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All right, thank you for joining us today. My name is Jonah Kim. I'm the retail and beauty analyst at TD. I have the pleasure of hosting Aerosculpt's management team, Yogi Jashnani, CEO, and Michael Arthur, CFO. And Aeroscult is a next-generation body contouring treatment designed to optimize both comfort and precision, available exclusively at Aeroscelpt offices. So with that, I mean, I gave a quick intro, but it's better to hear from you. So to those that are new to the story, could you provide a quick overview of AirSkull? Sure. And, Shana, first of all, thank you for having us. It's great to be here at the conference. So for those who don't know about AirSKull, we are a premier body contouring service provider. What does that mean? Well, it's fat removal, fat transfer, skin tightening kind of services. We do those with a patented method in our 31 offices across the country. We have, we do it in a minimally invasive manner. So patients are awake through the procedure. And as a result of that, complication rates are lower. Many people are out and about and back to their normal routines within 24 to 48 hours. typical consumer, this is a $12,000, $13,000 procedure, all cash pay out of pocket, so typically more affluent consumers, she is 35 to 55 years of age, kind of business, we've grown to about $150 million in top line, and we're the place where you can address GLP-1 side effects and we'll talk more about that hopefully because everybody's looking to sell GLP-1 medication but as you think about GLP one side effects we are the place to address that and we are seeing growing demand related to our services from consumers who've taken GLP 1 and you know last quarter you infected same-store sales to 1% in which you highlighted as a first positive comp quarter in over two years can you share just the drivers that led to that civilization and the company's return to same store growth and sort of what you're seeing um going forward sure so we've been uh we've seen same store sales uh were were soft for for a long time over the last year so i joined january of last year michael joined jan of this year we have a new leadership team in place we have brought in a lot of expertise on direct to consumer marketing so while we're a healthcare service it's direct to the consumer on the front end and sales and marketing so we've spent a lot energy invested heavily in revamping our sales and marketing engine that's been the key driver which has gotten us to positive same store sales comp for the first time in years yeah and we talked about it a little bit the GOP one opportunities is massive and you know obviously the side effects that come from you see that in an opportunity to sort of address that how are you addressing the opportunity and what KPIs should investors watch as you know they measure the traction of that type of procedure absolutely so first the opportunity itself again folks are on GLP-1 that penetration is increasing this studies out there it says the usage is going to go up from five six million consumers back in 23 to 25 30 million consumers pretty shortly over here so GLP one usage is growing up many people in this room and in the investor community are tracking that what's also happening is that the same studies are saying now that consumers have had a couple of years of usage of GLP-1, there are major side effects coming through, primarily loose skin. You've lost the weight, but now you have loose skin, first of all. Secondly, GLP1 is not really targeted. So there's still stubborn fat deposits that remain. And thirdly, an extension of that, there might be here I had fat in my abdomen, which I wanted gone, but I lost volume in my face. Ozempic face is a term. Ozempics buttocks is a time, right? So those are the side effects of GLP-1s. The services we offer and some of the extensions which we have address many of those concerns. So we are able to remove stubborn fat deposits and we see increasing demand for that. But more importantly, we are the scaled player to address loose skin in terms of skin tightening, as well as skin removal from certain areas, again, under local, in an awake procedure so that people can get back to their normal routines. We're increasingly seeing more and more demand from consumers who are coming in with, you have lost weight through GLP-1 and now have loose skin. Help me get the last 10% done, because I've lost the weight, that's 90% of the work, but I didn't count on the loose skin. Helped me address skin laxity. That's a key opportunity. Middle of last year, we rolled out skin tightening as a standalone service. That's in all of our centers. Q4 of last we also launched skin removal in pilot. So Q4, we did about a hundred procedures. Q1, we about 150. Just as a benchmark, we do about a thousand procedures quarter, 3,000 procedures a quarter, sorry. So that number is still small, but growing. And with any medical procedure, there's an element of pilot it, make sure that the protocols are where you want it to be, wait a few months for before and afters to come in and then scale that. So we are in really early innings of addressing GLP-1 side effects and capturing that market. And just going back to overall sort of AeroSculpt's competitive positioning, why would a customer go to Aero Sculpt versus other, you know, plastic surgeons? Sort of what is your competitive mode? Great question, Joanna. So a couple of things. One is the biggest one is the patented process that we have. You're doing this in a minimally invasive approach for fat removal. we go in through a opening less than two millimeters no stitches no scalpel body heals by itself and we are literally sucking the fat out using compressed air by doing that in a