AIRS 10-K & 10-Q changes, risk factors and insider trading

•We may not be able to successfully continue to expand in markets outside of North America.

•Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy resulting from several instances of geopolitical instability, including the ongoing military conflict between Russia and Ukraine.Ukraine, the ongoing conflict in the Middle East, and tensions between the U.S. and China.

•WeAfter areDecember 31, 2025, we will no longer qualify as an “emerging growth company,company” as defined in the JOBS Act and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will makeno ourlonger common stock less attractiveapply to investors.us.

•Certain of our directors and executive officers hold a substantial portion of our common stock, which may lead to conflicts of interest with other stockholders over corporate transactions and other corporate matters.

In response to the declinedeclines in revenue we experienced during the 2024 and 2025 fiscal year,years, we are in the process of implementing certain cost-savings initiatives and revenue growth strategies, which are discussed in further detail under the captions “Our Company,” “National and International Footprint Fueled by Attractive Unit Economics,” “Our Growth Strategies,” and “Our Marketing and Sales Efforts and Third-Party Financing” included in Item 1 of this Annual Report on Form 10-K. We may not realize in full or in part, or within the time periods expected, the anticipated savings or benefits from one or more of the various strategies and cost-savings initiatives undertaken as part of these efforts. We also may not realize the increase in sales we expect in connection with these strategies. Our ability to improve operating results depends upon a significant number of factors, some of which are beyond our control. Other events and circumstances, such as financial and strategic difficulties and delays, unexpected costs, the impact of non-surgical methods of fat reduction, including weight-loss drugs, on the demand for our procedures, or inflationary pressures, may occur which could result in not realizing targets or in offsetting the financial benefits of reaching those targets. We may also experience a decline in revenue in the short-term, as part of the implementation of our cost-savings initiatives and revenue growth strategies, with the goal of progressing toward positive revenue and profit growth in the long-term. We are also subject to the risks of labor unrest, negative publicity and business disruption in connection with these initiatives, and the failure to realize anticipated savings or benefits from such initiatives or to implement our growth strategies could have a material adverse effect on our business, prospects, financial condition, liquidity, results of operations and cash flows.

We have a limited operating history and our past results may not be indicative of our future performance. Further, our revenue growth rate is likely to slow as our business and our market matures.

We began operations in 2012. We have a limited history of generating revenue. As a result, ourOur historical revenue growth should not be considered indicative of our future performance. In particular, we have experienced periods of high revenue growth,growth includingand periods of revenue decline during the globalhistory pandemic, that we do not expect to continue asof the business, and the body contouring market, mature.company. Estimates of future revenue trends are subject to many risks and uncertainties and our future revenue may differ materially from our projections. We have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing companies in rapidly changing industries, including market acceptance of our procedures, attracting new patients, hiring surgeons and responding to increasing competition and expenses as we expand our business. We cannot be sure that we will be successful in addressing these and other challenges we may face in the future, and our business may be adversely affected if we do not manage these risks.

Our success depends on our ability to maintain the value and reputation of the AirSculpt® brand.brand, , which may be harmed by changing consumer preferences and negative publicity, including social media reviews.

We believe that our brand is important to attracting patients and high-quality surgeons. Maintaining, protecting, and enhancing our brand depends largely on our ability to deliver consistent and beneficial results for our patientspatients, and the success of our marketing efforts.efforts, and our ability to manage our public image. We believe that the importance of our brand will increase as competition further intensifies. Our brand could be harmed if we fail to achieve these objectives or if our public image were to be tarnished by negative publicity. Unfavorable publicity about us, including our procedures and technology, could diminish confidence in the AirSculpt® brand. Such negative publicity also could have an adverse effect on our business, financial condition, and operating results.

While we do not expect to open new centers in the next year, our long-term growth strategy contemplates expanding our footprint opportunistically by opening new centers. Many of our centers are relatively new and we cannot assure you that these centers or that future centers will generate revenue comparable with those generated by our more mature locations, especially as we move to new geographic markets. Further, many of our centers are leased pursuant to multi-year leases, and our ability to negotiate favorable terms on an expiring lease or for a lease renewal option may depend on factors that are not within our control. Opportunistically expanding our footprint will require significant expenditures before any substantial associated revenue is generated and we cannot guarantee that these investments will result in corresponding and offsetting revenue growth.

OurWhile we do not expect to open new centers in the next year, our long-term growth strategy depends, in large part, on growing and operating our new centers, including five opened in 2024,centers both in existing and new geographic regions, particularly in densely populated and affluent metropolitan and suburban regions.

To successfully continue to grow in markets outside of North America, we must address many issues with which we have limited experience.

•geopolitical events (such as the Russian invasion of Ukraine and the conflict in the Middle East), social and economic instability abroad, terrorist attacks, and security concerns in general;

We have significant exposure to the weight loss and obesity solutions market, which is highly competitive, subject to rapid change and significantly affected by new product introductions, results of clinical research, corporate combinations, and other factors relating to the weight loss industry. Because of the market opportunity and the high growth potential of the market for weight loss and obesity solutions, existing and potential competitors have historically dedicated, and will continue to dedicate, significant resources to aggressively develop and commercialize their products. For example, in 2023, certain drugs initially approved for use in diabetes patients gained market acceptance for use in weight loss treatment following FDA approvals for weight loss indications.

Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy resulting from several instances of geopolitical instability, including the ongoing military conflict between Russia and Ukraine.Ukraine, the ongoing conflict in the Middle East, and tensions between the U.S. and China.

The global economy has been negatively impacted by increasing tension, uncertainty and tragedy resulting from ongoing military conflict between Russia and Ukraine. The adverse and uncertain economic conditions resulting therefrom have and may further negatively impact global demand, cause supply chain disruptions and increase costs for transportation, energy and other raw materials. Furthermore, governments in the United States, the European Union, the United Kingdom, Canada and others have imposed financial and economic sanctions on certain industry segments and various parties in Russia and Belarus. WeAdditionally, are monitoringin the conflictMiddle includingEast, the potentialIsrael-Hamas impactwar ofhas financialtransitioned from active combat to a fragile ceasefire, but regional volatility persists, recently drawing in Iran and economicother sanctionsactors. onMeanwhile, emerging flashpoints, notable the globalstrategic economy.rivalry between the U.S. and China, contribute to trade fragmentation and technological decoupling, posing longer-term supply chain and market risks. Increased trade barriers, sanctions and other restrictions on global or regional trade could adversely affect our business, financial condition and results of operations. The length and impact of theeach ongoing military conflict is highly unpredictable, and resultedmay result in market disruptions, including significant volatility in commodity prices, credit and capital markets, anand increaseincreases in cyber securitycybersecurity incidents as well as supply chain disruptions. Further escalation of geopolitical tensions related to thisthese military conflictconflicts and/or itstheir expansion could result in increased volatility and disruption to the global economy and the markets in which we operate adversely impacting our business, financial condition or results of operations.

Our revenue is particularly sensitive to regulatory, economic and other conditions in the states and jurisdictions in which we have centers. As of the date of this Annual Report on Form 10-K, we operate through our arrangements with our affiliated Professional Associations thirty-two centers in Arizona, California, Colorado, Florida, Georgia, Illinois, Kansas, Massachusetts, Michigan, Minnesota, Nevada, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Utah, Washington, and Virginia as well asand Toronto, Canada and London, United Kingdom.Canada.

In addition, our five centers located in California represented 20% of our revenue in 20242025 and 2023.2024. As a result, our business, financial condition and results of operations could be adversely affected by disruptions in the Southern California economy resulting from recent wildfires. We expect that disruptions in the Southern California economy resulting from recent wildfires may impact the demand for our procedures at our five centers located in California, in particular at our center located in Beverly Hills.economy. In the event of any other adverse regulatory, economic or other developments in any of the states and jurisdictions in which we have a higher concentration of centers there could be unanticipated adverse impacts on our business in those states and jurisdictions, which could have a material adverse effect on our business, prospects, results of operations and financial condition.

Because our senior management has been key to our success, we are highly dependent on Dr. Aaron Rollins, our founder and Executive Chairman of our board of directors. We do not maintain “key man” life insurance policies on any of our officers. Competition for senior management generally, and within the cosmetic surgery and healthcare industry specifically, is intense and we may not be able to recruit and retain the personnel we need if we were to lose an existing member of senior management. Because our senior management is instrumental to our future success, the loss of key management personnel, without adequate replacements, or our inability to attract, retain and motivate sufficient numbers of qualified management personnel could have a material adverse effect on our financial condition and results of operations.

We have in recent years depended on our relationship with our Sponsor to help guide our business plan. Our Sponsor has significant expertise in financial matters.matters, Thiswhich expertise wasis available to us through the representatives our Sponsor has on our board of directorsdirectors. and as a result of our management agreement with an affiliate of ourOur Sponsor (the "Management Agreement"). In connection with the completion of our IPO, the Management Agreement terminated. Daniel Sollof and Adam Feinstein remain on our board of directors and holdholds contractual rights to seats on our board of directors for as long as our Sponsor maintains certain levels of ownership of our common stock. We have entered into, and may in the future enter into, agreements with our Sponsor which constitute related-party transactions as defined under Item 404 of Regulation S-K, as disclosed in further detail in this Annual Report on Form 10-K under the caption “Certain Relationships and Related Transactions, and Director Independence.” As of the date of this Annual Report on Form 10-K, affiliates of our Sponsor beneficially own 50.1%47% of our common stock. Affiliates of our Sponsor may elect to reduce their ownership in our Company, which could reduce or eliminate the benefits we have historically achieved through our relationship with it.our Sponsor..

