1

**EXHIBIT 31.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Pedro Malha, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this quarterly report on Form 10-Q of SkinHealth Systems Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | May 7, 2026 | |
| | | /s/ Pedro Malha |
| | | Pedro Malha |
| | | Chief Executive Officer |
| | | (Principal Executive Officer) |

---

## Exhibit 31.2

**EXHIBIT 31.2**

**CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13A-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Michael Monahan, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.I have reviewed this quarterly report on Form 10-Q of SkinHealth Systems Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | May 7, 2026 | |
| | | /s/ Michael Monahan |
| | | Michael Monahan |
| | | Chief Financial Officer |
| | | (Principal Accounting and Financial Officer) |

---

## Exhibit 32.1

**EXHIBIT 32.1**

**CERTIFICATION PURSUANT TO SECTION 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of SkinHealth Systems Inc. (the "Company") on Form 10-Q for the quarterly period ended March 31, 2026, as filed with the Securities and Exchange Commission (the "Report"), I, Pedro Malha, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: | May 7, 2026 | |
| | | /s/ Pedro Malha |
| | | Pedro Malha |
| | | Chief Executive Officer |
| | | (Principal Executive Officer) |

---

## Exhibit 32.2

**EXHIBIT 32.2**

**CERTIFICATION PURSUANT TO SECTION 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Quarterly Report of SkinHealth Systems Inc. (the "Company") on Form 10-Q for the quarterly period ended March 31, 2026, as filed with the Securities and Exchange Commission (the "Report"), I, Michael Monahan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as added by §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | | |
|:---|:---|:---|
| Date: | May 7, 2026 | |
| | | /s/ Michael Monahan |
| | | Michael Monahan |
| | | Chief Financial Officer |
| | | (Principal Accounting and Financial Officer) |

---

<br>