you can do it under local anesthesia in an awake environment computation rates are lower many people are back to their normal routines within 24 to 48 hours and and you know our patients value that she doesn't want to go under general anesthesia be out for two weeks for recovery and and have those kinds of challenges so the way we bring all of that together you're also able to tighten skin at the same time for a significant portion of our patients the fact we remove because it's their own fact we're able to insert it back into the body so we also do fat transfers to the breasts fat transfers to the buttocks and those are valuable also so if you don't want implants in your body or foreign objects in your bod,y this is your own fat which is getting transferred and many of our patients prefer that kind of a natural approach. Yeah and Michael this is more a question for you, can you share the key drivers of the this year's outlook? It implies roughly 2.5% that seems to our sales growth at the midpoint. Maybe you could just walk us through sort of the key components of that. Yeah, I think really there's not a lot of contemplation around expanded services in the GLP-1 market that we think is a big driver for us. That's really just stabilizing the business through enhanced sales and marketing efforts that Yogi's talked about. So Q1 positive for the first quarter and a couple of years, plus one. And so it's just showing continued improvement and momentum and pace of improved change in the business just as we operate the core business today. And of the 3,000 procedure you mentioned per quarter, what's the mix like? Which procedure is the highest? And then as we look at the skin removal that we talked about earlier, how does the economics look like? Maybe not now, it's pretty nascent, but as you look longer term, how that unit economics and sort of other key metrics versus a core? Sure. So of the procedures we do today, almost all of them have the foundation of fat removal. On top of that, some consumers would get skin tightening along with that. So 80% of our fat removal consumers get skin tightening today along with that. A third would also get fat transfers done. So it's primarily fat removal with these as add-ons on top of that. Skin excisions, as we said, are growing. So we did about 115 Q1 just over that. The good thing is the way our business model is set up, our gross margin on those is very similar to the core business. So as a result, as WeExpand the TAM, as WeXpand our revenue and EBITDA, these end up being margin accretive in many ways. And just touching on the GLP-1 opportunity, do you think you'll get a new set of customers sort of through sort of skin tightening and removal versus your current target customer group? How are you thinking about that? Great question. Absolutely. So what we are seeing with loose skin is it is a different customer who's coming in. their primary need is, I do have loose skin, I do have these GLP-1 side effects. They started off on their journey with GLP1s versus our traditional fat removal. Consumers would start off on the journey slightly differently. So we're seeing an expansion, a potential expansion of the TAM over here. Just to give you a sense, fat removal TAM versus just skin removal skin tightening skin removal skin typing is as big currently in terms of market time as fat removal would be so that gives us an opportunity to double our time and really double our revenue in the long term that's before GLP one really expands in terms of its core usage and we're seeing that happen as well so there's a lot of upside there and it's great to see the business improved despite the current inflationary consumer environment can you characterize um who your typical customer is and why the business is resilient um to the current economic headwinds i mean your ticket is as you noted pretty pricey but you're still growing um yeah yeah for sure so so i'll answer both parts of it let me just start with we see the consumer sentiment is very mixed i think that's what we're seeing you have to look at others in the consumer space and you see that from in messaging some are seeing strengths some are seeing not so much so our characterize the consumer continues to be very choppy that's what we're seeing now we have the benefit we have is our consumer tends to be she is typically 35 to 55 higher household income 100k plus 150k plus so she and she's investing in herself but it is still discretionary a lot of the changes that we have made in our business whether it's sales and marketing cost removals and the likes we know that the consumer will come back but we're not waiting for that so even in this environment we are making the right changes to drive the business to growth but yeah we we continue to see the the consumer is very choppy and that certainly plays a role. Yeah. You mentioned earlier in terms of marketing, you're increasing more the end consumer marketing. What is your marketing strategy? Which channels do you go after and how do you see this year evolving in terms of your marketing plan? So for us, we're unique in the sense that we are a direct-to-consumer business on the front end providing health care service as the service that we are giving. So it's what you would expect from a D2C organization, which is a lot of focus on who's my consumer, where are they shopping, where they're in the mindset of shopping, and what messages resonate with them. So with our consumer, we see that when she's actively looking for solutions, she's researching us a lot more. She's researching a lot blogs a lot more she's in paid search and if she is in passive mode like well i have a need but i don't quite know how to address it it's much more upper funnel in terms of paid social so our