Good morning, and welcome to AirSculpt Technologies' 1/3 1/4 2022 earnings conference call. Currently, all participants are in a Listen-Only mode. As a reminder, today's call is being recorded, and we have allocated one hour for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Dennis Dean, Chief Financial Officer at AirSculpt Technologies. Thank you. You may begin. Good morning, everyone, and thanks for joining us to discuss AirSculpt Technologies' results for the 1/3 1/4. Joining me on the call today is our Founder and Chief Executive Officer, Dr. Aaron Rollins, and our Chief Operating Officer, Ron Zelhof. Before we begin, I would like to remind you that this conference call may include forward-looking statements. These statements may include our future expectations regarding financial results and guidance, market opportunities, and our growth. Risk and uncertainties that may impact these statements and could cause actual future results to differ materially from currently projected results are described in last night's press release and the reports we will file with the SEC, all of which can be found on our website at investors.elitebodysculpture.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law. During our call today, we will also reference certain Non-GAAP financial measures. We use Non-GAAP measures in some of our financial discussions as we believe they are more accurately represent the true operational performance and underlying results of our business. A reconciliation of these measures can be found in our earnings release as filed last night and in our most recent quarterly report when filed, which will also be available on our website. With that, I'll turn the call over to Dr. Rollins. Aaron? Good morning, and thank you for joining us on the call today. Before we discuss the 1/4, I wanted to take a moment to recognize all the veterans that have served our great country. We truly appreciate all that you do, and thank you for your dedication to keeping our country safe. Recently, we celebrated our one-year anniversary as a publicly traded company. We've accomplished many things this past year, from performing over 30,000 procedures to expanding our footprint across the U.S. and soon to be Canada, while also paying a meaningful special dividend as a way of deploying our capital allocation strategy. For the 1/3 1/4, I wanna call out 3 key items that impacted our results. First, the timing of opening our new de novo location, specifically Philadelphia and Boston. They were later than expected. We had anticipated opening Boston in the second 1/4. It opened in the 1/3. While we are excited to open Philadelphia this week, we had anticipated it opening in the 1/3 1/4. Second, several surgeons of some of our larger, more mature centers took extended vacations. While we forecasted our normal seasonal impact for the 1/3 1/4, these vacations caused a more pronounced seasonality effect than we typically see. We do expect a significant number of these cases to be deferred to future periods, and we are already seeing some of those cases return in the fourth 1/4. Third, nursing costs in the 1/4, as well as year to date, have run higher than we anticipated. While Dennis will provide more details in the financial review, I would like to point out that we made the decision to increase investment in our clinical infrastructure. Nurses are central to that initiative. Although there is a Near-Term impact to margins as a result of this investment, we believe it is a strategic longer-term investment consistent with our commitment to quality. Moving to our de novo expansion strategy, I'm very excited to report that our first international center in Toronto, Canada is scheduled to open at the end of this month. We still have a vast number of markets to move into, and we look forward to bringing AirSculpt further across the U.S. and across the globe. As for the AirSculpt brand, we continue to invest heavily in brand awareness and other marketing-related activities. You may recall from last 1/4's call, our new chief marketing officer started in July. We believe the investments we have been making in this area and the work she is doing will result in meaningful growth for us in the future. We have also been very active in building out our team to support our rapid growth, both for new domestic sites and for our international expansion plan. We have focused on reinforcing our clinical infrastructure and related nursing and training teams to sustain our Long-Term growth plan. It's extremely important for us to enhance our training and oversight capabilities so that we can not only grow rapidly but do so while maintaining safety and quality to protect our patients and our brand. As mentioned on our second 1/4 call, we continue to add enhancements to the AirSculpt procedure. During the 1/4, we began offering AirSculpt+ at most of our centers. AirSculpt+ provides enhanced