As of December 31, 2024,2025, total outstanding indebtedness under our senior credit facility was approximately $75.8 million, consisting of $70.8$56 million in term loans (the “Term Loan”) and there is $5.0 million drawnavailable on theour revolving credit facility (the “Revolver”) (the “Term Loan and Revolving Credit Facility”). Our leverage could have important consequences, including:

In addition to revising the covenants listed above, the Third Amendment revised or added new terms such that (i) for outstanding loans, beginning on or about July 1, 2025 the applicable per annum margin will be increased to 3.75% or 4.75% for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 3.00x, 3.50% or 4.50% for base rate or SOFR, respectively, if the Company's total leverage ratio is equal to or greater than 2.00x and less than 3.00x, and 3.25% or 4.25% for base rate or SOFR, respectively, if the Company's total leverage ratio is below 2.00x, (ii) the Term Loan and Revolving Credit Facility will mature on May 11, 2027 (instead of November 7, 2027); (iii) Liquidity in excess of $3.0 million will be used to repay the outstanding funds drawn on the revolving credit facility on a monthly basis beginning April 30, 2025; (iv) revolver draws will be subject to compliance with the minimum Liquidity covenant; (v) the Company will be required to reimburse SVB for certain fees and expenses relating to the engagement of a financial advisor, and (vi) 100% of first $10.0 million of any equity proceeds will be used to repay the Term Loan, and Revolving Credit Facility, subject to a carve-out of the first $3.0 million of equity proceeds and any equity proceeds received from Sponsor. In consideration of the Third Amendment, the Company paid a fee equal to 0.15% of the outstanding loans to consenting Lenders, and a $125,000 arrangement fee to SVB. On March 12, 2025, in connection with the Third Amendment, the Company, SVB and our Sponsor (through certain affiliated entities) entered into that certain Limited Guarantee by and among Vesey Street Capital Partners Healthcare Fund, L.P., Vesey Street Capital Partners Healthcare Fund-A, L.P., SVB and the Company (the “Limited Guarantee”), pursuant to which our Sponsor agreed to provide a $10.0 million guaranty of the Company’s obligations under the Credit Agreement. The Limited Guarantee iswas callable on June 15, 2025 (or upon the earlier occurrence of certain defaults described therein) if the Company hashad not prepaid the Term Loan (excluding regularly scheduled amortization) by $10.0 million as of such date. UnderThe Company made the termsrequired $10.0 million repayment prior to June 15, and the Limited Guarantee automatically terminated on March 12, 2026 following the prepayment of the Term Loan in an aggregate amount of $20.0 million since the date of the Limited Guarantee, if Sponsor is required to make any payment under the Limited Guarantee (other than as a result of a bankruptcy event), then Sponsor will be deemed to have purchased shares of common stock of the Company having an aggregate value equal to the amount of such payment. The Company has agreed to issue a subordinated note to Sponsor if a payment occurs under the Limited Guarantee, to the extent such payment does not result from the issuance of shares of common stock by the Company to Sponsor.Guarantee.

We and our subsidiaries may be able to incur additional indebtedness in the future, including secured indebtedness. Although the Term Loan and Revolving Credit Facility, including the recent Third Amendment, contains restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of significant qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. In addition, as of December 31, 20242025 we had no$5.0 availabilitymillion under our Revolver. If new debt is added to our or our subsidiaries’ current debt levels, the related risks that we face would be increased.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, the Tax Cuts and Jobs Act of 2017 (the “Tax Cuts and Jobs Act”) enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities may affect us, and certain aspects of the Tax Cuts and Jobs ActAct, the OBBBA, or other U.S. tax laws could be repealed or modified in future legislation. In addition, it is uncertain if and to what extent various states will conform to any newly enacted federal tax legislation.

ProposalsPending toproposals change U.S. or foreign tax laws could have an adverse impact on our effective tax rate, income tax expense, and financial performance. For example,from the U.S. Congress, the Organization for Economic Cooperation and Development (“OECD”), and other government agencies are considering various proposals that may affectregarding the taxation of multinational corporations.corporations Althoughcould we cannot predict whether or in what form these proposals may pass, changes inchange corporate tax rates,rates the realization of net deferred tax assets relating to our operations, the taxation ofor foreign earnings,earnings orrules. otherSuch changes couldmay have a materialmaterially impact on the value of our deferred tax assets, could resultresulting in significant one-time charges, or could increase our future tax expense.

Most members of ourOur management team havehas limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. We are subject to significant regulatory oversight and reporting obligations under the federal securities laws, Nasdaq Stock Market, and the continuous scrutiny of securities analysts and investors. These obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and operating results.

InWhile we do not expect to open new centers in the next year, in pursuing our long-term growth strategy, we may seek to expand our presence into states in which we do not currently operate. In new geographic areas, we may encounter laws and regulations that differ from those applicable to our current operations. If we are unwilling or unable to comply with these legal requirements in a cost-effective manner, we may be unable to expand into new geographic markets or such expansion may be materially limited, which, in either case, could materially and adversely affect our ability to expand and grow the business.