primary mechanisms are digital marketing we're also seeing that uh influencers play a pretty heavy role in this space and we've expanded our presence with influencers over the last few months and we're seeing good results from that experimenting with new channels such as connected tv and podcasts as well so we're constantly looking as to you know where can we get her attention and then how do we how do we engage her that's that that's been the big change in marketing yeah um and can you just walk us through the clinic level unit economics in a bit more detail you discuss approximately million dollar of build-out costs per clinic, around 60% gross margin. Maybe give us what the mature stores look like, how's the RAM period sort of from, you know, start to mature, and any other details you can provide around that. Yeah, let me let me start with just the mature kind of clinic. So, what I would say, it's a really key strength of the business and the economics of each clinic are really strong. So an average clinic does roughly $5 million of revenue annually with 60% gross margins and fairly high profit margins as well. All of our clinics are profitable to date and have been since the opening of them. They get profitable pretty quickly. On new clinics, the build-out cost for a new clinic is roughly $1 million to $2 million. There's variables in that, but that's usually around the cost to build out a new clinic, and they get profitable in a few months, but definitely minimum six, six this month, we find them profitable, and the payback period is usually within a year, which, you know, sometimes two, but within the first year is kind of what we've seen historically and that's pretty unique for a multi-site consumer business right so that's what that's, what's really interesting about us is as we start to look to add new clinics they're highly creative at the top line and bottom line with high ROI. And on that point you have 31 centers today with the opportunities to grow 300 locations in the US, how should we sort of think about the cadence of the expansion and what regions are you going after I know you still have a lot of white space but you know what is your your plan forward yeah maybe I'll take the first part certainly so we've made the conscious decision to stop de novo as the last couple years as we stabilize the business and and stabilize and clean up our balance sheet so it's really the kind of two main markers for us to kind of start new de novo growth again is is seeing the stabilization in the core business. We saw, as Yogi alluded to, Q1 positive comp. So we're on our way. We want to see more than one quarter before we can kind of call that victory there. But we're really pleased with the progress we're making in the business and stabilizing it. So that's kind of seeing true stabilization in our core and showing that we can have some level of growth in same-store sales is kind of marker number one. And then secondly is also stabilizing and strengthening our balance sheet. So in the last year, we've decreased our debt by $30 million and improved liquidity, which gives us the financial flexibility to invest in the CapEx. While they do pay back within a short period of time, it does require some upfront commitment. And we want to make sure we have the right balance sheet and liquidity to do that as well. In terms of expanded locations, we have 31 now. We've said, you know, we've done studies where there's 200, 300 possible locations where we can expand. I think more reasonably is probably 100 we could easily get to without any sort of cannibalization or kind of concentration of clinics. But just give you some examples of where we're not, and you would think that'd be surprising. We're not in Long Island, we're in the Bay Area, we're San Jose, but not San Francisco on the other side in Oakland, Portland, Indy, Tampa. So there's a lot of just natural places to go where we'll be able to capture the opportunity. And again, like I said, all of our clinics today are profitable. So as we open them, the model works wherever. Big market, small market, they work. And so it's just a matter of executing on them, which has us really excited. And as volumes recover, how much operating leverage is embedded in the model? where do you see the biggest opportunity to expand your margin just from you know current level today yeah yeah it's you know historically the business has been at ebitda margins at or above 20 percent and so we're at 10 ebitd margins now so there there is real opportunity to improve our ebit margins and profitability um and so that obviously has us excited as mentioned before our gross margin has historically been around 60 percent and highly variable so as we drive more volume and revenue into the business each incremental case gross margin is you know going to be around 60 but that still leaves us with 40 or 50 percent of kind of fixed costs that we'll be able to gain operating leverage over over time as we see increase in revenue um beyond that though there's so there's still opportunity for us to just get more efficient and streamline the business to kind of create that operating leverage and not having to wait for significant kind of volume flow through which you know we're expecting those really come in the two buckets of continue to optimize our sales and marketing efforts and in corporate SG&A and the last year we've we've taken already steps to do that we've you know already taken roughly four million dollars of cost out of the system and streamlined operations really just through getting more efficient taking out complexities where it wasn't necessary to be as complex as we are we have really a new management team yogi has been here a year in here four or five months we have a new