skin tightening, and we recently began a rollout of AirSculpt Smooth, which offers a treatment for the Long-Term reduction of the appearance of cellulite. We take pride in continuing to offer new service offerings that are effective and provide tremendous results to our patients. I'm sure some of you are interested in the status of our health research study. As previously reported, we are undertaking a research study on the effects our procedures have on the metabolic parameters of our patients. I'm happy to say that we have received approval from the Institutional Review Board to begin enrolling patients, which we plan to do this month, and we expect the results of the study to be completed in 2023. With that, I will turn the call over to Ron to discuss more about our operations and de novo activity. Ron? Thank you, Dr. Rollins, and good morning, everyone. As Dr. Rollins mentioned, our de novo openings this year were delayed relative to our expectations. However, we expect meaningful growth from these sites as they mature. As a reminder, it takes approximately 24 months for a new center to reach full maturity. Our most recent de novo opening, Philadelphia, performed its first procedures this week. We are excited about opening our Toronto office at the end of the month and believe that it will be an exceptional market for us, providing meaningful revenue growth as it ramps up. This opening has taken a bit longer than our typical domestic center. I wanna thank our team for their efforts in getting this center across the finish line. Once Toronto opens, this will bring our total number of center openings for the year to 4, which is in line with our guidance for the year and will bring our total center count to 22. Our pipeline of new markets continues to grow as well. We announced last 1/4 that Austin and Irvine will be our next 2 domestic centers. We expect these centers to open in the first 1/2 of 2023. We are now adding Raleigh, North Carolina, and San Jose, California, as additional locations we expect to open in 2023, and we look forward to sharing more about our growth strategy on our year-end call. Since our founding, we've been committed to providing exceptional quality and care to the patients we serve. As Dr. Rollins mentioned, we made several investments this year targeted towards our clinical, development, and operational teams. These investments were made to prepare the company for accelerated growth, and while it's had an impact on our margins in the current year, we are confident we will achieve margin expansion by leveraging these costs as we continue to open new centers and grow our revenue. With that, I'll turn it back over to Dennis to provide additional details on our financial results. Dennis? Thanks, Ron. Our revenue for the 1/4 was $38.9 million, a 12.2% increase over the prior year 1/4, and our cases increased approximately 5%. The increase is primarily the result of adding 4 de novo centers over the prior year 1/4, which expanded our footprint to 20 centers as of September 30, 2022. Our average revenue per case for the 1/4 was $13,500, a 7% increase over the previous year's 1/4, and we are pleased that our average revenue per case on a sequential basis has remained consistent. Our same center revenue decreased approximately 2% over the prior period. As Dr. Rollins remarked, we had a meaningful number of physicians who took extended vacations during the 1/4 at our more mature centers, which impacted our same center growth. We do expect many of these cases to be deferred into future periods, and we have started to see an uptick in our sales early in the fourth 1/4. Our cost of service as a percentage of revenue was 38.3% versus 32.9% in the same period last year. This increase is primarily related to the addition of clinical and support resources we have added this year, plus an increase in hourly wages as we seek to recruit and retain our nursing staff. Relative to our expectations, the combined impact was approximately $800,000 in the 1/3 1/4 and approximately $2.8 million for the year. As Ron mentioned, we expect meaningful improvement in our margins as our revenue growth continues, and we begin to leverage some of these costs that are more fixed in nature. Our margins in the 1/4 were also impacted approximately 140 basis points due to the de novo openings in the past year, and we expect to achieve margin expansion as these centers mature. As a reminder, we have a highly variable cost model. Our physician and supply costs, which comprise most of our cost of service expense, are 100% variable as we don't incur these costs until a case is performed. Customer acquisition cost was approximately $2,650 for the 1/4. We continued to invest in brand awareness activities during the 1/4 and expect to achieve meaningful revenue increases in future periods as a result. On a sequential basis, our total cash spent on acquisition costs was