AirSculpt Technologies, Inc. (AIRS) Q2 2026 Earnings Report, Transcript and Summary

Greetings, and welcome to the AirSculpt Technologies, Inc. Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Allison Malkin with ICR. Please begin.

Good morning, everyone. Thank you for joining us to discuss AirSculpt Technologies' results for the second quarter of fiscal 2026. Joining me on the call today are Yogesh Jashnani, Chief Executive Officer, and Michael Arthur, Chief Financial Officer. For this morning's call, Yogi will begin with a review of our second quarter results and the progress made on our strategic priorities, and Michael will share a detailed review of our second quarter and first six-month performance and guidance. Before we begin, I would like to remind you that this conference call may include forward-looking statements. These statements may include our future expectations regarding financial results and guidance, market opportunities, and our growth. Risks and uncertainties that may impact these statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we will file with the SEC, all of which can be found on our website at investors.airsculpt.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain non-GAAP financial measures. We use non-GAAP measures in some of our financial discussions, as we believe they more accurately represent the true operational performance and underlying results of our business. A reconciliation of these measures can be found in our earnings release as filed this morning and in our most recent 10-K, which will also be available on our website. With that, I'll turn the call over to Yogi.

Thank you, Allison, and good morning, everyone. Welcome to AirSculpt's second quarter earnings call. I am pleased to share that our second quarter and first half results marked meaningful progress on our transformation. For the quarter, on a comparable basis, we delivered stable revenue and positive same-center case growth. Center sales began the quarter positively and saw moderating sales trends in June, which we attribute to a dynamic consumer environment. Overall, we generated a 21-percentage-point improvement in same-center sales versus Q2 last year and a 23-percentage-point improvement year-to-date. Over the past 18 months, we have broadened our consumer reach to capture the growing opportunity presented by GLP-1 patients, bolstered our talent, invested in new marketing strategies, and strengthened our balance sheet to provide the financial flexibility to support future growth. Those actions are showing in the continued stabilization of the business with roughly flat same-center sales growth in the first half. Our near-term focus remains squarely on increasing same-center sales. Longer term, we believe there is meaningful growth in new procedures and de novo expansion. As our balance sheet and cash flow generation strengthen, we intend to expand our geographic footprint and center base over time. Let me now turn to our progress on the three strategic priorities. As a reminder, these are, first, introducing new services to capture our GLP-1 market opportunity; second, enhancing our sales and marketing strategy; and third, maintaining strong financial discipline. First, introducing new services to capture our GLP-1 market opportunity. GLP-1 continues to represent a significant long-term growth driver for AirSculpt, with nearly 19 million potential patients interested in body contouring or related aesthetic procedures over time. Our core body contouring procedures continue to resonate with GLP-1 patients, and we are expediting the expansion of our portfolio of procedures to serve their evolving aesthetic needs. During the quarter, we completed over 200 skin excision procedures and expanded the offering to additional centers. We also broadened our services to include upper blepharoplasty and mastopexy. These procedures further expand our addressable market and increase our center productivity, while allowing us to better serve the needs of our patients. We continue to expect this to represent a $100 million-plus long-term revenue opportunity across our existing base of centers with an increasing long-term potential as we resume de novos. As part of our strategy to expand our body contouring platform, today we are announcing a partnership with Tiger Aesthetics to offer AlloClae for patients. AlloClae is a structural adipose tissue allograft used for non-surgical body contouring designed to add subtle, natural-looking targeted volume. We are excited about this partnership for several reasons. First, it allows us to reach patients we previously could not serve, including those without enough fat for a traditional fat transfer. Second, we expect a quicker ramp as many of our surgeons are trained in this procedure already. And finally, consumer interest in this category continues to grow as the use of GLP-1 creates the need for targeted restoration of volume. We believe this further strengthens our ability to serve consumers across their entire aesthetics journey. AlloClae will start rolling into our centers later this quarter. Looking forward, we have additional procedures in the pipeline that are core to body contouring and are a strong fit for our brand. We remain focused on thoughtfully expanding our capabilities to enhance the patient experience and increase center productivity. Our second focus is enhancing our sales and marketing strategy. As we expand our portfolio of procedures, we're also evolving how we market and sell them. During the quarter, we refined our marketing through a test and learn approach, optimizing how we reach GLP-1 patients and educate prospective patients on our new procedures. As we fine-tune our marketing investments in these procedures, we expect to achieve a higher return on that spend, driving revenue growth and greater marketing efficiency. At the same time, we trained our sales team and implemented additional sales optimization tools to make them more efficient and effective, recognizing that selling these procedures requires a different approach than a traditional body contouring business. We believe these investments will enable us to better reach patients and improve commercial execution as our portfolio continues to grow. Third area of focus is maintaining strong financial discipline. Maintaining a strong balance sheet remains a key priority as we execute our long-term strategy. During the quarter, we raised approximately $5 million through our ATM program, which continues to provide us with the balance sheet flexibility and liquidity to support our growth. Michael will discuss our balance sheet in more detail shortly. In summary, we made progress in the second quarter, and while our results reflect the expected variability of a turnaround being executed in a dynamic consumer environment, we entered the second half of the year a stronger company with the right strategy and team. Our addressable market is larger, our procedure mix is broader, and our operating platform is more disciplined than it was 12 months ago. Our focus for the balance of the year is unchanged. Convert the stabilization achieved year-to-date into sustained profitable growth. That means same-center sales, marketing efficiency, and consistent execution across our locations. We expect the actions underway to be reflected in our results in the quarters ahead. And with that, I will now pass it over to Michael.