president of operations new general counsel as well so we continue to evaluate the business to find ways to streamline become more nimble and flexible to generate that operating leverage both on steady state of the business but certainly as we see more volume flow through we'll see pretty strong flow through on the profitability side as well and just on the clinician side on the doctor side why would they choose to partner with you and how does your vetting process also work from you know how do you choose your doctors at the same time we'd love to hear a little bit more yeah so great great question goes to the heart of uh why people choose us right so we we ensure that we work with elite you know both certified plastic surgeons or cosmetic surgeons like that's that's who we work with uh before someone joins our team they've you know they have a book of results already and uh and that's where we that's what we go from the the vetting process is you know what What are your certifications? What's your book of results? Where do we have openings? And really even within that, we would have a process where they're observing, we're observing their work. We're training them for a few weeks before they can start. Because again, remember, because these are both certified plastics, for example, they know all of this, but it's the ASCULP method. How do you do it under awake? How do we do it in our settings? which is critical, and how do we make sure that we are providing the right experience? If someone's paying $12,000, $13,000 out of pocket, those things matter. Now, from an economics perspective, what's in it for the surgeon as well? The interesting thing is all of our surgeons are 1099s, so they get a percentage of the revenue that they treat. This is very powerful for them because it does a couple of things. One is they have full medical freedom to say, hey, I don't want to take this case. So there's no pressure when they're an employee. There's an implicit pressure of I need to do volume. Here, they have fully medical flexibility, and we pride ourselves on that, on being medically first. Secondly, if you think about surgeons and you're going to talk to them, many of them say, look, I got into this for the surgery aspect of it. What you guys allow me to do is focus on that. We take care of marketing, sales, operations, supplies, somebody called out, you know, somebody quit. The plumbing is backed up. The landscaping of the office or outside. Those are the kinds of things as for surgeons, they're like, I come, I do what I love, which is surgery. I leave, you all take care, take care everything else and I get paid fairly. fairly. So many of our surgeons work with us two, three days a week, and they're making mid-six figures. So in that sense, that's appealing to a lot of our surgeons, and we have a strong network of 80-plus. Yeah, that is very impressive. Where do you think the biggest self-help opportunities still remain inside the business? Is it marketing size, sales conversion? We talked about clinic productivity. any other sort of areas that you as you assess the business as you said with the new management team what are key opportunities that you see that can still improve significantly from here absolutely so I'll point out three one is definitely around sales and marketing we are we're still one of the best-kept secrets out there and that's not a good thing so how do we get our name out how do we make sure that people people understand what we're doing even early steps towards that has inflected to positive growth so that's what's driving growth now the next leg of growth is going to be capturing the glp-1 opportunity as i said we are the scale player who has the ability to do that we're in early innings of that but that's going to be the next stage of growth for us and then over time just expanding our geographic footprint because there's a huge amount of populations where we are not able to serve and who are not able to access our services so how do we expand that so that's almost a you know now soon and future growth vectors that we are looking at yeah before i jump to any other questions any questions from audience by the way that you would like to consider putting the technology in a plastic surgeon's office, or is it always used in your own office by the plastic surgeon? So just to repeat the question, so the question was, would we consider putting the technology in any other plastic surgeon'S office, or would we only do this in our setting? So we've historically only done it in our settings, because it's not just the technology, it's also the training and how you go about that. Currently, that's not a focus to expand that to other plastic surgeons' offices, but never say never. Any other questions? And just on, Michael, on the capital allocation priorities, you obviously mentioned the debt reduction. Do you anticipate investing more in your growth in the near term versus other alternatives? How are you thinking about that internally? Yeah. From a capital allocation perspective, our top priority over the last year has been paying down debt. And we've we've done that. We've decreased it by 30, roughly 30 million dollars or, you know, leverage ratios below two and a half times. We're in a much healthier place. Still a priority for us, but less so than it was a year or so ago. Beyond that, it really is around investing in growth initiatives that we see. And there's high ROI opportunities in our business today to invest in those growth initiatives, whether it be just continuing the sales and marketing efforts, getting our brand name out there, and then expanding our services as well. You know, those two both have really high ROI. We want to be thoughtful about how we deploy capital to those areas. But