Good afternoon. Thank you all for joining us. My name is Brian Nagel. I'm a Senior Equity Research Analyst here at Oppenheimer, covering consumer growth and e-commerce. This is the second half of day two of our 26th Annual Oppenheimer Consumer Growth & E-Commerce Conference. We very much appreciate everyone tuning in here. I'm very pleased to have with us our next presenting company, AirSculpt Technologies, and two of the company's Senior Executives, Yogi Jashnani, who's the CEO, and Michael Arthur, who serves as CFO. Gentlemen, thank you for joining us. Brian, thank you for having us. Thanks for having us, Brian. We're going to structure this as an informal fireside chat with me asking questions and the AirSculpt team respond to those questions. To the extent there are questions from the audience, just send them through the chat, and I'll be happy to work them into our conversation. Guys, I thought we'd start, just maybe for those in the audience that are less familiar with AirSculpt Technologies, just talk about the company and basically the strategic positioning of the company within the broader, what I consider, health and wellness space. Yeah. Absolutely, Brian. I can get started on that. Just as an overview of who we are. We're a premier body contouring company. We've got a proven track record doing 75,000+ cases. The main body contouring procedures we do are fat removal, fat transfer, and skin tightening. These are elective plastic surgery procedures, essentially. We do those in our facilities. Our patented process is such that these are minimally invasive procedures that we do. The patient is awake through the procedure, and that leads to fewer complications and low downtime. Many of our patients are back to their regular routines within 24- 48 hours. Do this across 31 centers, $150 top line, roughly, last year. It's a high margin business, so our average ticket is $12,000- $13,000. It's all cash pay, so we don't work with insurance. It's about 60%-ish gross margins. All centers generate strong forward profitability. How we do that's what we do. The how behind that has been, we are a D2C on the front end, it's a direct-to-consumer model to get folks interested. As you can imagine, it's a $12,000 elective plastic cosmetic surgery, it's a reconsidered purchase. There's a consultative sales process with the surgeon involved in helping build a custom surgery plan. All of our surgeries are done by board-certified plastic surgeons or cosmetic surgeons, some of the best out there. They're 1099 with us. With 1099, they get a percentage of revenue, we have a revenue share model with the surgeons that work with us. I joined a year ago, in the past year, we've embarked on a transformation. We're now seeing the initial fruits of that transformation and turning around our top line and putting a first positive print in years on same-store sales. We can talk more about what drove that and future growth levels as well. That's a bit of who we are and what we do. That's helpful. Let's talk about that, Yogi. One of the notes I had here is there has been a rather notable upturn in the business. Maybe talk about what's behind that and then the sustainability of it. Absolutely, Brian. As I mentioned, I joined early last year, and we have a new leadership team in place. Michael joined early this year as CFO, with new head of operations as well. We've been focused on transformation. That starts with stabilize the revenue base. When I joined, we were running -15%, -20% same-store sales. As we've added talent, we've improved our marketing and sales execution, which is really driving the core business. The Q1 positive print was we enhanced sales and marketing. That includes who we are targeting, what message are we giving her, the channels we are using to talk to her, and really testing into those to see what resonates more with our target audience. She is 35-55, for the most part. Our target audience is female. Higher household incomes. If you're paying $12,000, $13,000 out of pocket, you'd have the disposable income. She's investing in herself. This is an investment in herself. We've been spending a lot of time figuring out what works on the sales and marketing front and enhance sales and marketing strategies, which have helped us go from negative sales for a few years to a +1 in Q1. That's been the driver of growth thus far. We're also seeing GLP-1 is a huge opportunity for us, which we are investing in as a driver for the next phase, footprint expansion in the future as well. Yogi, talk about your consumer. One of the themes of our consumer conference has been what we view as a more challenged consumer. We talk a lot about factors such as elevated gas prices, inflation more broadly, et cetera. You're clearly, given the price point, like you mentioned, you have generally an upper income consumer. How do you view the consumer backdrop, and to what extent has that been a headwind for your business? Absolutely, Brian. The broader consumer environment certainly remains mixed, and we see that in the wide