Thank you, Yogi. Good morning, everyone. As Yogi mentioned, we are pleased to deliver our second consecutive quarter of stable revenue. We continue to see encouraging signs across the business. Underlying case volume increased year-over-year. Our newer procedures continue to gain traction, and we remain focused on executing the strategic priorities Yogi outlined. Turning to the second quarter, revenue for the quarter was $42.9 million, a decrease of 2.5% versus the prior year quarter. On a same-center basis, excluding the impact of London, revenue declined approximately 1%, reflecting positive 1% case growth in the quarter, the second consecutive quarter of year-over-year case growth, a continued sign of stabilization. This was offset by a 2% decline in average selling price in the quarter. The decline in average selling price was primarily driven by our comparison against an unusually high average selling price in the prior year period. Average selling price for the quarter of approximately $12,700 remains well within our historical range. Cost of services was $16.6 million, resulting in gross margin expansion to roughly 61% of revenue. Selling, general and administrative expenses were approximately $23.4 million, an increase of approximately $750,000 compared to prior year. This reflects the deliberate choice to increase investment in marketing and brand development by $1.5 million in the quarter. This was offset by efficiencies in general and administrative expense. Customer acquisition cost for the quarter was roughly $3,500 per case, compared to approximately $2,900 in the prior year quarter. While elevated, as Yogi mentioned, we made intentional investments in brand marketing. While the spend is not fully optimized today, we do expect these investments to pay off in the future. Overall, cost disciplines continue to be a priority. And equally important is being strategic about where we reinvest those savings to drive long-term shareholder value. As a result, adjusted EBITDA was $4.9 million, roughly 11.5% of revenue, a decrease of $900,000 from the prior year. Through June 30, 2026, cash provided by operating activities after capital expenditures was approximately $3.8 million, up slightly year-over-year. Also, year-to-date, we raised roughly $20 million on our ATM and paid down debt of approximately $13 million. As it relates to our balance sheet, we ended the quarter with roughly $19 million in cash and $5 million available in our revolver, resulting in roughly $24 million of liquidity available to the company at the end of the quarter. Turning to our term loan, we ended the quarter with approximately $44 million of gross debt and remain in compliance with all covenants under our credit agreement. We recently signed an amendment extending the maturity of the facility to November 2027. At the same time, we continue to make progress refinancing. The continued stability in our business has allowed us to receive multiple term sheets that we believe are aligned with our long-term interests, and a maturity extension gives us additional time to achieve the right transaction. Now, turning to guidance. As you saw in our earnings release, we are reaffirming our outlook at the lower end of our revenue guidance and updating our adjusted EBITDA outlook to a range of $12 million to $14 million, which reflects our intentional investment and marketing of an additional $5 million this year to support future growth. We believe this will strengthen the business and support improving performance over time. Our guidance assumes a stable macroeconomic environment through the balance of the year and does not contemplate any further deterioration in consumer demand. While we are not providing quarterly guidance, we thought it would be helpful to provide context for our expectations in Q3 versus Q4. On a comparable basis, excluding London center sales from 2025, we expect third quarter revenue to be down single digits. In Q4, we expect continued ramp of our existing and new service offerings and market efforts to deliver year-over-year growth in revenue and adjusted EBITDA on a comparable basis. Additionally, while we're introducing new procedures such as AlloClae, our guidance does not include any contributions from these offerings given how early they are in the implementation process. While we remain mindful of the current environment, we continue to be encouraged by the underlying fundamentals of the business, including continued growth in case volume, progress of our strategic initiatives, and the early impact we're seeing from our expanded marketing efforts. We believe these investments position the business well for improving performance as we move through the remainder of the year. Importantly, we've made significant strides strengthening the business. In the past year alone, we have stabilized revenue trends, improved same-center sales from -23% in the first half of 2025 to flat year-to-date, reduced gross debt by over $30 million since the start of 2025, and increased cash by over $10 million since the start of 2025. Overall, the business is much stronger on almost all accounts compared to a year ago. As we look towards the second half of the year, we remain focused on disciplined execution, maintaining financial flexibility, and continuing to invest in initiatives we believe will drive long-term shareholder value. And with that, I'll turn it back to you, Yogi, for closing remarks.