mostly unchanged, so the increase in our customer acquisition costs was due to the sequential volume decline. Our adjusted EBITDA was $9.2 million for the 1/4. Adjusted EBITDA included approximately $1.8 million of public company-related costs, which did not exist in the prior year 1/4 as we were a private company. Going forward, Year-Over-Year public company costs should be more comparable now that we have been public for a full year. As revenues continue to grow, we anticipate a return to adjusted EBITDA margins to be greater than 30% as we continue to leverage our fixed overhead costs. Moving on to liquidity. Our cash position as of September 30, 2022, was $7.6 million, and our $5 million revolver remains undrawn. Our Long-Term debt was approximately $83 million, and our leverage ratio at the end of the 1/4, calculated under our credit agreement, was 1.7 times. I'm also pleased to announce that earlier this week, we closed on a new $90 million credit facility, which consists of $85 million of term loans and a $5 million revolver. The proceeds were used to pay off our existing credit facility, which was set to mature in October of 2023. This new agreement will reduce our cash interest by approximately $2 million annually on a go-forward basis. It has a 5-year maturity with no prepayment penalties. Given the current economic environment, we are very pleased to have completed this transaction with more favorable terms than our previous facility, and it positions us well to continue to execute on our strategic growth plan. Cash flow from operations for the 1/4 was 329,000. Our cash from operations for the 1/4 was impacted by our 1/3 1/4 estimated cash tax payment of approximately $4.2 million. We saw an uptick in our cash interest on a sequential basis of approximately $300 thousand due to the rise in interest rates. While our cash from operations was lower during the 1/4, we are forecasting sufficient cash flow going forward to fund our operations and to continue to grow the business. We invested $4.6 million during the 1/4, primarily related to opening new centers and purchasing equipment as part of our rollout of AirSculpt Plus, and our cash flow from financing activities was a use of $23.4 million, primarily due to paying the special dividend of $22.8 million during the 1/4. Finally, as for the outlook for the year, we are lowering our revenue guidance to a range of $168 Million-$170 million for the full year, which represents 26%-28% increase over 2021. We are lowering our adjusted EBITDA outlook to approximately $45 million-$47 million. With that, I'd like to turn the call over to the operator for a few questions. Operator? Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time, we ask that you each keep to one question and one Follow-Up. Thank you. Our first question comes from the line of Josh Raskin with Nephron Research. Please proceed with your question. Sorry about that. You guys hear me okay? Yes. Yeah, Josh, we hear you. Okay, perfect. Sorry about that. Can you just give some more specifics? Let's start with the vacation days for the physicians. I guess the 2 questions there would be, one, you know, what do you think is causing that, right? The physicians are only getting paid per procedure, right? So, you know, I assume they understand, you know, prolonged vacations means no pay. Then do you track the number of vacation days? Is there a sense of how many days the physicians were out in 3Q this year versus last year? Thank you. It's Aaron Rollins. Traditionally in, physician vacation days haven't been a major problem, and we haven't needed to track them or have a major and Well-Enforced vacation policy. This is the first time that we've been so impacted by physician vacations. Now, sometimes physicians have to have family emergencies. Sometimes there's all sorts of commitments that require them to miss days. I don't feel like there's anything we can do about that. Moving forward, we do plan on having more elasticity and redundancy in our MD model than we've had before to account for those. Any planned vacations, we're asking for very advanced notice. We have onboarded seven new doctors in 3Q, and we have more physicians in our pipeline than is typical. Our physician recruiting efforts and our internal team are going extremely well, and the team's doing a great job. Okay. Hey, Josh, it's Dennis. Yeah, I do. Hey, Josh, I was just gonna follow up real quick. You'd asked sort of about some days. We saw about 120 open days from physician vacations in the 1/3 1/4, which is really significant. If you think about, like Dr. Rollins said, we don't have a good metric from the prior year. The ability to travel internationally was substantially limited last year. It was just almost impossible to travel overseas. We just saw a huge number. If you kinda look at 120 days of physician vacations, kind of our average sort of estimate of, you know, a couple of