we see significant opportunity there, And we're going to lean in. And we've done that in Q1. And we've got to be thoughtful about it, and we'll continue to be so. But that's really the balance. It's continuing to make sure we have a strong balance sheet and lean into the growth opportunities we see. This is a question for both of you. What made you join Aerosculpt, and what are you most excited about since you joined? I can go first. You have to hear your point. So for me, it was a few things. One was my background has always been in consumer. I've led and grown consumer-focused organizations, driven revenue growth, and profitable growth. What I really liked about iSculpt is one, it's an effective procedure. I want to be able to stand behind something which I say, yes, I'm proud to stand behind the service. I've gotten the service done myself and I can attest firsthand the value there is. And you have to talk to the consumers and people who have gotten the procedure done. They call it life-changing. It's not just your physical appearance changes, but the impact it has on your confidence. It really matters. So just the effectiveness and the value it adds to the consumer was number one for me. The second one was just the unit-level economics. It's a significantly profitable business, variable costs, 60% gross margins, and even at its low point, we're at 9%, 10% EBITDA margins. That's a good business to be in, in my mind. And 20% is what we are targeting. We've been there before. And lastly, honestly, it was the culture of the team. So the focus on the consumer, the passion behind delivering great service was the hallmark. And I saw that from the outside, but as I've joined, I've seen that firsthand while visiting our clinic. So I really think it's what am I selling, being able to stand behind that, great economics, and a great team that goes along with it. Still a lot of the same reasons. the one thing i would just add to that really is the the revenue runway that this this company has with the unit economics of the business um with that kind of revenue runway made it really interesting just to kind of put funner points on it one as we mentioned same source sales we can we knew we could stabilize that and get it to growing at least low single digits um at a minimum the expanded services to capture the glp-1 opportunity is huge and growing there's not really other players out there that are servicing um the side effects of glp ones and we think we're we're primed to service that uh consumer base even more broadly and then couple that with de novo growth with only 31 locations in natural places to move there all those compound on itself where revenue. There's a there's a large revenue runway ahead of us that we know we can kind of go get with Strong flow through it's not like you have to invest into revenue. And so so profitability has to be you know, diluted significantly There'll be some investment that's made but we can do it really really economically and efficiently which got me really excited Yeah, and what do you think is the most misunderstood by investors about AeroSculpt at this point? Or what do want them to take away the most? Yeah, I think really just the investment community is starting to see the progress the business is making. We're still in the very early innings, but we are executing on the key initiatives really Yogi laid out a year ago, whether it be stabilize the business, Q1, again, one quarter, but getting same-store sales to positive after comping. Q1 last year was down over 20%, right? that's a huge turnaround in and of itself through the enhanced sales and marketing efforts we talked about. And we're still just scratching the surfaces on expanding the GLP-1 services in our clinics that's gonna capture that opportunity. We've cleaned up the balance sheet quite significantly, fairly new management team to kind of streamline operations, take out complexity, get more efficient, allow us to move more quickly into Genova's expanded services. So I think it's really just getting our story out there and investors starting to see the progress we're making. And we're kind of putting our own tailwinds behind our back and not waiting for a robust consumer to take us where we need to be. I think that's really it, yeah. Yeah, I'd echo that. It's more of a, ours is now, we have the right plan. We have the team in place. It's a focus on execution. yes the consumer will remain uncertain and choppy but we're not waiting for the consumer to turn so we're executing on our priorities and we look forward to continuing to report progress yeah and as we close out i love your perspective on sort of the structural trend towards longevity and wellness that we are seeing you know how are you what's your sort of personal outlook of the sector as a whole and um you know what you're most excited about as you look out next three to five years the the sector is just getting started so i've been in uh aesthetics before before this as well and just uh it's a long-term focus uh i think a lot of the solutions which will come in the next three to four years there's a few different disruptive uh trends that are coming together uh everything from uh you know some of the crisper solutions becoming more mainstream which is gene editing, combined with what AI can bring to the table, combined with how just the pace of innovation is picking up in this space. So I think we're just at the starting point. A lot of what's coming will be really, really positive over the next few years. Any thoughts, Michael? Not much to add. Well, thank you, Yui and Michael, for joining us. Really excited to get to know more about your scope. And yeah, thank you everyone for joining. Thank you for having us. Thanks for having me. Thank you.