AirSculpt Technologies, Inc. (AIRS) Earnings

Management highlights

- Transformation Progress * The company delivered two consecutive quarters of stable revenue, with meaningful progress on its business transformation. Same-center sales improved 21 percentage points versus Q2 2025 and 23 percentage points year-to-date, reaching roughly flat same-center sales growth in H1 2026, up from negative 23% in H1 2025. * Gross debt has been reduced by over $30 million since the start of 2025, and cash has increased by over $10 million over the same period, strengthening the overall balance sheet. - Strategic Priority 1: Expand services to capture GLP-1 patient market opportunity * GLP-1 weight loss use represents a significant long-term growth driver, with ~19 million addressable patients seeking body contouring and related aesthetic procedures. The company has expedited procedure portfolio expansion to meet evolving patient needs from GLP-1 use. * During Q2, the company expanded skin excision procedures to additional centers, and added upper blepharoplasty and mastopexy to its service offering, expanding addressable market, improving center productivity, and better serving patient needs. This is expected to be a $100 million+ long-term revenue opportunity across existing centers, with additional upside as geographic expansion resumes. * The company announced a new partnership with Tiger Aesthetics to offer Alloclay, a structural adipose tissue allograft for non-surgical targeted volume restoration, which serves patients who do not have enough of their own fat for traditional fat transfer (a common need for GLP-1 patients). Alloclay will begin rolling out to centers in Q3 2026. Additional body contouring-focused procedures are in the development pipeline. - Strategic Priority 2: Enhance sales and marketing strategy * The company uses a test-and-learn approach to optimize marketing to reach GLP-1 patients and educate prospective patients on new procedures, with the goal of increasing return on marketing spend, driving revenue growth, and improving marketing efficiency. * The sales force has received specialized training for new procedure offerings, and new sales optimization tools have been implemented to improve commercial execution as the service portfolio expands. - Strategic Priority 3: Maintain strong financial discipline * The company prioritizes a strong balance sheet to support long-term growth. It raised ~$5 million via its ATM program in Q2 2026, and ~$20 million year-to-date, which it used to pay down ~$13 million in debt in H1 2026. Financial flexibility is maintained to support ongoing strategic investments.

Guidance

- Revenue guidance is reaffirmed at the lower end of the company's original full-year 2026 outlook. - Adjusted EBITDA guidance is updated to a range of $12 million to $14 million, reflecting the company's intentional decision to invest an additional $5 million in marketing this year to support long-term growth. - Guidance assumes a stable macroeconomic environment through the end of 2026, and does not include any revenue contributions from newly launched procedures like Alloclay, as these offerings are still in very early implementation stages. - Management expects to deliver full-year 2026 year-over-year revenue growth on a comparable basis.

Segment performance

AirSculpt Technologies reports consolidated Q2 2026 revenue of $42.9 million, a 2.5% year-over-year decrease. On a same-center basis (excluding the London location), revenue declined ~1% year-over-year, offsetting a positive 1% year-over-year case growth (the second consecutive quarter of positive case growth) with a 2% decline in average selling price, which was driven by an unusually high ASP comparison to Q2 2025. The Q2 2026 ASP was ~$12,700, which remains within historical ranges. Cost of services was $16.6 million, bringing gross margin to 61% of revenue. Selling, general and administrative expenses were ~$23.4 million, a $750,000 year-over-year increase, driven by a deliberate $1.5 million increase in marketing and brand development investment offset by general administrative cost efficiencies. Customer acquisition cost was ~$3,500 per case, up from $2,900 in Q2 2025. Adjusted EBITDA was $4.9 million (11.5% of revenue), a $900,000 year-over-year decrease. For the first half of 2026, operating cash flow after capital expenditures was ~$3.8 million, up slightly year-over-year. End-of-quarter cash was ~$19 million, with $5 million available on the company's revolver for total liquidity of $24 million, and $44 million in gross term loan debt, with all credit covenants met. The company extended its term loan maturity to November 2027. New procedures (skin excision, upper blepharoplasty, mastopexy) contributed incremental volume in Q2, with over 200 skin excision procedures completed during the quarter. No separate segment financials or revenue contribution percentages are provided for new versus core service lines.

Risks & headwinds

- Overall consumer demand is soft and variable in the current choppy macroeconomic environment, with sales trends moderating in June 2026 and softening further into July 2026, creating near-term top-line pressure. - Changes to the AI search landscape have created headwinds for digital marketing, lowering Google click-through rates and increasing the challenge of reaching prospective patients efficiently. - New marketing investments for expanded service lines and GLP-1 patient outreach have increased customer acquisition costs in the near term, and ROI from these investments will not be fully realized for multiple quarters. - New procedure expansion depends on surgeon availability and surgeon willingness to add new services, which can slow the rollout pace across the center network. - A potential moderation in GLP-1 adoption due to employer coverage changes could impact the size of the company's key long-term growth market, though management notes it can also serve patients seeking traditional body contouring if adoption slows.

Analyst Q&A

• Q: How have demand trends held up in July and August, and can you sustain procedure volume growth in the second half of 2026? /

  A: Management confirmed that after moderating in June 2026, soft trends continued into July 2026, which it attributes to executing a business transformation amid a choppy consumer environment. Management remains confident that its new services, updated marketing strategy, and disciplined execution will allow it to hit full-year 2026 revenue at the low end of its original guidance and deliver full-year growth. (159 characters)

• Q: What is the strategic rationale for the Alloclay partnership, and what is your long-term vision for expanding beyond traditional core body contouring? /

  A: Alloclay is a complementary procedure that allows AirSculpt to reach patients who need body contouring but do not have enough of their own fat for traditional fat transfer, a common need for GLP-1 patients. It fits the company's existing model, as it can be performed in-center under local anesthesia. Management is actively evaluating additional complementary procedures to increase center productivity and drive same-store sales growth, expanding its service portfolio to meet patient needs. (318 characters)

• Q: Have recent employer cuts to GLP-1 coverage impacted your case volumes, and what would be the impact if GLP-1 adoption moderates longer term? /

  A: Management states it has not seen any noticeable impact from reduced GLP-1 coverage on its business to date. GLP-1 adoption has continued to grow overall, and a rising share of AirSculpt's consultations are from GLP-1 patients who respond well to the company's new procedures. If adoption does moderate, the company is well positioned to serve both GLP-1 patients and patients seeking traditional body contouring procedures. (283 characters)

• Q: How do you evaluate ROI on increased marketing spend, and how do you adapt to the changing AI search landscape that has lowered click-through rates? /

  A: Management evaluates marketing ROI on expected lifetime profit return per dollar spent, not just near-quarter results, and uses a test-and-learn approach to optimize channels, messaging and creative for GLP-1 patient outreach. It reports that two consecutive quarters of stable case growth already reflect improvements from its updated marketing strategy, and expects efficiency to improve over time. Management is investing in optimizing its presence for AI search engines, while also expanding its presence in non-AI channels like patient ratings, reviews, and peer conversations to counter AI-related headwinds. (371 characters)