We are an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation and exemptions from the requirements of holding a non-binding stockholder advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information that they may deem important. We could remain an emerging growth company until December 31, 2026, although circumstances could cause us to lose that status earlier, including if our total annual gross revenue is $1.235 billion or more, if we issue more than $1 billion in non-convertible debt during the previous three-year period, or if the Company qualifies as a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stockstock, and our stock price may be more volatile. After December 31, 2025 we will no longer be considered an emerging growth company but rather an accelerated filer where we will be subjected to compliance under the Sarbanes-Oxley Act.

Certain of our directors and executive officers beneficially own a substantial portion of our outstanding common stock. This concentration of ownership may not be in the best interests of our other stockholders. These stockholders, acting together, would be able to have significant influence significantlyover all matters requiring stockholder approval, including the election of directors and significant corporate transactions such as mergers or other business combinations. This controlinfluence could delay, deter, or prevent a third party from acquiring or merging with us, which could adversely affect the market price of our common stock.

For the avoidance of doubt, this provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such Proceeding, and any other professional or entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering. However, these choice of forum provisions may limit a stockholder’s ability to bring a Proceeding in a judicial forum that it finds favorable for disputes with us or our directors, officers, other employees or stockholders. Further, these choice of forum provisions may increase the costs for a stockholder to bring such a Proceeding and may discourage them from doing so.

As a public company, we are required to evaluate our internal controls over financial reporting. Furthermore, atafter suchDecember time31, as2025, we ceasewill tono belonger qualify as an “emerging growth company,company” as more fully described in the risk factor “We are an “emerging growth company,” as defined in the Securities Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors,” we will also be required to comply with Section 404 of the Sarbanes-Oxley Act. At such time, we may identify material weaknesses that we may not be able to remediate in time to meet the applicable deadline imposed upon us for compliance with the requirements of Section 404 of the Sarbanes-Oxley Act. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. We cannot be certain as to the timing of completion of our evaluation, testing and any remediation actions or the impact of the same on our operations. If we are not able to implement the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or with adequate compliance, our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation. As of December 31, 2024,2025, we remained an emerging growth company, and as such, our independent registered public accounting firm is not required to certify the effectiveness of our internal controls.

As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. WeAfter December 31, 2025 we will remainno longer qualify as an “emerging growth company”. As a result, we will be required to comply with the auditor attestation requirements pursuant to SOX 404. To achieve compliance with Section 404 of SOX, we are engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for upinternal tocontrol fiveover years,financial although we may cease to be an emerging growth company earlier under certain circumstances.reporting. See the risk factor “We"After areDecember 31, 2025, we will no longer qualify as an “"emerging growth company,”company" as defined in the SecuritiesJOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will makeno ourlonger common stock less attractiveapply to investors”us" for additional information on whenthe wepotential mayimplications ceaseof toour beloss anof emerging growth company. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.status.

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See the section entitled “"Cautionary Note Regarding Forward-Looking Statements”" in this Annual Report on Form 10-K. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including those risks. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report. You should read this Annual Report completely, including Part I, Item 1A (Risk Factors) of this Annual Report and the section titled “Cautionary Note Regarding Forward-Looking Statements” sections ofin this Annual Report for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by our forward-looking statements contained in the following discussion and analysis. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Given the recentcontinued decline in its revenue, the Company is focusing onreturning stabilizingto revenue growth through a number of strategic and growth initiatives, including:

•optimizing our marketing investment by spending on techniques that have proven successful for us in the past using a returns-based approach and testing new areas such as online video, and other social marketing channels under the direction of our new Chief Digital Officer;

•improving our go-to-market and sales strategies under our new Chief Sales Officer who is dedicated to strengthening our consultative sales model with enhanced training, improving our sales processes, and providing a greater focus on lead conversion;

Our long-term growth strategy depends, in large part, on successfully operating our new facilities, both in existing and new geographic regions, particularly in densely populated and affluent metropolitan and suburban regions.

◦Same-center revenue per case increasedchanged 0.1%, (2.4)%, 1.5%,and 1.5% in 2025, 2024, and 7.4% in 2024, 2023, and 2022, respectively;

◦Same-center volume changed (13.722.1)%, (1.413.7)%, and 0.7%(1.4)% in 2025, 2024, and 2023, and 2022, respectively;

•Adjusted Net Income per share (diluted)* was $0.02,$(0.06), $0.28$0.02 and $0.32$0.29 in 2024,2025, 20232024 and 2022,2023, respectively.

For the twelve months ended December 31, 20242025 and 2023,2024, we define same-center case and revenue growth as the growth in each of our cases and revenue at facilities that were owned and operated during the twelve months ended December 31, 20242025 and 2023,2024, respectively. At facilities that were not owned or operated for the entirety of the prior year period, the current year period has been pro-rated to reflect only growth experienced during the portion of the twelve months ended December 31, 20242025 in which such facilities were owned and operated during the twelve months ended December 31, 2023.We2024. We define same-center facilities and procedure rooms based on if a facility was owned or operated as of December 31, 2023.2024. Beginning September 30, 2025, we have excluded the London facility from all periods presented due to the closure of the facility.

