Release Date: May 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue growth of 4% in the quarter primarily driven by new de novo centers opened in 2023, which continue to outperform internal metrics.
- Significant investment in customer acquisition marketing and optimizations made to performance marketing are expected to improve trends in the latter part of the season.
- Cost management efforts resulted in a $5 million run rate in cost savings, with further opportunities identified for additional efficiencies.
- Celebrity partnerships and media mix changes have led to increased organic search traffic and higher intent leads, which are lower in cost compared to paid search.
- Maintained a healthy cash position of $11 million as of March 31, 2024, with a strong leverage ratio and undrawn $5 million revolver.
Negative Points
- Experienced softness in same-store centers due to temporary macroeconomic headwinds affecting the price-sensitive segment of the customer base.
- Same-store revenue down approximately 10% during the quarter, with overall revenue growth not meeting the levels seen in previous years.
- Adjusted EBITDA declined to $7.3 million from the prior year, with increased SG&A spending contributing to the decrease.
- Customer Acquisition Cost (CAC) increased significantly due to higher investments in brand awareness and competitive market conditions.
- Despite maintaining full-year revenue and EBITDA outlook, the company acknowledges ongoing challenges and softness in procedure volumes.
Q & A Highlights
Q: Given the softness in procedures over the last two quarters, why are you maintaining a cautiously optimistic outlook for the full-year guidance?
A: Dennis Dean, CFO of Airsculpt Technologies, explained that the optimism is based on significant upticks in lead volumes from recent marketing initiatives, strong performance from 2023 de novo centers, and a similar strategy being applied to the 2024 de novos. These factors are expected to drive growth and improve performance in the latter half of the year.
Q: What are your assumptions for same-store case growth in the upcoming quarters?
A: Dennis Dean mentioned that they anticipate a high-single-digit decline in same-store cases for the second quarter, similar to the first quarter. Improvements are expected in the third quarter, approaching flat growth, and mid-single-digit growth in the fourth quarter, aided by corrective actions in underperforming centers.
Q: Are there plans for more aggressive promotions or discounting to address the current challenges?
A: Todd Magazine, CEO, stated that while they are using targeted promotions selectively, they are cautious about broad price reductions to avoid devaluing the brand. The focus remains on targeted, strategic discounting rather than widespread price cuts.
Q: With the Customer Acquisition Cost (CAC) increasing, when do you expect it to decrease?
A: Todd Magazine noted that although CAC is currently high due to competitive activity and increased marketing spend, they expect it to decrease over time as their marketing strategies, particularly in organic search and optimization of paid search, become more efficient.
Q: How is the introduction of GLP-1 weight loss medications affecting your business?
A: Todd Magazine views GLP-1 medications as a tailwind rather than a threat, noting that many patients are combining these medications with AirSculpt procedures. This combination is seen as an opportunity to attract more clients who are initially drawn by weight loss medications.
Q: Given the current performance trends, are there any considerations for closing unprofitable locations?
A: Dennis Dean confirmed that all locations are currently profitable, with no considerations for closures. The London center, although slower to ramp up, is still seen as a potentially strong market once fully optimized.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
