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

In addition, these agreements provide for termination by the cruise lines with limited or no advance notice under certain circumstances, including, among other things, the withdrawal of a ship from the cruise trade, the sale or lease of a shipship, or our failure to achieve specified passenger service standards. Termination or nonrenewal of cruise line agreements, either upon completion of their terms or prior thereto, could have a material adverse effect on our business, results of operations and financial condition. Some of our land-based destination resort health and wellness center agreements also provide for termination with limited advance notice under certain circumstances.

Prior to the recent pandemic, the cruise industry had never before experienced a complete cessation of its operations. The public concern over the recent pandemic, coupled with a drop in demand for international travel and leisure, and restrictions on international travel and immigration, adversely affected the demand for cruises. In addition, the recent pandemic caused, and future outbreaks of illnesses may causecause, some cruise lines to declare bankruptcy or cause their lenders to declare a default, accelerate the related debt, or foreclose on collateral. Such bankruptcies, accelerations or foreclosures could, in some cases, result in the termination of our agreements with certain of our cruise line partners and eliminate our anticipated income and cash flows, which could negatively affect our results of operations. Cruise lines in bankruptcy may not have sufficient assets to pay us termination fees, other unpaid fees, or reimbursements we are owed under their agreements with us. Even if some cruise lines do not declare bankruptcy, they may be unable or unwilling to pay us amounts to which we are entitled on a timely basis or at all. Cruise lines compete for consumer disposable leisure time dollars with virtually all other vacation alternatives. Demand for cruises is dependent on the underlying economic strength of the countries from which cruise lines source their passengers. Economic changes such as unemployment, economic uncertainty, and the threat of a global recession reduce disposable income or consumer confidence in the countries from which our cruise line partners source their passengers and have affected the demand for vacations, including cruise vacations, which are discretionary purchases.

Our continued success will depend to a significant extent on our senior executive officers, including Leonard Fluxman, our Executive Chairman, PresidentChairman and Chief Executive Officer, and Stephen Lazarus, our President, Chief Financial Officer and Chief Operating Officer, and Susan Bonner, our Chief Commercial Officer. The unanticipated loss of the services of anyeither of these persons or other key management personnel, due to illness, disability, resignation or otherwiseotherwise, could have a material adverse effect on our business, results of operations and financial condition.

Almost all of our shipboard personnel come from jurisdictions outside the United States. Our ability to obtain non-United States shipboard employees in the future is subject to regulations in certain countries from which we source a number of our employees are sourced and, in the case of one country, control by an employment company that acts on behalf of employees and potential employees from that country. In addition, in that country, we are required to deal with local employment companies to facilitate the hiring of employees. Our ability to obtain shipboard employees from those countries on economic terms that are acceptable to us may be hampered by our inability to enter into an acceptable agreement with the applicable local employment company.

We are a Bahamas international business company (“IBC”) that owns, among other entities, OneSpaWorld (BahamasMaritime) Limited (formerly known as OneSpaWorld (Bahamas) Limited, and, prior to that, Steiner Transocean Limited) (“OneSpaWorld (BahamasMaritime)”), our principal subsidiary and a BahamasCayman IBCIslands entity that conducts our shipboard operations, primarily outside United States waters (which constitutes most of our shipboard activities), and One Spa World LLC, a Florida limited liability company that performs administrative services in connection with our operations in exchange for fees from OneSpaWorld (BahamasMaritime) and other subsidiaries.

We also own, directly or indirectly, the shares of additional subsidiaries organized in the United States, the United KingdomStates and other taxable jurisdictions, as well as subsidiaries organized in jurisdictions that do not subject the subsidiaries to taxation.

Currently, we and our non-United States subsidiaries are not subject to Bahamas or Cayman Islands income tax or other (including United States federal) income tax, except as set forth below. These non-United States subsidiaries earn a substantial portion of our revenue, which contributes to our low effective tax rate.

ECI may include any type of income from sources within the United States (“U.S.-source income”), but only limited types of income from sources without the United States (“foreign-source income”). OneSpaWorld (BahamasMaritime) has three types of income: income from the provision of health and wellness services, income from the sales of health and wellness products and income from leasing (at rates determined on an arm’s length basis) our shipboard employees and space to a United States subsidiary that performs health and wellness services and sells health and wellness products while the ships are in United States waters and pays OneSpaWorld (BahamasMaritime) the amounts referenced above (the “U.S. Waters Activities”).

We believe that most of OneSpaWorld (BahamasMaritime)’s shipboard income should be treated as foreign-source income under the U.S. Treasury Department regulations for determining the source of such income (the “source rule regulations”). This belief is based on the following:

all of the functions performed, resources employed and risks assumed in connection with the performance of the above-mentioned services and sales (other than OneSpaWorld (BahamasMaritime)’s involvement in the U.S. Waters Activities) occur outside of the United States; and income to OneSpaWorld (BahamasMaritime) from the U.S. Waters Activities is ECI, and thus subject to United States income taxation, but constitutes a small percentage of OneSpaWorld (BahamasMaritime)’s total income.