Our same-storesame-center revenuecase decline is primarily attributed to weaker than expected performance across the broader aesthetics and high-end retail industries.industry.

We define Adjusted EBITDA as net loss excluding depreciation and amortization, net interest expense, income tax (benefit)/expense, restructuring and related severance costs, loss on debt modification, lossLoss/(gain) on disposal of long-lived assets, settlement costs for non-recurring litigation, and equity-based compensation.

(12) During the first quarter of fiscal year 2024,ended 2025, the Company recorded a cumulative$4.5 reversalmillion loss related to the impairment of stocka compensation expenseportion of $10.4the Salesforce implementation project and $0.1 million related to reassessing the probabilitycorporate ofoffice achievingPPE the performance target on certain of the Company's performance-based stock units.write-off. See Note 61 to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion.

We generally expect our selling expenses to increase as we continue to grow our brand and expand our national footprint. We evaluate our selling expense as compared to growth in our sales volume and will invest accordingly to the extent we believe we can position ourselves for future growth without materially negatively impacting our Adjusted EBITDA Margins.

General and administrative expenses include employee-related expenses, including salaries and related costs (excluding physician and clinical cost included in cost of service and the salaries and commissions of sales and marketing employees), equity-based compensation, technology, operations, finance, legal, corporate office rent and human resources. We expect our general and administrative expenses to increase over time due to the additional legal, accounting, insurance, investor relations and other costs that we will continue to incur as a public company.

Overview— Our financial results for the twelve months ended December 31, 2024 compared to the twelve months ended December 31, 2023 reflect the addition of five de novo centers which increased procedure rooms by ten.10.

Revenue—Our revenue decreased $15.6 million, or 7.9%, compared to the same period in 2023. The decrease is primarily attributed to weakerlower thancase expected performance across the broader aestheticsvolume and high-endlower retail industries.rate.

Cost of Service—Our cost of service decreased $2.6 million, or 3.6%,3.6% compared to the twelve months ended December 31, 2023. The percentage decrease in cost of service is driven by the decrease in cases compared to the 2023 period and partially offset by increases in nursing and rent costs related to our new facility openings during the 2024 period. Cost of service was 39.6% and 37.8% as a percentage of revenue for the twelve months ended December 31, 2024 and 2023, respectively. The percentage increase is primarily due to the decline in revenue and not being able to leverage certain fixed costs within cost of service such as rent and certain nursing costs.

Selling, General and Administrative Expenses—Selling, general and administrative expenses decreased $3.5 million, or 3.4%, for the twelve months ended December 31, 2024 compared to the same period in 2023. This decrease is related to a decrease in our equity-based compensation expense (see Note 6 to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion) partially offset by additional expenses we incurred for marketing and corporate support as we grow our center count through de novo expansion and providing support for our centers. We expect our marketing and corporate support costs to continue to increase on an absolute dollar basis as we open de novo centers. Selling, general and administrative expenses as a percent of revenue were 54.8% and 52.3% for the twelve months ended December 31, 2024 and 2023, respectively.

We principally rely on cash flows from operations as our primary source of liquidity and, if needed, up to $5.0 million in revolving loans under our revolving credit facility. Our primary cash needsuses are for payroll, marketing and advertisements, rent, debt service, as well as information technology and infrastructure, including our corporate office. AsOur cash flows are closely tied to the receipt of patient payments, and we have experienced revenue declines in the two most recent year,years due to a decline in overall cases performed. In response, we haveimplemented implementedduring fiscal year 2025 initiatives to return to revenue growth, engaged in a cost reduction program that iswas estimated to eliminate approximately $3$3.0 million in annual overhead costs and contracted expenses.expenses Theseduring initiativesfiscal mayyear not realize anticipated savings or benefits from one or more of the various strategies2025, and cost-savingspaused initiativesde undertakennovo ascenter partand ofnew theseprocedure effortsroom in full or in part or within the time periods expected. We also may not realize the increase in sales related to these initiatives.openings. Our ability to improve operating results depends upon a significant number of factors, some of which are beyond our control. If we are unable to realize the anticipated savings or benefits, or otherwise fail to implement the growth strategies, the business operating results and liquidity may be adversely affected.

The primary source of our operating cash flow is the collection of patient payments received prior to performing surgical procedures. For the twelve months ended December 31, 2024,2025, our operating cash flow decreased by $12.6$8.3 million compared to the same period in 2023.2024. The decrease is primarily attributed to weaker than expected revenue performance and an increase in our marketing investments during the twelve months ended December 31, 20242025 as compared to the prior year period. At December 31, 2024,2025, we had a working capital deficit of $(11.512.4) million compared to $(4.411.8) million at December 31, 2023.2024.

Net cash used in investing activities for the twelve months ended December 31, 2024, 2023,2025 and 20222024 was $14.0$2.4 million, $9.9 million,million and $12.9$14.0 million, respectively. Investing activities in the twelve months ended December 31, 2025 relate primarily to final payments on our White Plains, NY location that opened in December 2024 and maintenance capital expenditure. Investing activities during allthe threetwelve periodsmonths ended December 31, 2024 were attributable to the preparation for the opening of our 2024 de novo locations and the relocation of multiple existing facilities.locations.