Thank you, Michael. In closing, I want to thank our team for their hard work and dedication. The progress we described today is a direct result of their efforts. While we remain mindful of the current environment, we are building momentum across the business through disciplined execution. We remain confident in the opportunities ahead and our ability to deliver long-term shareholder value. With that, I'd like to turn the call over to the operator to begin the question-and-answer portion of the call.

[Operator Instructions] Your first question comes from the line of Sam Eiber with BTIG.

Maybe I can start on the market environment, Yogi, and the trends that you've seen in July and into August, and then your ability to maybe sustain procedure volume growth for the back half of the year.

Sam, this is Yogi. Thank you for the question. Thanks for joining. First of all, I'm really pleased with the stability we've been able to deliver for two consecutive quarters. Underlying case volume growth for sure. And just the continued traction from the new procedures that we have, we've been able to accelerate those as well as just the discipline across the company. You see that in the cost initiatives as well. As it relates to trends, we did see the trends soften in June from earlier in the quarter, and that continued into July. We attribute that to the fact that we're just executing a transformation in a choppy consumer environment, frankly, so that's what led us to make sure that we provide additional insight where we don't guide quarter to quarter. This time around, we wanted to provide additional insight on what to expect in Q3 and Q4. So we remain confident that what we have with what we're doing, the new services, the marketing, as well as just the disciplined execution will allow us to end the year with growth and at the low end of the guidance that we have provided at the beginning of the year in terms of revenue.

Okay, that's really helpful. And maybe I can use a follow-up here on the AlloClae partnership. Maybe I can just get your thoughts on the strategic rationale there. Is this going after a separate patient demographic than your traditional core body contouring procedures? And then long-term, just the idea of AirSculpt maybe turning into what was formerly just a body contouring business into maybe a full service and suite of platforms that can offer patients different aesthetics needs.

Sam, great question. Thanks for that. I'll answer both parts of your question. On AlloClae, we view that as a complementary procedure to body contouring. So if you think about what AlloClae does, it's a great opportunity to provide and extend or really reach to patients who have body contouring needs, but do not have either enough fat to transfer or have other reasons why they would want to, you know, external fat rather than their own fat for transfer. So in the near term, it allows us to expand our reach to patients who we could not serve earlier. More broadly, it fits within our brand. It fits within what we do. It is body contouring, can be done in our facilities under local anesthesia. So as far as procedures are concerned, we think this is a great fit and expansion and complementary to fat transfers that we're doing. We are constantly looking at what procedures make sense for AirSculpt, what can we do within our four walls? And that pipeline is also very robust in what we are evaluating. So as far as are we looking to expand procedures, absolutely. The goal is how do we increase center productivity and drive same-store sales, we continue to do things which make sense and resonate with our patients.

Your next question comes from the line of Whit Mayo with Leerink Partners. Please go ahead.