range of messages from other companies in the consumer space. We've certainly seen that despite the fact that our audience tends to skew higher income, broadly, aesthetics has been impacted by the uncertainty in the consumer, and we have had to face those impacts as well. We remain focused on making the strategic changes to drive growth regardless of the consumer cycle. The consumer cycle being that, it will turn at some point. We know that that's just the way consumer cycles work, but we're not waiting for that. To answer your question, we continue to see the consumer as very mixed and very choppy, even at the work that we are doing. Regardless of that, we're able to drive growth in the business in Q1, and that's pretty encouraging. We have other levers focused to continue driving growth. When the consumer health improves, that'll be a massive tailwind for us. You mentioned a moment ago growth in the footprint. Maybe you can just talk about what the footprint looks like now and where that could go over time. Absolutely. Currently we have 31 locations, 30 stateside, plus one in Toronto. All of our locations are in major metropolitan areas and the higher end of those cities as well. In New York, Manhattan, for example, we'd be next to The Plaza. In Beverly Hills, we are right off of Rodeo Drive, South Beach in Miami. Our locations are in the major cities where you would expect our target audience to be. Our model also works across different tiers of cities. We're just as successful in New York City as we are in Salt Lake City. Different demographics, different sizes of cities, we see that all of our locations are overall positive, and the business model works across different sizes of cities. From a footprint perspective, it's probably easier also to say where we're not, really. We're not in Long Island, not in Indianapolis, not in Tampa, Florida, where I'm based out of, Portland, San Francisco. These are places where we don't have locations. Even though we have 31 locations nationwide or in North America, there's still a lot of white space. The work we have done shows us there's at least another 100 we could put in with minimal cannibalization risk. How far will a consumer of your services travel to a location? Right. Great question. Because it's a one and done procedure, this is not a repeat procedure, and it's a surgery, consumers actually are willing to travel further to seek out the right quality surgeon and the right name. We routinely see people are coming from one to two hours out, because remember, you're coming in for a consultation, and then you're coming in for your surgery. It's not too many visits. We do see that the trade area or the catchment area is much larger for what we are doing. Michael, I want to bring you into the conversation. Yogi mentioned. We talked about an improvement in same-store sales and then the outsize gross margins here, but how should we, as investors, how should we think about, currently and maybe more importantly over time, just the overall economic model here? I guess the question I'm asking is, as the business continues to grow, how should we think about the scalability and longer-term margin profile? Maybe I'll start with, right now. Great question, Brian. Our EBITDA margins right now are roughly 10%, but we've historically reached and exceeded over 20% EBITDA margins, and we think we can get back there. As Yogi alluded to, our gross margins are roughly 60%, and that kind of will stay steady as we scale because our cost of services and the way we've structured the business is highly variable. That kind of will scale up and down, which is nice. Also, it still gives us 40%, 50% of revenue that has some level of operating leverage that we can gain over time. Some of that will come through just more volume as we grow the business, but also, as Yogi alluded to, we're really focused also on streamlining the business, taking out complexity, becoming more nimble and flexible to lean in, reallocate capital to higher ROI opportunities, and we've started doing that, and we'll continue to do that. When we think about also de novos and adding new clinics, as Yogi alluded to, there's a lot of growth opportunity in front of us on how many clinics we can open, and the unit economics are really attractive. Just to kind of put some numbers to it, for a new clinic, historically, the build-out cost has been roughly $1 million-$2 million. Those historically have gotten profitable in a few months and paid them back in a year, certainly within two years, which is really kind of unheard of for a multi-site consumer business. The clinic-level economics on themselves are a real strength of ours, and we continue to look favorably on how we will expand de novos with the long kind of runway ahead of us of where we can do that. We do think that's attractive, and as we grow EBITDA on the de novo side, we'll be able to continue to see and drive operating leverage in the fixed cost base of G&A and things like that as we go. From a balance sheet perspective, how conducive is the