AirSculpt Technologies, Inc. — FY 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report, not a standalone fourth-quarter report; separate Q4 results are not clearly provided. The company completed its IPO and reorganization on October 28, 2021, so FY 2021 includes predecessor operations before that date and corporate income taxes only after the reorganization.
Business context
AirSculpt provides elective, primarily self-pay body-contouring procedures through its Elite Body Sculpture brand. The company manages non-clinical operations while affiliated, physician-owned professional associations provide clinical services; their results are consolidated in the financial statements. It performed 11,050 cases in 2021. There were 18 centers at year-end, increasing to 19 across 15 states by March 10, 2022.
Financial results and liquidity
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Revenue | $133.3 million | $62.8 million |
| Operating income | $15.8 million | $10.0 million |
| Net income | $10.6 million | $7.6 million |
| Adjusted EBITDA (non-GAAP) | $46.1 million | $17.5 million |
| Adjusted EBITDA margin (non-GAAP) | 34.6% | 27.9% |
| Cash from operating activities | $26.6 million | $14.0 million |
| Capital expenditures | $7.1 million | $3.7 million |
Cost of service was 33.4% of revenue, versus 37.4% in 2020, implying gross margins of 66.6% and 62.6%, respectively. Selling, general and administrative expenses were $65.7 million (49.3% of revenue), up from $23.6 million (37.6%). FY 2021 included $11.8 million of IPO-related costs and $7.2 million of equity-based compensation. Interest expense rose to $4.9 million from $2.5 million, primarily following additional borrowing.
At December 31, 2021, cash and cash equivalents were $25.3 million, working capital was $13.0 million, and $5.0 million was available on the revolving facility. Operating cash flow less capital expenditures was approximately $19.5 million. Senior secured term-loan principal was $84.3 million (carrying value, net of financing costs, was $82.6 million); the loan matures in 2023. The company reported compliance with debt covenants. Debt is variable-rate and secured by substantially all company assets.
Changes versus prior period
- Revenue increased 112.4%; cases rose 87.8% to 11,050 and revenue per case increased 13.1% to $12,065.
- At comparable centers, case volume increased 55.5% and revenue per case increased 12.1%. The comparison benefited from COVID-related center closures for two to three months in 2020; no COVID-related facility shutdowns occurred in 2021.
- Adjusted EBITDA margin increased to 34.6% from 27.9%, while GAAP operating margin declined to 11.8% from 16.0%, reflecting higher SG&A, IPO costs, equity compensation, and growth infrastructure.
- Operating cash flow rose to $26.6 million from $14.0 million. Cash increased to $25.3 million from $10.4 million.
- In May 2021, the company added $52.0 million of senior term loans and used the proceeds, together with cash, for a $59.7 million distribution to its former parent. Total member distributions during 2021 were $66.9 million. The IPO generated $13.5 million of net proceeds for the company.
Outlook, risks, and unusual items
No numerical revenue or earnings guidance is provided. Management plans to continue marketing, expand existing centers and procedure capacity, introduce procedures, and target three to four new U.S. center openings annually; international expansion is also contemplated. Management states that operating cash flow and revolving availability should cover working capital, planned capital expenditures, and debt payments for at least the next 12 months.
Key risks include reliance on discretionary patient demand and the AirSculpt brand; ability to recruit surgeons and open centers profitably; competition and consumer financing availability; dependence on a single handpiece supplier; medical liability and patient outcomes; evolving healthcare regulation, including corporate-practice-of-medicine and fee-splitting restrictions; variable-rate debt and restrictive covenants; and privacy, cybersecurity, and paper medical-record risks. COVID-19, economic weakness, and supply-chain constraints could also affect volumes and operations. The company reported routine pending or threatened legal matters and stated that their resolution was not expected to have a material adverse effect, while noting insurance may be insufficient for some claims.
Unusual FY 2021 items include $11.8 million of IPO-related costs, a $0.7 million loss on debt modification, a $1.0 million sponsor-advisory agreement termination fee, and substantial IPO-related equity awards. The reported $0.01 loss per share applies only to the post-IPO period and reflects a loss attributable to AirSculpt after pre-reorganization income was attributed to the predecessor entity; it is not the same measure as full-year consolidated net income of $10.6 million.
The financial statements received an unqualified audit opinion. Management judged disclosure controls effective at a reasonable-assurance level; the filing did not include management’s ICFR assessment or auditor attestation under the newly public company transition provisions.
Important facts for investors to verify
- Reconcile the reported growth and margins with center openings, same-center trends, and the unusually weak COVID-affected 2020 comparison.
- Review debt maturity, variable-rate exposure, covenant terms, and the company’s ability to refinance or repay the 2023 maturity.
- Assess the sustainability of adjusted EBITDA and its reconciliation to GAAP results, including IPO costs, stock compensation, and other exclusions.
- Confirm the pace, investment requirements, and profitability of planned center openings, and whether surgeon and supplier capacity can support expansion.
- Review risks from medical claims, healthcare regulatory arrangements, patient financing, and the concentration of revenue in California (24% in both 2021 and 2020).
- Consider sponsor influence and potential share sales: sponsor affiliates beneficially owned 52.7% of common stock, and approximately 77.9% was held by sponsor affiliates, management, and employees as of March 1, 2022.