procedures a day at our current rates, you can kinda get into that sort of estimate of, you know, an impact of, you know, close to $3 million in the 1/4. Okay. Gotcha. $3 million. That's super helpful. Dennis, can you just revisit the conversation around fixed versus variable? I heard you say, you know, a large majority of it is all variable, but revenues were down $11 million sequentially. Cost of services was only down $2.5 million sequentially. That seems a lot more fixed than I had previously thought. Yeah. On the cost of service side, you know, the physicians and the supplies are, you know, 100% variable. We don't pay a doctor unless they perform a case. And obviously, if we don't perform a case, we won't incur the supply. We have enhanced our nursing costs, which has built, you know, additional fixed sort of cost in our structure around that, as Dr. Rollins talked about, and the safety and the quality and those types of things. Those that line item has developed into somewhat more of a fixed item. We also have, you know, marketing costs. If you work your way all the way down to the EBITDA line, we spent the same amount of cash in the 1/3 1/4 as we did in the second 1/4 in marketing and advertising. Well, that was a choice and a decision we made. It's a variable cost line item. We can move that number up and down based on what we see and what we expect. Again, extremely highly variable structure. If we wanted to choose to reduce our advertising, we definitely could do that. Got it. Your nurses are salaried now, so they're, you're paying for them regardless of whether, you know, there's 2 or 3 or 1 doctor in the center for the day? The nurses that we've added this year are more in a salary base. They're regional type structures from an overhead standpoint, so they're salary based. We've added. Okay. Certain individuals in centers with, you know, that are kind of managing the site itself that are falling under more of a Salary-Based position. Okay. Just last one, sorry for the 1/3 one here. Is there any thought on pausing new centers? I heard you've got 4 in the pipeline for next year. I know you talked about 3-4, so that's sort of on the high end of a typical year. Any sense of pausing until you get a better sense of market trends or, you know, just sort of preserve cash? No, we absolutely not. We have no intention of pausing our de novo development strategy, and we're going full force. Josh, I think one thing that's important to note here too, even though the 1/4 was softer than we forecasted, our lead volume activity has remained very steady. There are not a lot of indicators out there that would lead us to say we need to potentially put a pause. As a matter of fact, we think there's so much opportunity there that, you know, we're building an infrastructure to potentially accelerate in the future. Yeah. Yeah, that's all right. That's positive. All right, thank you. Thank you. Our next question comes from the line of Whit Mayo with SVB Leerink. Please proceed with your question. Yeah, maybe just to follow up on that, last question. Is there any data that you have, Dennis, that you can share around leads? Additionally, anything around close rates when you look at the consultations, and then presumably the elevated physician vacation time negatively impacts the consult rates too. Just any metrics that you can share that could give us a sense of, sorta how the close rates are trending. Yeah. We don't have any metrics to necessarily share publicly. But what we can say is that again, our lead volume has remained consistent. Our close rates for consults have remained consistent. A couple of other factors that we look at too, our rates have remained very consistent. Our financing as a percent of our business has remained consistent, around 40%. All these sort of indicators about the business, nothing has changed, again, other than just this significant impact in the 1/4 from doctors taking time off. Yeah. A 1/4 or 2 ago, you guys made some investments that I think you referenced earlier in your prepared remarks around some of the physician recruiting, bringing on board additional staff to help support that. I think you said you brought on 7 new physicians in the 1/4. How many of those are staffing the de novos versus legacy centers? Just any progress you could share around how you feel about those investments. Sure. Of that 7, we have a mix where I don't have the exact number for you, but we have new centers staffing of surgeons and also backfilling legacy centers. We really do have more physicians in our pipeline than we typically have because the team's doing such a good job, and our de novos coming online already have a very good physician team in play. Whit, it was about 50%. Yeah. It was about 50%. Okay. About 1/2 of them were legacy, 1/2 of them were de novo. Yep. Just last one here. Can you just remind me the percent of your nurses that are full-time