These statements may include our future expectations regarding financial results and guidance, market opportunities, and our growth. A reconciliation of these measures can be found in our earnings release as filed this morning and in our most recent 10-Q, which will also be available on our website. Then Dennis will review our financial results in more detail and provide our outlook. During the quarter, we made strong progress on our key initiatives that focused on new growth opportunities, margin improvement, and debt reduction.
While third-quarter revenue was lower than anticipated, this is reflective of timing instead of trajectory of our business. GLP-1 medications have fundamentally reshaped how consumers approach weight loss and wellness, and we are seeing this change is beginning to create demand for aesthetic procedures that align to our existing brand and capabilities. In the long term, we believe these procedures can account for a significant portion of AirSculpt's revenue and drive meaningful growth. In Q3, we adapted our marketing spend to align with the moderation in our revenue trend and prioritized initiatives that drive higher conversion.
Our third area of focus is maintaining strong financial discipline both in our margins and capital allocation. Year to date, we have generated more than $3 million in annualized cost savings net of investments in new growth initiatives. We expect to continue unlocking incremental value from our current operations, which we anticipate will expand our operating margin going forward. Turning to capital allocation, we have repaid nearly $18 million of our debt year to date.
| Metric | Period | Current guidance |
|---|---|---|
| FY2025 revenue | FY2025 | approximately $153 million |
| FY2025 adjusted EBITDA | FY2025 | approximately $16 million (low end of range) |
| Q4 same-store sales | Q4 2025 | improving versus year-to-date trend; implied smaller year-over-year revenue decline |
| Q4 margins | Q4 2025 | implied EBITDA guidance highlights stronger margins sequentially and year over year |
| Metric | YoY | Note |
|---|---|---|
| Revenue | -17.8% to $35 million | Challenging consumer environment for considered purchases; consumers hesitant to convert from leads/consults to purchase; muted skin-tightening uptake. |
| Same-store revenue | down approximately 22% | Softness in a challenging discretionary consumer environment; conversion pressure despite strong leads and consultations. |
| Cases | -15.2% to 2,780 | Same-store cases down approximately 20% amid weaker conversion of interested consumers to procedures. |
| Average revenue per case | down approximately 3% to $12,587 | Remained above the midpoint of the historical $12,000-$13,000 range. |
| Adjusted EBITDA | $3.0 million vs $4.7 million | Result of revenue declines, partly offset by cost controls. |
| Adjusted EBITDA margin | 8.7% vs 11% | Revenue declines outpaced cost reductions. |
| Cost of services (% of revenue) | 42.5% vs 41.8% | Dollar costs fell $2.9 million, but deleverage on lower revenue raised the ratio. |
| SG&A | down $6 million | Cost management activities and reductions in equity-based compensation. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| GLP-1 body-contouring opportunity | Skin tightening expected to address a broader sliver of demand | Opportunity seen as broader and more durable than initially expected; adding skin excision/removal procedures and fat removal to expand the total addressable market, with GLP-1 users converting better than non-GLP-1 users. | — |
| Skin-tightening pilot | Pilot began in Q2 | Expanded to multiple centers; found many clients have loose skin beyond what tightening can address, prompting new procedures. | — |
| Marketing and sales strategy | Standard lead-generation focus | Adapted spend to the moderating revenue trend, prioritizing higher-conversion initiatives; shifting to a more diversified media mix (influencer campaigns, television) plus new sales training and improved patient financing options. | — |
| Capital allocation / deleveraging | Debt repayment prioritized (Q2 repaid $16 million including $5 million revolver and $10 million prepayment) | Debt repayment remains the primary near-term focus; nearly $18 million repaid year to date; leverage 3.04x. | — |
| Center portfolio / London closure | London operating as part of the network | Decided to close the London center, its only unprofitable location, to focus resources on North America growth. | — |
| Leadership transition | CFO retirement previously announced | Michael Arthur to join as CFO in January 2026 as Dennis Dean retires after a transition; Dr. Aaron Rollins resigned from the board for personal reasons (no disagreement). | — |