balance sheet right now to either your ongoing operations, but more importantly, the growth you're discussing here? Yeah. We made meaningful progress over the last year on strengthening the balance sheet. As of Q1, net debt has come down to below $30 million, and we have cash on the balance sheet above $16 million as of Q1, and leverage below 2.5x. We definitely feel like we're in considerably a better place than we were a year or so ago. Over that time period, we've reduced debt by $30 million while continuing to lean into investing in those growth initiatives that Yogi alluded to. Expanding into marketing capabilities, pursuing service expansions where we see them. We want to continue to maintain that financial flexibility. That's important to us, so that as we see continued attractive opportunities to present themselves, we'll be positioned to act on them. We continue to see that, whether it be continuing to enhance marketing, expanding services on the GLP-1 to serve that GLP-1 patient, and obviously de novos are all important. We want to continue to maintain the financial flexibility there. That being said, the most immediate priority for us on the capital structure side is really refinancing our existing debt, which matures May 2027. Getting that done is critical to us. That's really where our near-term focus is aimed at the moment. Is making sure that we have that refinance and then ensuring that we continue to maintain financial flexibility to lean into the growth initiatives that Yogi's laid out. Yogi, on the GLP-1 side, again, in the work I've done starting your company, it seems to me it's quite new. There's a big opportunity but for as a company, you're quite new into it. Maybe we can talk a little further about what you've seen already and then the opportunity here. I guess importantly, how different is the GLP-1 side versus what your traditional business would be? Yeah. Brian, great question. Broadly on GLP-1s, GLP-1s are here to stay, right? We've seen adoption. I feel like everybody knows somebody who's on the medication, whether they admit it or not. I think JP Morgan did some study where they said users are going to go from roughly $5 million, $6 million a year or two ago, to up to $30 million in a few years. Lots of focus on GLP-1 and the drugs that are coming out there. We see GLP-1s as a significant opportunity. While they're effective for weight loss, what's happening is the side effect of GLP-1s, which people are just starting to now coming to mainstream, right? Folks who've taken it for 12, 18, 24 months, now you're starting to see the long-term side effects, which is around primarily loose skin. You've lost the weight, but you have loose skin. The second one is GLP-1s are not very targeted, you are left with some stubborn fat deposits, too. When you're 90% towards your target for how you want to look, the loose skin or stubborn fat deposits, you want to address that. Lastly, some of the volume that gets lost. Everybody's heard the word Ozempic face, like that's a terminology now. Where you just lose fat from areas you don't want to lose fat. The good thing is our whole body contouring and fat transfer procedures already address many of these concerns. We have been addressing many of these concerns. We've seen an uptick of GLP-1 users who are interested in aesthetic procedures. What we've further done is we saw, as I came in, I saw an increasing amount of patients walking in with loose skin. We expanded our service offerings to standalone skin tightening middle of last year. We also saw that the weight loss, if you've lost five, 10 pounds, skin tightening can help. If you've had larger weight loss, we see there's need for skin removal. We started piloting skin removal procedures in Q4. Again, all under local anesthesia while the patient is awake. Certain areas of the body where there is a lot of opportunity, like your abdomen or your upper arms. Those have been expanding. We reported some growth in those in pilots from Q4 to Q1 as well. We've deployed marketing against that. Everybody's marketing and talking about they want to sell you GLP-1s. We're over here saying the side effects of GLP-1s, we are the scaled player to address that and to complete the transformation people are looking to do. It's a big opportunity. Just skin tightening and skin removal, TAM, is as large as fat removal when I measured in just procedures done in the past alone by the industry. We view this as a $100+ million revenue opportunity in the long term. Excited about that. We have to execute. Obviously, with medical procedures, you do pilots, you get your initial cohorts for before and afters, refine your medical protocols, grow from there. We talked a little bit about the ticket, so to say. I think it was $12,000. Is the GLP-1 focused procedure similar economically for the company as more the legacy procedures? Yeah, Brian. The gross margin profile is pretty similar because my surgeon cost is the primary gross margin cost, and then some supplies, nursing, and the like. It is just as accretive