To the extent that our belief about the source of OneSpaWorld (BahamasMaritime)’s shipboard income is correct, such income would not be ECI because such income is income of a character (compensation for services, gains on sales of certain property, and rental income from the lease of tangible property) that cannot be treated as ECI unless it is treated as U.S.-source income. However, OneSpaWorld (BahamasMaritime)’s shipboard income generated while in port in The Bahamas is subject to the payment of a 10% VAT payable to the Bahamas Department of Inland Revenue. Cayman Islands does not impose VAT.

Under United States Treasury Department regulations, as of January 1, 2007, all or a portion of OneSpaWorld (BahamasMaritime)’s income for periods commencing on or after that date could be subject to United States federal income tax at a rate of up to 35% with respect to income earned prior to January 1, 2018 and 21% with respect to income earned thereafter:

to the extent the income from OneSpaWorld (BahamasMaritime)’s shipboard operations that OneSpaWorld believes are performed outside of United States territorial waters is considered by the Internal Revenue Service (“IRS”) to be attributable to functions performed, resources employed or risks assumed within the United States or its possessions or territorial waters;

to the extent the income from OneSpaWorld (BahamasMaritime)’s sale of health and wellness products for use, consumption, or disposition in international waters is considered by the IRS to be attributable to functions performed, resources employed or risks assumed within the United States, its possessions or territorial waters; or to the extent that passage of title or transfer of ownership of products sold by OneSpaWorld (BahamasMaritime) for use, consumption or disposition outside international waters, takes place in the United States or a United States office materially participates in such sales.

Additionally, if OneSpaWorld (BahamasMaritime) were considered to be a controlled foreign corporation (“CFC”) for purposes of the source rule regulations, any of its shipboard income would be considered U.S.-source income and would be subject to United States federal income tax unless such income is attributable to functions performed, resources employed or risks assumed in a foreign country or countries.

Under certain “downward attribution” rules made applicable by a provision of Pub. L. No. 115-97, enacted December 22, 2017 (known as the “Tax Cuts and Jobs Act” (“TCJA”)), to determine the CFC status of a foreign corporate subsidiary of a foreign parent corporation that also has a U.S. subsidiary, the foreign subsidiary may in certain circumstances be treated as a CFC based solely on its brother-sister relationship to the U.S. subsidiary. However, on September 22, 2020, the Federal Register published an amendment to the source rule regulations (the “2020 amendment”), providing that for purposes of that regulation, the status of a foreign corporation as a CFC or not is determined without regard to the above-mentioned provision of the TCJA. The 2020 amendment applies to taxable years of foreign corporations ending on or after October 1, 2019. For taxable years of foreign corporations ending before October 1, 2019, a taxpayer may apply such provisions to the last taxable year of a foreign corporation beginning before January 1, 2018, and each subsequent taxable year of the foreign corporation, provided that the taxpayer and U.S. persons that are related (within the meaning of section 267 or 707) to the taxpayer consistently apply such provisions with respect to all foreign corporations. Most recently, Pub. L. No. 119-21, enacted July 4, 2025 (known as the “One Big Beautiful Bill Act"), reinstated a provision that was previously repealed by the TCJA and that limits downward attribution of stock ownership under the CFC rules effective for tax years of foreign operations beginning after December 31, 2025.

Accordingly,In solelylight of the foregoing, for purposes of the source rule regulations, we believe that OneSpaWorld (BahamasMaritime) should not be characterized as a CFC. This should allow us to treat most of our shipboard income,income which is earned by a foreign corporation that would not be a CFC but for the TCJA provision referred to above, to beas foreign source income to the same extent as income earned by a foreign corporation that is not a CFC.

If OneSpaWorld (BahamasMaritime) is subject to United States federal income tax (at a rate of 21%) on its income that is ECI, it also would be subject to a branch profits tax of 30% on its annual dividend equivalent amount (a measure of its after-tax earnings that are considered to be withdrawn, from its United States business).

Separately, certain non-United States jurisdictions may also assert that OneSpaWorld (BahamasMaritime)’s income is subject to their income tax. For example, some of our United Kingdom, Bahamas and United States subsidiaries provide goods and/or services to us and certain of our other subsidiaries. The United Kingdom or United States tax authorities may assert that some or all of these transactions do not contain arm’s length terms. In that event, income or deductions could be reallocated among our subsidiaries in a manner that could increase the United Kingdom or United States tax on us. This reallocation also could result in the imposition of interest and penalties. As of December 31, 2025, we no longer have an operating subsidiary in the United Kingdom.