versus contract? I think you gave some commentary around, you know, increased wage pressure. Can you just maybe elaborate a little bit on that? I don't have the exact number, but we're close to probably 25-30 nurses that are on a full-time basis, from a salary perspective. We again added a regional overhead structure this year, which we didn't have in past, just to be able to monitor our growth, keep quality and safety as a paramount. That's kind of in a ballpark. I don't have the exact FT count in front of me. We also hired another physician trainer, so we now have one on each coast, so we can onboard physicians more efficiently. Okay. Thanks, guys. Thank you. Our next question comes from the line of John Ransom with Raymond James. Please proceed with your question. Hey, good morning. Just to kind of back up and ask a more meta question, I guess. I mean, what we're seeing is costs go up and, obviously, your revenue didn't come in. You have to have some confidence in the demand picture, but I know your leads are generated only a week or 2 out. What work have you been able to do to get, you know, visibility or confidence in the intermediate term demand picture that, you know, leads to some of this continued spending? Thank you. It's Aaron Rollins. We really believe demand continues to be strong given the consistency we are seeing with lead volume. Lead volume is right on track. As you can see from our fourth 1/4 guidance, it contemplates sequential improvement in 4Q, and we're really excited about the momentum we're seeing. We don't comment on Intra-Quarter trends, but clearly our guidance suggests some momentum. The other thing is, should we see any softening, our business model tends to be resilient due to our low fixed cost structure as well as our low leverage. We believe we are well positioned if we see any indicators of a softening in demand, but we are not. We also target a higher-end demographic that is more recession-resistant. I mean, just to be clear, if we look at the 1/3 1/4 revenue shortfall, you have physician outages versus deferrals. I'm sorry if you've spelled this out, I joined the call a few minutes late. What's the mix, do you think, of just the not having doctors versus people pulling back on, you know, schedules? The number we shared, John, was the impact in the 1/4 was about $3 million from doctors' vacations when we go back and look at the schedule and the days they were out. One of the things too that hit us, and Ron and Dr. Rollins I think both spoke of it in their comments and as it related to the de novo timing, we saw about a $1 million impact from de novos that we'd expected to come on a little bit sooner. Glad to get them open, obviously. Okay. in Philadelphia and then Boston. There's about $1 million impact to what we had forecasted for the 1/4 for those. We also saw demand. $4 million. Okay. Okay. We also saw demand from Q3 where the patient wanted the consult and wanted the procedure, but didn't wanna actually have the procedure until the fourth 1/4, and sometimes into 2023. We saw procedures deferred many times because the patient had a big vacation planned. Gotcha. Okay. All right. Thank you. Thank you. Our next question comes from line of Korinne Wolfmeyer with Piper Sandler. Please proceed with your question. Hey, good morning, guys, and thanks for taking the question. So first for me, can you just provide, you know, any further color on maybe what caused the delay of these new center build outs? I mean, it seems like the Philly one was about 2 or so months delayed. I mean, just any color on like why this was happening. Was it, you know, maybe supply chain and struggling to get parts and pieces? Was it doing anything macro-wise, just any color you can provide there. Then as you think about 2023, you know, what's giving you confidence in these centers that you're planning to come online on time? Thanks. Sure. Hey, Corrin. It's Ron. How are you? You know, you hit it on the head. It's permitting lead times and then just some delays in construction, whether that's some manpower and every actual site's a little bit different. Every location is a little bit different. If you look at it, permitting lead times 2 biggest things, especially on some millwork items and supply chain, as you said. That remains out of our control. They are typically out of our control. We will ensure we have you know the correct clinical and operational staff in place as well prior to grand opening because you know that's on us. Your follow-up question in terms of, you know, our confidence, we are extremely confident in what we've set out in opening our Austin and Orange County in the first part of the year and Raleigh and San Jose in the second part of 2023 as well. That's very helpful. Thank you. Then on those maybe patients that were deferred in Q3 due to vacations, can you provide any color on, you know, what is the capacity at your centers to