This is Dean Rosales for Whit. We've heard commentary from the payer space expressing that some employers are dropping GLP-1 coverage intra-year. Have you experienced this potential headwind in your case volumes yet? And finally, how do you expect this would influence business in the mid and long term if GLP-1 uptake were to sort of moderate as payer dynamics shift?

Thank you for that question. So the short answer to what you're saying is, as employers are dropping coverage, we've not seen that have an impact or noticeable impact on our business. Broadly, the GLP-1 trend has been up and to the right in terms of adoption by consumers. And we see that in consumers coming to us as well. So the patients who are reaching out to us, who are doing the consultations, including increasing amounts of them are on GLP-1s. The new procedures are resonating with them. We're pleased with what we have and continue to expand over there. If it does create a bit of a hiccup for GLP-1 adoption, I think it would be well within, frankly, what would work for us in terms of being able to serve both people who have GLP-1 side effects and if people end up not going down the GLP-1 route and need traditional fat removal, fat transfer, then we can do that as well.

Your next question comes from the line of Jonna Kim with Cowen and Company.

The first one is what evidence do you have that increased marketing spend is generating higher ROI for you and how do you just see your marketing strategy evolve over time? And second one, what KPIs do you monitor throughout the year and how are you reflecting on these KPIs real-time to make improvements?

Jonna, thank you so much for the questions. I'll answer it in the order you asked them. So as far as marketing investments are concerned, you think about marketing investments as if I'm investing a dollar today, over the life of that dollar, am I going to get more than a dollar back in terms of profit essentially. So that does a couple of things. We are not looking at just spending to the average, looking at every, you know, effectively every dollar and whether that's working hard for us or not. Some of those are done within the quarter and some of those would return outside the quarter. But effectively, that's how we are monitoring. That's how we are focusing on the ROI that's being generated. And currently, the results in many ways speak for themselves. We've had stability for two consecutive quarters with case growth. That's a trend change from where the business has been for multiple quarters, if not multiple years. So that's been, part of that has been the enhanced marketing strategy that we have put in place. Going forward, as we said, we're going to continue to invest. A lot of those investments are also going into the new services, which is working. We're seeing that show up in our numbers. We expect to get more efficient as we learn how to market to GLP-1 customers, as we learn what's the best way to drive value over there. So in future quarters, I completely expect that our marketing will get even more efficient. We are committed to making sure that we are driving growth within the organization. And that's where the marketing investments come in.

Your next question comes from the line of Nick Sherwood with Maxim Group.

How long had the building in that AlloClae capability, how long did that process take from evaluating to implementing it? And then was this a direct response to some of the concerns of your customers who had been uptaking GLP-1s and are you serving customers who are taking GLP-1s to find out what procedures you should add to your portfolio?

Nick, this is Yogi. Thank you for those questions. Over the last year or so, I would say we have, if I can talk more broadly about how we are evaluating procedures, over the last year or so, we've done an outreach and understood what's the universe of body contouring procedures, what makes sense within what we're doing. So really started with patient needs. What are patients needing? Where can those needs be met better? And as part of that, we have a constant evaluation process where we're looking at different solutions. AlloClae was one which has been, even before it hit the market, it has been something that we've been talking to Tiger Aesthetics with. We have a deep relationship with them. We provide other services that they have as well. So this one is something which, just like other things, it's well thought out. We keep an eye on it, and when the time is right, which we feel is now, we look to bring that in. We start with a few locations and then expand it as we get learnings, as we understand how to market this, how to serve the patients better. And broadly, that's what we are doing. We're looking constantly for what's on the market, what makes sense. In this particular case, it fits the need. It solves a problem for the patient, which is I don't have enough factory transfer. We do hear it, and we hear it increasingly from our patients. So that's a little bit of insight on how we go about these medical advisory board, which also advises us on these along the way.

And then thinking about some of the new marketing spend, how are you adapting, how are you evaluating and adapting that spending strategy across the quarters? What kind of KPIs are you bringing in real time? And then how are you also responding to that new sort of AI search landscape where, you know, click-through rates are really low on Google right now, and how are you making sure that you're getting potential customers onto your website?