In addition, we cannot assure you that the tax laws on which we have relied to minimize our income taxes will remain unchanged in the future. We are directly and indirectly affected by new tax legislation and regulation and the interpretation of tax laws and regulations worldwide. Changes in such legislation, regulation or interpretation could increase our taxes and have an adverse effect on our operating results and financial condition. This includes potential changes in tax laws or the interpretation of tax laws arising out of the Base Erosion Profit Shifting (“BEPS”) project initiated by the Organization for Economic Co-operation and Development (“OECD”). In July and October of 2021, the OECD/G-20 Inclusive Framework on BEPS released statements outlining a political agreement on the general rules to be adopted for taxing the digital economy, specifically with respect to rules for nexus and profit allocation (Pillar One) and rules for a 15% global minimum tax (Pillar Two). 140 member states have agreed to support implementation, including The Bahamas, where we earnearned a substantial portion of our revenue.revenue Onprior to December 15,31, 2022, the European Union Member States formally adopted the European Union’s Pillar Two Directive with effective dates of January 1, 2024 and January 1, 2025 for certain aspects of the directive. Generally, the Pillar Two rules apply to multinational enterprises with annual revenue of €750 million or more in their consolidated financial statements in at least two of the four fiscal years immediately preceding the tested fiscal year. Given these revenue requirements, the earliest Pillar Two would apply to us would be beginning January 1, 2026. The Government of The Bahamas is currently implementing an International Business Income Tax in compliance with Pillar Two. Specifically, the Bahamas has announced plans to enact a qualified domestic minimum top up tax for multinational corporations that meet the aforementioned Pillar Two revenue thresholds. We are continuing to monitor Bahamas implementation of the new tax regime. In addition to Bahamas, certain European countries in which we have subsidiaries have either enacted or have draft Pillar Two legislation. If we become subject to such legislation but are not exempt under any revenue-based threshold to which such an income tax might be subject, and if certain restructuring alternatives being contemplated cannot be implemented, there could be a material adverse impact on our effective tax rate or higher cash tax liabilities for our operations, which could have a material adverse effect on our business, results of operations and financial condition.2025.

the outbreaks of illnesses, such as the recent pandemic,illnesses or the perceived risk of such outbreaks, in locations where we operate land-based health and wellness centers or locations from which guests of such wellness centers are sourced;

Many of the land-based venues that we serve or may serve in the future offer recreational entertainment facilities and activities similar to those offered on cruise ships, often without additional charge to guests. A number of the hotels we serve also offer casino gambling. These activities and facilities compete with us for customer time and disposable income. Our destination resort health and wellness centers also compete with other health and wellness centers in their vicinities, as well as with other beauty,beauty salons and relaxation or other therapeutic alternatives. These include salons that offer these services at prices significantly lower than those charged by us. We believe, however, that the prices charged by us are appropriate for the quality of the experience we provide in our respective markets. In addition, we also compete, both for customers and for contracts with hotels, with health and wellness centers and beauty salons owned or operated by companies that have offered their destination resort health and wellness services longer than we have, some of which enjoy greater name recognition with customers and prospective customers than health and wellness centers operated by us. Also, a number of these health and wellness center operators may have greater resources than we do. Further, some hotel operators provide health and wellness services themselves. If we are unable to compete effectively in one or more areas of our operations, our results of operations and financial condition could be adversely affected.

The waters and countries in which we operate include geographic regions that, from time to time, experience political and civil unrest and armed hostilities. Political unrest in areas where we operate health and wellness centers also has adversely affected our operationsoperations, and continued political unrest in the Middle East has adversely affected the travel industry in that region. The threat of additional attacks and of armed hostilities internationally, such as the hostilities in Eastern Europe and Ukraine, or locally, may cause prospective travelers to cancel their plans, including plans for cruise or land-based venue vacations. Weaker cruise industry and land-based venue performance could have a material adverse effect on our business, results of operations and financial condition.

Our operations may be impacted by adverse weather patterns or other natural disasters, such as hurricanes, earthquakes, floods, fires, tornadoes, tsunamis, typhoons and volcanic eruptions. Most scientists have concluded that increasing concentrations of greenhouse gases in the Earth’s atmosphere that contribute to climate change could have significant physical effects on weather conditions, such as increased frequency and severity of hurricanes, storms, droughts, floods, fires, and other climatic events. It is possible that cruises we serve could be forced to alter itineraries or cancel a cruise or a series of cruises or tours due to these or other factors. Extreme weather events, such as hurricanes, floods and typhoons, may not only cause disruption, alteration, or cancellation of cruises and closures of destination resort health and wellness centerscenters, but may also adversely impact commercial airline flights and other transport or prevent certain individuals from electing to utilize our offerings altogether. In addition, these extreme weather conditions could result in increased wave and wind activity, which would make it more challenging to sail and dock ships and could cause sea/motion sickness among guests and crew on the ships we serve. These events could have an adverse impact on the safety and satisfaction of cruising and could have an adverse impact on our net revenue yields and profitability. Additionally, these extreme weather conditions could impact our ability to provide our cruise products and services as well as to obtain insurance coverage for operations in such areas at reasonable rates.