take on additional patients if they were delayed a bit? Like, could we see all of those come back here in Q4? Will that be spread over Q4, Q1, Q2, maybe Q3? Just what is the capacity of the centers to take on this kind of excess demand that got pushed back? Oh, we have excellent capacity now that all of our centers have at least 2 operating rooms. It gives us a lot of elasticity in scheduling, and that's why we're building more redundancy into our surgeon model so that we can, when there is surge demand, we can meet that demand. As I said, the color on the patients that came in the 1/3 1/4. Again, lead volume was normal in the 1/3 1/4. Demand was normal. It's just that, you know, if the patient wants to get surgery around Thanksgiving or Christmas or in the new year, or you know, whenever they have a vacation at work scheduled, then we want them to do it when it makes sense for them. We see that deferral both in the fourth 1/4, and we see it also trailing into next year. That's very helpful. Thank you. If I could just squeeze in one more. Can you just provide a little bit of color on how utilization of some of the Add-Ons has been like AirSculpt+ and AirSculpt Smooth? Have those picked up a bit over the past few months? Just any perspective or color you can provide on uptake of those? Thanks. Dennis, do you have any numbers on that? Well, we don't provide specific numbers on it, but what we can say is that Q3 for AirSculpt Smooth was very much a training 1/4. So not a lot of actual cases performed yet. Some, but again, most of this is due to training. You have to train everyone. You have to train the sales team, you have to train the nurses, you have to train the doctors. You can understand the undertaking it takes to roll out a new surgical type procedure. We expect to get, you know, improvement as we move into the fourth 1/4 and particularly into 2023 from that. AirSculpt Plus, again, somewhat of a rollout, if you will, for the centers that didn't have it. We are seeing, you know, good, steady results in the AirSculpt Smooth, which is giving us, you know, continued rate, I think impacting our rates, you know, a touch there. It's going quite well. We've now rolled them out to 100% of the centers, and we expect some meaningful growth going into next year from it. Another thing I'd like to mention about. Yeah. One thing about AirSculpt Smooth I think is relevant is that we really did just launch it, and we're doing a PR campaign around it. I actually did something yesterday for a market, and I feel that permanent removal of cellulite while you're awake and you can see immediately on the table is something incredible and unprecedented, and I think there's gonna be great demand for it. I'm really excited about, you know, building PR around it and marketing this to our existing and new patients. Thank you. Thank you. Our final question this morning comes from line of Simeon Gutman with Morgan Stanley. Please proceed with your question. Hi, all. This is actually Hanna Pittock on for Simeon. Thanks for taking the question. We're hearing a lot about kind of a slowing in consumer discretionary spend, especially concentrated in high-ticket purchases. You sound pretty constructive on your run rate, but are you seeing any trends within your customer base that reflect that in any way, whether that's kind of fewer body areas per patient, lower attachment rates, you know, higher revenue skew toward the High-Income patients or any lower conversion from consultation to procedure? We really aren't. One way to answer the question is to look at financing rates, and our financing rate of right around 40% remains consistent. Moreover, there's no meaningful change that we've seen in approval rates for our patients. We really do target a Higher-End demographic, and, you know, the price of gas isn't gonna affect whether or not they get a mommy makeover. Any Follow-Up question? Yeah, I would say, too, Hannah, that you had talked about pricing. The rate, again, Q3 to Q2 sequential, you know, has continued to be in the $13,000 range. I mean, that rate can bounce around. I mean, $12,000-$13,000 a case is a good rate, but again, it's held up quite nicely. Maybe if I can squeeze in a quick Follow-Up. Obviously pricing varies patient to patient, but have you kind of, Quote-Unquote, "taken price" at all this 1/4 or this year? Do you have kind of space to do more of that? Philosophically, how do you think about it as a way to offset maybe some lower case rates temporarily? We're confident our current pricing offers great value for our patients, anywhere in an average price between $12,000 and $13,000. Got it. Thanks, guys. Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Dr. Rollins for any final comments. Thank you so much. We really appreciate everyone's interest and your questions, and we look forward to reporting our next 1/4. Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.