Net cash used in financing activities during the twelve months ended December 31, 20242025 was $0.6$0.5 million. During the twelve months ended December 31, 2024,2025, we received net proceeds of $13.8 million from an underwritten public offering, made principal payments on our debt of $2.1$13.8 million, borrowedpayments $5.0for milliondebt onmodification ourof revolving$0.4 credit facility, andmillion, made payments of taxes withheld through vested equity-based compensation of $0.9$0.1 million.million, and received net proceeds of $5.3 million from the at the market offering.

Net cash used in financing activities for the twelve months ended December 31, 20232024 was $13.4$0.6 million. For the twelve months ended December 31, 2023,2024, we paid cash dividends to stockholders of $0.4 million and made principal payments on our debt of $12.1$2.1 million and made payments of taxes withheld through vested equity-based compensation of $0.9 million.

AirSculpt is an experienced national provider of body contouring procedures delivering a premium consumer experience. At AirSculpt, weWe provide custom body contouring using our proprietary AirSculpt® method that removes unwanted fat and tightens skin in a minimally invasive procedure, producing dramatic results. We now deliver our AirSculpt® procedures through a nationwide footprint of 31 centers across 20 states and Canada as of MayAugust 8,10, 2026.

For the three months ended MarchJune 31,30, 2026 and 2025, we define same-center case and revenue growth as the growth in each of our cases and revenue at facilities that were owned and operated during the three months ended MarchJune 31,30, 2026 and 2025, respectively. At facilities that were not owned or operated for the entirety of the prior year period, the current year period has been pro-rated to reflect only growth experienced during the portion of the three months ended MarchJune 31,30, 2026 in which such facilities were owned and operated during the three months ended MarchJune 31,30, 2025. We define same-center facilities and procedure rooms based on whether a facility was owned or operated as of MarchJune 31,30, 2025.

We report our financial results in accordance with generally accepted accounting principles generally accepted in the United States of America ("GAAP"), however, management believes the evaluation of our ongoing operating results may be enhanced by a presentation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income per Share, which are non-GAAP financial measures.

We define Adjusted Net Income as net loss excluding restructuring and related severance costs, equity-based compensationcompensation, loss on disposal of long-lived assets, restructuring and related severance costs, certain other non-recurring costs, and the tax effect of these adjustments.

Our revenue is generated from ourAirSculpt® procedures, which incorporate certain patented AirSculpt®technologies proceduresand techniques, performed on our patients. We are 100% self-pay and do not accept payments from the U.S. federal government or payer organizations. We assist patients, as needed, by providing third-party financing options to pay for procedures. We have arrangements with various financing companies to facilitate this option. There is a financing transaction fee based on a set percentage of the amount financed. We recognize revenue based on the expected transaction price which is reduced for financing fees.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Cost of Service— Our cost of services decreased $0.4$0.6 million, or 2.3%,3.7%, compared to the same period in 2025. The decrease in cost of service is drivencaused by aefficiencies $0.4 million decreasegained in medicalpersonnel payrollcosts as compared to the same period in 2025. Cost of service was 39.6%38.6% and 40.5%39.1% as a percentage of revenue for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Selling, General and Administrative Expenses— Selling, general and administrative expenses increased $0.8 million, or 3.7%,3.3%, for the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. This decreaseincrease is driven primarily by a $0.6$1.4 million increase in advertising expense, offset by a $0.4 million decrease in stock compensation expense, offset by a $0.1 million increase in bank fees, a $0.7 million increase in professional service fees, a $0.1 million increasedecrease in travel expense, and a $0.6$.06 million increasedecrease in advertisingoffice supplies expense. Selling, general and administrative expenses as a percent of revenue was 54.6% and 51.5% for the three months ended June 30, 2026 and 2025, respectively.

Selling expenses consist of advertising costs for social, digital and traditional marketing and sales and marketing personnel. Total selling expenses were approximately $10.5$11.7 million and $9.6$9.9 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Our customer acquisition costs were approximately $3,397$3,467 and $3,130$2,905 per customer in the three months ended MarchJune 31,30, 2026 and 2025, respectively. Selling expenses as a percentage of revenue may fluctuate from quarter to quarter based on the timing and scope of our initiatives and the related impact to our revenue.

General and administrative expenses include employee-related expenses, including salaries and related costs (excluding physician and clinical cost included in cost of service), equity-based compensation, technology, operations, finance, legal, corporate office rent and human resources. General and administrative expenses were approximately $12.1$11.7 million and $12.2$12.8 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Depreciation and Amortization— Depreciation and amortization decreased to approximately $3.0$2.9 million for the three months ended MarchJune 31,30, 2026 compared to $3.2 million for the same period in 2025. This decrease is driven primarily by the net reduction of one clinic location and one office location during the three months ended MarchJune 31,30, 2026 as compared to the 2025 period.

