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LONG BEACH, Calif. - The Beauty Health Company (NASDAQ:SKIN), known for its Hydrafacial brand and currently showing signs of undervaluation according to InvestingPro analysis, announced today an agreement to exchange a portion of its existing debt for new notes with a higher interest rate, aiming to improve its financial flexibility. The company maintains strong liquidity with a current ratio of 7.47, indicating robust ability to meet short-term obligations. The company entered into exchange agreements with certain holders of its 1.25% convertible senior notes due in 2026.
Under the terms of the exchange, approximately $413.2 million of the existing notes will be swapped for $250 million of new 7.95% convertible senior secured notes due in 2028, plus around $143.4 million in cash, which includes accrued and unpaid interest. This restructuring comes as the company’s stock has shown significant momentum, posting a 14% gain in the past week, according to InvestingPro data. The new notes will be senior secured obligations backed by guarantees from certain subsidiaries of the company.
The initial conversion rate for the new notes is set at 349.6503 shares per $1,000 principal amount, equivalent to a conversion price of approximately $2.86 per share. This rate may be adjusted in response to specific corporate events. The transaction is expected to close around May 27, 2025.
Marla Beck, BeautyHealth’s CEO, commented on the strategic move, stating, "Our refinancing marks a critical step in strengthening our financial position and extending a portion of our debt maturity, giving us greater flexibility to invest in long-term, profitable growth." While the company reported losses in the last twelve months, InvestingPro analysts forecast a return to profitability this year, with impressive gross profit margins of 56.6%. Get access to 8 more exclusive ProTips and comprehensive analysis in the Pro Research Report. She also highlighted the company’s focus on innovation, brand initiatives, and provider engagement.
The new notes have not been registered under the Securities Act of 1933, as amended, and will not be offered or sold without registration or an applicable exemption from registration requirements.
Goldman Sachs is serving as the exclusive financial advisor for the transaction, while Latham & Watkins LLP is the legal counsel to BeautyHealth. Further details can be found in the company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission.
This press release does not constitute an offer to sell or a solicitation to buy the new notes or any other securities. The information provided is based on a press release statement.
In other recent news, The Beauty Health Company reported its first-quarter 2025 earnings, revealing a revenue of $69.6 million, which exceeded forecasts. The company also achieved an adjusted EBITDA of $7.3 million, surpassing the Street’s projection of a $5.5 million loss. Despite these positive results, Beauty Health’s management remains cautious for the remainder of the fiscal year due to macroeconomic concerns, leading to conservative forecasts. Analyst Oliver Chen from TD Cowen raised the company’s price target to $2.00 from $1.50 while maintaining a Hold rating, noting the better-than-expected performance but acknowledging ongoing challenges in the Asia-Pacific market and tariff issues.
Beauty Health’s consumable sales grew by 8.2% year-over-year, contributing significantly to its strong market position. The company holds over 60% market share in the U.S. for minimally invasive skin health treatments. Looking ahead, Beauty Health projects full-year 2025 sales between $270 million and $300 million, with adjusted EBITDA ranging from $15 million to $25 million. The company is also planning new product launches, including a hydrophilic booster and a skincare line, to drive growth and consumer engagement.
Additionally, Beauty Health has begun transitioning its China distribution to a third-party model, which presents operational challenges but aims to simplify operations and reduce capital intensity. The company anticipates $5 million in additional tariff costs for the second half of 2025, affecting its profitability. Despite these challenges, CEO Marla Beck emphasized the company’s focus on enhancing commercial execution and accelerating science-backed innovation to drive long-term shareholder value.
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