as our core business. If I'm just doing skin excision, the average ticket would be $6,000-$8,000. What we are seeing, though, is someone who's coming in with loose skin, they tend to have stubborn fat deposits as well. They tend to want skin tightening. The ticket actually ends up being larger than the $12,000, $13,000 average ticket. Remember, that $12,000, $13,000 is average of just fat removals, fat removal with skin tightening, fat removal with skin tightening, fat transfers, skin excisions, all of that. How much of your business is repeat? It's a low percentage. Because our procedures are so effective at permanent fat removal, you literally see fat come out of your body into a canister right next to you. Probably not a lunchtime conversation, it is the reality. Because the procedures are permanent fat removal, the repeat visits we would get is if someone wants to get fat removed from another part of the body. Not a, "I've done my abdomen. I'm back in six months, one year, two years to do abdomen again. Got it. This. Send me back. Competition. I guess I can ask you who are your primary competitors? Are there primary competitors? Maybe the better way to ask the question is from a consumer's standpoint. If I'm a consumer that's looking to have this type of procedure done, why do I choose AirSculpt Technologies versus some other competitor? Yeah. Brian, the market is, as a consumer, when someone is interested in either fat removal, fat transfer, skin tightening, skin excisions, it starts with a need. Right? I have a need. The market remains highly fragmented. More than 90% of the competition comes from your local plastic and cosmetic surgeons. We're differentiated as a scaled national player specializing in awake body contouring procedures. Right? We're not trying to do all sorts of plastic surgery procedures. Our main competitive advantage is we're minimally invasive. You have minimal downtime. Many people are back to their normal routine within 24- 48 hours. This is what we specialize in. Your local plastic surgeon would do all range of procedures. We do what I would consider the slightly boring end of plastic surgery. Like, this is not your facial reconstruction. This is not your nose job. This is not your breast implants. It is a high-volume procedure. By focusing on that, we've become really good at that and become really good at body contouring. That's what we see with patients. If anything, a lot of what we hear from patients is, after the procedure, particularly, we're the best-kept secret out there, and they'd wish they'd known about us before. That's great to hear from an outcome perspective. Obviously, I'd want more people to know about us, though. Marketing. I guess I'll ask you. You mentioned maybe some shifts you make in your marketing. Michael. I'd love to hear you in the conversation, too, but from a more financial standpoint. How do we think about marketing? Let's just start with how you market now, how that shifted. We can talk about the financial implications of it. Yeah. Absolutely. For us, very direct-to-consumer marketing engine on the front end. What that means is that people are out there thinking about they need these procedures. Folks are in research mode. We make sure that we are present in all the places where people are researching, whether it's information on our site, on paid search, and the likes. We're also present where people are passively trying to understand. They're not as committed to a want to get a procedure done, but they're trying to understand what's available. It's a direct-to-consumer model on the front end with consultative sales right after that. Someone raises their hand, "Hey, I'm interested," and then we build a custom surgery solution for them with a sales consultant and the surgeon involved. My background's been in consumer all throughout and accelerating profitable growth. In bringing D2C practices, whether it's what channels are we in, depending upon who our consumer is, how she consumes the media, what are we testing in terms of marketing approaches, and doubling down on areas that we find profitable. A lot of these enhancements to sales and marketing particularly started to take hold in Q4, where we bent the curve on our same-store sales decline and then turned it positive in Q1. It's things like increasing influencer engagement. The space is highly coveted from that perspective. Improving meat and potato website functionality, conversion optimization, optimizing our spend towards higher-value audiences to deliver sustained momentum in our business. I'll let Michael speak to just what the economics are for those. Yeah. The way I would think about the economics or the way we think about it internally, really, is starting with what are the unit economics of a single case? As Yogi alluded to, average case roughly $12,000, $13,000. Our gross margin on that is pretty steady around 60%. Per case, we're making, let's call it $8,000 per case. Our blended CAC is around $3,000, give or take. It can fluctuate quarter to quarter. Our margin