Interest Expense, net— Interest expense was $1.2$1.0 million and $1.6 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The $0.4$0.6 million decrease was related to principal prepayments which reduced the outstanding balance.

Income Tax Expense— Our effective tax rate was 16.2%8.3% and 11.4%23.8% for the three months ended MarchJune 31,30, 2026 and 2025, respectively. The main driver of the difference between the effective and statutory rate is non-deductible executive compensation under Section 162(m) of the Internal Revenue Code.

We principally rely on cash flows from operations as our primary source of liquidity and, if needed, up to $5.0 million in revolving loans under our revolving credit facility, subject to minimum liquidity draw requirements. In March 2025, we filed a Registration Statement on Form S-3 (File No. 333-285825) which covers the offer, issuance and sale, for an aggregate initial offering price not to exceed $100.0 million, of shares of common stock and preferred stock; debt securities; warrants to purchase common stock, preferred stock and/or debt securities; and units. We also commenced an at-the-market offering program, with Leerink Partners LLC (“Leerink”) acting as sales agent. This at-the-market offering program provides us with additional access to capital, as needed, subject to market conditions. During the quarter ended MarchJune 31,30, 2026, the Company sold approximately 5.9 million973,000 shares of common stock through its at-the-market offering program for total net proceeds of approximately $14.6$5.0 million. Additionally, during the quarter ended March 31, 2026, the Company voluntarily pre-paid $10.0 million of the principal balance of the term loans under the Credit Agreement using cash on hand.

As of MarchJune 31,30, 2026, we had $16.7$18.8 million in cash and cash equivalents and an available amount of $5.0 million under our revolving credit facility. We did not have any letters of credit outstanding as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 2025, we had $5.6$8.2 million in cash and cash equivalents and noan availabilityavailable amount of $5.0 million under our revolving credit facility. We did not have any letters of credit outstanding as of MarchJune 31,30, 2025.

The primary source of our operating cash flow is the collection of patient payments received prior to performing surgical procedures. For the threesix months ended MarchJune 31,30, 2026, our operating cash flow increaseddecreased by $4.4$1.8 million compared to the same period in 2025. This improvement was primarily driven by favorable working capital changes and the benefits realized from cost savings initiatives implemented during the prior year. At March 31, 2026, we had a working capital deficit of $(8.2) million compared to $(12.4) million at December 31, 2025.

Net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 was $0.1$0.3 million and $1.9$2.2 million, respectively. Investing activities in the threesix months ended MarchJune 31,30, 2026 relate primarily to maintenance capital expenditures. Investing activities during the threesix months ended MarchJune 31,30, 2025 relate primarily to final payments on our White Plains, NY location that opened in December 2024.

Net cash used in financing activities during the threesix months ended MarchJune 31,30, 2026 was $3.0$6.6 million. During the threesix months ended MarchJune 31,30, 2026, we received net proceeds of $14.6$19.6 million from the at-the-market offering, made principal payments on our debt of $11.4$12.7 million and made payments of taxes withheld through vested equity-based compensation of $0.2 million.

Net cash used in financing activities for the threesix months ended MarchJune 31,30, 2025 was $1.6$3.7 million. For the threesix months ended MarchJune 31,30, 2025, we received net proceeds of $14.0 million from an underwritten public offering and made principal payments on our debt of $1.1$12.0 million, payments for debt modification of $0.2 million and made payments of taxes withheld through vested equity-based compensation of $0.1 million.

On March 14, 2025, wethe Company entered into a sales agreement (the “ATM Agreement”) with Leerink, as sales agent, in connection with an at-the-market offering program under which wethe Company may offer and sell, from time to time in our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million at prices and on terms to be determined by market conditions at the time of offering. The $50.0 million of common stock that may be offered, issued and sold under the ATM Agreement is included in the $100.0 million of securities that may be offered, issued and sold by us under our Registration Statement on Form S-3 (File No. 333-285825). WeThe Company and Leerink each have the right to suspend or terminate the ATM Agreement in each party’s sole discretion at any time.

ForIn the quarterthree ended,and Marchsix 31,months ended June 30, 2026, wethe Company sold the following quantities of our common stock pursuant to the ATM Agreement for total net proceeds of approximately $14.6$5.0 million and $19.6 million:

The carrying value of our total indebtedness was $44.8$43.6 million and $56.0 million, which includes unamortized deferred financing costs and issuance discount of $0.8$0.6 million and $0.9 million as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

On November 7, 2022, the Company entered into thea Term Loan and Revolving Credit Facility pursuant to the Creditcredit agreement with a syndicate of lenders (the "Credit Agreement"), originally maturing November 7, 2027. Pursuant to the Credit Agreement, there is (i) an $85.0 million original aggregate principal amount of term loans and (ii) a revolving loan facility inwith an aggregate principal amount of up to $5.0 million. On September 29, 2023, the Company voluntarily pre-paid $10.0 million of the principal balance of the term loans under the Credit Agreement using cash on hand. Additionally, duringDuring the quarter-ended March 31, 2026, the Company voluntarily pre-paid $10.0 million of the principal balance of the term loans under the Credit Agreement using cash on hand.