Nick, thanks for that. As far as how we are doing marketing spending across the quarters and the KPIs, we covered some of this in Jonna's question as well. We take an approach of for every dollar that we're putting in, what's the expected return over the life of that dollar? And is that driving profitability. As it relates to new procedures, what we are seeing is how we reach out to GLP-1 patients. We're testing different channels, different messaging, different creatives, different landing pages. So it's a heavy test and learn approach that we are taking, both in the channels which we are present in and in new forums as well. That's the plan. We're committed to it because we see the need, we see the demand from patients. Now it's up to us to crack the code on how do we have an efficient outreach to them so that they allow us to serve their needs. The AI search landscape, like any direct-to-consumer marketer will tell you, that is definitely having an impact. I'm glad we're able to maintain stability and drive results despite a choppy consumer environment and despite AI search overviews creating headwinds as far as clicks are concerned. That's an evolving area. We continue to invest in how we show up when these search engines or when the LLMs are being turned to, whether it's Google, whether it's OpenAI, whether it's Claude. So that's one area. The other area is also where they don't have reach currently. Never say never, but things where people are looking for guidance, whether it's ratings, reviews, conversations. Also, how do you make sure that our presence over there is robust is the other way we're looking to beat the system. So there's more around how we show up well in AI and then when people are not turning to AI, but turning to other people, how do we show up well over there as well.

Your next question comes from the line of Kyle Bauser with Titan Partners.

Maybe could you talk a little bit more about some of the newer procedures that you talked about in the past, like standalone skin tightening and skin removal? And you mentioned more today on the call. How many of the 31 centers are conducting these, and how does that economics or margins kind of compare with the existing services?

Kyle, I'll bucket it into three groups, essentially. We do skin tightening, which is your, as the name suggests, you're going in just slightly underneath the skin, tightening it. We do it either as standalone, or in most cases, actually, along with fat removal and fat transfers. That's available in all of our centers. The second bucket would be skin removal or skin excisions. There is four or five body areas where we do skin removal, skin excisions. Those are roughly in, I would say, 20 out of 30 locations or so, 20 out of the 31 locations that we have. That number continues to go up and certain procedures are in some locations. It all depends upon surgeon availability, surgeon preference, and we're working with our surgeons to expand that further. The third bucket is AlloClae, which we just announced on the call today. That's going into pilot later this quarter. So our first centers will start treating patients with AlloClae sometime later this quarter. As far as the economics are concerned, skin tightening and skin removal, the gross margin profile and the economics of that are very similar to our core fat removal, fat transfer business. So roughly a gross margin of 60-ish percent, which has been ticking up of late, if you might have noticed. So that we continue to expect to have a similar gross margin profile. Now, many of these are combined with other procedures. So the average ticket ends up being higher. So while we do have some patients who are doing standalone skin tightening, for example, most are combining it with either fat removal or fat removal and fat transfer. So anytime it's an add-on, we see the ticket price is higher for those. Same dynamic on skin removal as well. It's too early to know how AlloClae would work. Once we have it in our clinics, we have more insights. AlloClae does have a product cost. So the gross margin profile over there would be different. Gross margin percentage would be lower. The expectation is that the gross margin dollars would go higher so that net it's accretive to the business on a dollar perspective.

Got it. Appreciate that. And you mentioned, you know, the marketing to become a bit more efficient as you learn how to better market to GLP-1 patients moving forward. I think the customer acquisition cost is about, you mentioned $3,500, pretty similar with the last couple of quarters, maybe a slight step up. How should we anticipate the customer acquisition costs trending over the balance of the year based on investments you're making in marketing?

Hey, this is Michael. Yes, I can take that one. Yes, so as you alluded to, CAC was approximately $3,500 in the quarter, which was up roughly relative to Q2 of last year, which was $2,900 a year ago. So it's a consistent step up in marketing investment as we discussed. A meaningful portion of that spend is top of the funnel brand building investments that don't necessarily show up in this quarter's case volume, but over time, it's designed to lower CAC as we expand our reach, improving lead quality and the like. And so as case volume builds and these investments mature, we do expect CAC to come down and marketing to turn back towards our lower percentage of revenue as well. It's another way we look at it, which, you know, last year was around 18% and year-to-date we've been around 20% of revenue.

This now concludes our question and answer session. I would like to turn the floor back over to management for closing comments.

Thank you everyone for joining us for our second quarter earnings call. We look forward to connecting with many of you at investor events over the next few days and weeks, and then also report back on our third quarter in a few months. Thank you.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.