profile per case is $5,000, right? Now, that CAC is a blended number. Really what our conversations are, what is that incremental dollar, and if we spend an incremental dollar to get another case, what is that relative to the EBITDA we'll get? As long as that incremental dollar is going to return more than a dollar and some change on that, we'll continue to lean into marketing. Really, it's underneath the hood of can we drive the leads? Can we drive that into someone coming in, getting a consult, and then obviously driving into an incremental case? As long as that can be done for less than what we're spending, then we'll continue to lean into that marketing. That's kind of how we think about our marketing engine. At large, our margins are healthy enough that we can lean into marketing to drive incremental revenue when we see the opportunity. To what extent, you mentioned the kind of the surgeon dynamic that I would say contract surgeons. I guess the question I want to ask is how difficult is it for AirSculpt to recruit surgeons? Is that a gating factor to the operations or the growth of the business? Brian, I'd say that's not the gating factor for us. Demand generation on the front end with consumers, that's the key unlock for higher revenue. On the surgeon side, we've got a network of 80+ surgeons. We're very blessed to have the surgeon partners that we have. Now, again, both certified plastics or cosmetic surgeons, before we bring them on board, we want to make sure they have a book of results. They've done awake procedures before. We make sure that they find this as much of a fit on both ends. They do observations, come in, they train for a few weeks. Remember, these are surgeons. They already know how to do a lot of these procedures. They're trained in the AirSculpt way. Look, for them, they get 20% of the revenue that comes in. You're working two, three days a week, and making mid-six figures. What surgeons like about that model is we take away all of the hassle of marketing and sales and getting a consumer in and running the practice and dealing with staffing and dealing with all of the other things that come in. Surgeons, most of the ones that I've met, they love to do surgeries. They love to treat. All of the other stuff that comes with running a business, we take that away. I think many of our surgeons prefer that model and actually quite like it. We've had a stable set of surgeons. We're really happy with the partners that we have. Guys, I think our time's going to wind down here. Is there anything we did not discuss here that we should have discussed? Yeah, I can take that, Brian. You can kind of fill in. I'd say largely, I think really the key takeaway here and message we've been trying to deliver to the investment community is really we're executing on the key initiatives that we've laid out, primarily around one, stabilizing the business, getting same store sales comps turned around from a year ago down 20% same store sales to, as Yogi alluded to, positive same store sales in Q1, mostly through just enhanced sales and marketing efforts, right? We're really executing in the background on getting our sales and marketing engine running and operating more efficiently. Excited about that. Second is making sure that we can be well-positioned to capture this GLP-1 opportunity that we think is large and untapped. Everyone's meeting the upfront of getting GLP-1s to consumers, but those consumers we know of GLP-1s have side effects that are kind of unmet, and we're a scale player that can meet those side effects. We've been working on expanding the services as well as enhancing our marketing messaging so that we're making sure we're able to reach those consumers in the right way to bring them in the door and serve them appropriately. Excited about that. Thirdly, as I mentioned, is our efforts around refinancing our debt that kind of matures in a year which is important to us, and to continue to maintain that financial flexibility that we have to continue to lean into these growth initiatives that we're excited about. Once those kind of steps, I think de novos also are a question that we get a lot, which is some version of just when will you start adding clinics again? We've made the conscious decision to stop as we stabilize the business, and refinance our debt. As we execute on those markers, de novos will be soon to follow, which we're also excited about. Yeah, you nailed it, Michael. Yeah, look, Brian, lots of growth ahead of us, just in the core business with new services and with footprint expansion. We feel pretty excited on where the business is and where we're going, and we're just getting started. Just like any transformation, it's never linear. We've seen some ups and downs already. The opportunity's there, and we're focused on execution. Well, thank you. We very much appreciate having you here at our Oppenheimer Consumer Conference. Exciting story. Congratulations. We look forward to watching it continue to play out. Thanks for having us, Brian. Thank you for having us.