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On Wednesday, Benchmark analysts maintained their Hold rating on shares of The Beauty Health Company (NASDAQ: SKIN) following the company’s fourth-quarter earnings report for 2024, which surpassed expectations. Trading at $1.41, with a market capitalization of $176 million, the company posted annual revenue of $334 million and maintained impressive gross margins of 54.5%. The company also provided a cautious outlook for 2025. Beauty Health’s management acknowledged the tough market conditions affecting their delivery systems, but they remain optimistic about the growth potential of their high-margin consumable segment.
Despite facing a projected $10-15 million revenue shortfall due to a strategic shift in China from direct sales to a distributor model, the company expects this move to be EBITDA neutral for 2025 and to contribute positively in the longer term. InvestingPro analysis reveals the company maintains a healthy current ratio of 7.0, indicating strong short-term liquidity. The specifics regarding the distributor’s identity and any associated costs are set to be disclosed in the second quarter.
Benchmark analysts have adjusted their revenue forecast downward in light of the anticipated impact of this transition on Beauty Health’s financials. However, their estimate for Adjusted EBITDA remains unchanged. The firm’s statement suggests a cautious approach to the company’s stock, indicating that it may be premature to predict a significant change in its trajectory. According to InvestingPro’s Fair Value analysis, the stock currently appears slightly undervalued, though investors should note the stock’s significant -67.6% decline over the past year.
In other recent news, The Beauty Health Company reported its fourth-quarter earnings for 2024, surpassing analyst expectations with an earnings per share (EPS) of -$0.08 against a forecasted -$0.11. Revenue for the quarter was $83.5 million, exceeding the expected $77.39 million. Despite these positive results, the company’s 2025 revenue guidance, with a midpoint of $285 million, fell short of analysts’ expectations, which were set at $338 million. The company has been making strategic changes, including transitioning to a distributor model in China, which is anticipated to impact sales by $10-15 million. Stifel analysts maintained a Hold rating on the company, while Canaccord Genuity reduced its price target to $1.50, citing ongoing challenges. The company’s adjusted EBITDA for the fourth quarter was $9.0 million, surpassing estimates that predicted a loss. Despite a 13.8% decline in fourth-quarter sales, Beauty Health Co’s high-margin consumables business continued to perform well, contributing to a strong cash position of $370 million at the end of the quarter.
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