The Beauty Health Company (SKIN) shares plummeted more than 50% in premarket trading after the company missed consensus third-quarter estimates by a wide margin when it reported after the close on Monday.
The company reported a Q3 loss per share of $0.56, $0.63 worse than the analyst estimate of a profit of $0.07 per share. Meanwhile, revenue for the quarter came in at $97.4 million versus the consensus estimate of $116.23 million.
SKIN, home to flagship brand Hydrafacial, also revised its fiscal year 2023 net sales guidance to a range of $385 to $400 million, its fiscal year adjusted EBITDA margin guidance to a range of 5% to 6%, and suspended its long-term 2025 financial outlook.
The company also separately announced that Andrew Stanleick will depart as president and CEO, effective November 19. Current BeautyHealth Director Marla Beck will take up the role in the interim while the company completes a formal search for a new CEO.
“We are focused on protecting Hydrafacial’s strong brand equity as we address the Syndeo provider experience challenges,” said Beauty Health CFO Michael Monahan.
He added: “We are confident that, with our strategy, we will return Hydrafacial to the reliable standard that our customers have come to expect from us and keep their trust—and, with this, re-accelerate Syndeo adoption in the U.S.”
Analysts across the board were quick to cut price targets and downgrade the stock when reacting to the report. TD Cowen analysts downgraded the stock to Market Perform, slashing the price target to $2.50 from $9 per share.
The firm said it is moving to the sidelines as the company manages through issues with clogged HydraFacial Syndeo machines, seeks a new CEO, and manages cash flow on lowered guidance.
"SKIN suspended 2025 outlook & FY guidance implies -MT % rev. declines in 4Q vs. 3Q’s +10% & 4Q EBITDA of -$4.7mm," analysts wrote.
At JPMorgan, SKIN was lowered to Underweight from Neutral, with the previous price target withdrawn.
The investment bank said they think investors were "prepared for a softer quarter from BeautyHealth given the aesthetic prints we’ve seen to date; however, there’s clearly more to unpack from a 3Q23 headlined by both a significant negative revision to the financial outlook and the exit of CEO Andrew Stanleick."
Canaccord cut SKIN to Hold from Buy, lowering the price target to $2.50 from $10 per share as analysts believe there is a lack of visibility on SKIN's return to growth plan.
"As Syndeo's problems continue to persist, management decided to "rip the band-aid off" and stop selling older systems with issues, along with offering to repair or fully replace systems already out in the field at no cost to the provider; there is a lack of visibility to when SKIN can stabilize the business. Analysts also believe some weakness has been due to macro pressures, both in the consumables and systems, which could get worse," the firm wrote.
Finally, Piper Sandler double-downgraded SKIN to Underweight from Overweight, slashing the price target by $10 to $2 per share.
The firm explained that while they have been fans of the name and do think solid performance could be attainable over the long term, they "see too many uncertainties to even be comfortable just remaining on the sidelines right now."
"Management's messaging has not been clear, today brought an abrupt CEO change, and long-term outlook was suspended," they added.