On March 12, 2025, the Company entered into an amendment to the Credit Agreement (the "Third Amendment.Amendment"). Under the terms of the Third Amendment, the parties thereto agreed to modify certain financial condition covenants made by the Company underin the Term Loan and Revolving Credit Facility,Agreement, such that (i) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) of the Company and its subsidiaries as of the last day of the fiscal quarters ending March 31, 2025 and June 30, 2025 must be no less than 0.50x and 1.10x, respectively, and no less than 1.25x on the last day of the fiscal quarters ending September 30, 2025 and thereafter, instead of 1.10x as of March 31, 2025 and 1.25x as of June 30, 2025 and thereafter, as previously set forth in the Credit Agreement; (ii) the Consolidated Leverage Ratio (as defined in the Credit Agreement) of the Company and its subsidiaries as of the last day of the fiscal quarters ending March 31, 2025, June 30, 2025, September 30, 2025, December 31, 2025 and March 31, 2026, must not exceed 4.25x, 3.50x3.50x, 3.25x, 3.25x, and 2.75x, respectively, and the Consolidated Leverage Ratio as of the last day of each fiscal quarter thereafter must not exceed 2.25x, instead of 3.25x as of March 31, 2025, 2.75x as of June 30, 2025, and 2.25x thereafter, as previously set forth in the Credit Agreement; (iii) the Company and its subsidiaries will be required to maintain minimum Liquidity (as defined in the Credit Agreement) of not less than (A) $3.0 million as of the last day of the month ending March 31, 2025, (B) $5.0 million as of the last day of the month ending April 30, 2025, and (C) $7.5 million as of the last day of the monthsmonth ending May 31, 2025 and thereafter (or the last day of each fiscal quarter thereafter upon the satisfaction of certain financial tests described therein); and (iv) new liquidity and financial reporting requirements have been added.

In addition to revising the covenants listed above, the Third Amendment revised or added new terms such that (i) for outstanding loans, beginning on or about July 1, 2025, the applicable per annum margin willwould be increased to 3.75% or 4.75% for base rate or SOFR,SOFR (as defined in the Credit Agreement), respectively, if the Company's total leverage ratio iswas equal to or greater than 3.00x, 3.50% or 4.50% for base rate or SOFR, respectively, if the Company's total leverage ratio iswas equal to or greater than 2.00x and less than 3.00x, and 3.25% or 4.25% for base rate or SOFR, respectively, if the Company's total leverage ratio iswas below 2.00x, (ii) the Termterm Loanloan and Revolvingrevolving Creditcredit Facilityfacility will mature on May 11, 2027 (instead of November 7, 2027); (iii) Liquidity in excess of $3.0 million will be used to repay the outstanding funds drawn on the revolving credit facility on a monthly basis beginning April 30, 2025; (iv) revolver draws will be subject to compliance with the minimum Liquidity covenant; (v) the Company will be required to reimburse Silicon Valley Bank ("SVB") for certain fees and expenses relating to the engagement of a financial advisor, and (vi) 100% of first $10.0 million of any equity proceeds will be used to repay the Termterm Loanloan and Revolvingrevolving Creditcredit Facility,facility, subject to athe carve-outfollowing ofcarve-outs (A) the first $3.0 million of equity proceeds and(B) any equity proceeds received from Vesey Street Capital Partners, L.L.C., our Sponsor.private equity sponsor ("Sponsor"). In consideration offor the Third Amendment, the Company paid a fee equal to 0.15% of the outstanding loans to consenting Lenders,Lenders (as defined in the Credit Agreement) and a $125$0.125 thousandmillion arrangement fee to Silicon Valley Bank. On March 12, 2025, in connection with the Third Amendment, the Company, SVB and our Sponsor (through certain affiliated entities) entered into that certain limited guarantee by and among Vesey Street Capital Partners Healthcare Fund, L.P., Vesey Street Capital Partners Healthcare Fund-A, L.P., and the Company (the "Limited Guarantee,Guarantee"), pursuant to which our Sponsor agreed to provide a $10.0 million limited guaranty of the Company’s obligations under the Credit Agreement. The Limited Guarantee was callable on June 15, 2025 (or upon the earlier occurrence of certain defaults described therein) in the Company had not prepaid the Termterm Loanloans (excluding regularly scheduled amortization) by $10.0 million as of such date. On June 13, 2025, the Company made a $10.0 million principal payment on the term loanloans in accordance with the Third Amendment using proceeds from its underwritten public offering completed on June 11, 2025. The Limited Guarantee automatically terminated on March 12, 2026 following the prepayment of the Termterm Loanloans in an aggregate amount of $20.0 million since the date of the Limited Guarantee.

As of MarchJune 31,30, 2026, the interest rate under the Credit Agreement was 8.42%.8.39%.