Our guest and employee relationships provide us with access to sensitive data. We are subject to laws and requirements related to the treatment and protection of such sensitive data. We may be subject to legal liability and reputational damage if we do not comply with data privacy and protection regulations. Various governments, agencies and regulatory organizations have enacted and are considering new regulations and implementation of rules for existing regulations. Additional requirements could negatively impact our ability to market cruisesour services and products to consumers and increase our costs.

Our Credit Facilities contain certain financial covenants and a number of traditional negative covenants, including limitations on our ability to, among other things, incur and/or undertake asset sales and other dispositions, liens, indebtedness, certain acquisitions, and investments, consolidations, mergers, reorganizations and other fundamental changes, payment of dividends and other distributions to equity and warrant holders and prepayments of material subordinated debt, in each case, subject to customary exceptions. Any failure to comply with the restrictions of the Credit Facilities may result in an event of default under the agreements. If an event of default occurs, the lenders under the Credit Facilities are entitled to take various actions, including the acceleration of amounts due under the Credit Facilities and all actions permitted to be taken by a secured creditor, subject to customary intercreditor provisions among the first and second lien secured parties.Facilities.

The demands of consumers with respect to health and wellness services and products continue to evolve. Among other things, there is a continuing trend to add services at health and wellness centers similar to those traditionally provided in medical facilities, including services relating to skin care. If we are unable to identify and capture new audiences, our ability to successfully integrate additional services and products will be adversely affected. Our ability to provide certain additional services depends on our ability to find appropriate third parties with whom to work in connection with these services and, in certain cases, could be dependent on our ability to fund substantial costs. We cannot assure you that we will be able to find such appropriate third parties or be able to fund such costs. We also cannot assure you that we will be able to continue to expand our health and wellness services sufficiently to keep up with consumer demand. Accordingly, we may not be able to successfully implement our growth strategies or continue to maintain sales at our current rate, or at all. If we fail to implement our growth strategies, our revenue and profitability may be negatively impacted, which would adversely affect our business, financial condition and results of operations.

Pursuant to Section 404 of the Sarbanes-Oxley Act, we are required to furnish a report by our management on our internal control over financial reporting,reporting and once we no longer qualify as an emerging growth company, our independent registered public accounting firm will also beis required to provide an attestation report on our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. To comply with the Sarbanes-Oxley Act, the requirements of being a reporting company under the Exchange Act and any complex accounting rules in the future, we may need to upgrade our information technology systems; implement additional financial and management controls, reporting systems and procedures; and hire additional accounting and finance staff. If we or, if required,or our auditors,auditors are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in our financial reporting and the trading price of our common stockshares may decline.

We are an international business company incorporated under the laws of the Commonwealth of The Bahamas.Bahamas and certain of our subsidiaries are incorporated under the laws of the Cayman Islands. A substantial portion of our assets are located outside the United States. As a result, it may be difficult or impossible to:

Our Articles include certain provisions which may have the effect of delaying or preventing a future takeover or change in control of us that shareholders may consider to be in their best interests. Among other things, until recently, our Articles provideprovided for a classified Board serving staggered terms of three years, which classified structure is in the process of being phased out but continues to be applicable to a portion of our Board, super majority voting requirements with respect to certain significant transactions and restrictions on the acquisition of greater than 9.99% ownership without our Board’s approval. Our equity plans and our executive officers’ employment agreements provide certain rights to plan participants and those officers, respectively, in the event of a change in control of the Company.

OneSpaWorld Holdings Limited (“OneSpaWorld,” the “Company,” “we,” “our, “us” and other similar terms refer to OneSpaWorld Holdings Limited and its consolidated subsidiaries) is the pre-eminent global operator of health and wellness centers onboard cruise ships and a leading operator of health and wellness centers at destination resorts worldwide. We are positioned as a leader in the hospitality-based health and wellness industry. Our highly trained and experienced staff offer guests a comprehensive suite of premium health, fitness,wellness, beautyaesthetics and wellnessfitness services and products onboard cruise ships and at destination resorts globally. We are the market leader at more than 18x17x the size of our closest maritime competitor. Over the last 50 years, we have built our leading market position on our depth of staff expertise, broad and innovative service and product offerings, expansive global recruitment, training and logistics platform, as well as decades-long relationships with cruise line and destination resort partners. Throughout our history, our mission has been simple: helping guests look and feel their best during and after their stay.

At our core, we are a global services company. We serve a critical role for our cruise line and destination resort partners, operating a complex and increasingly important aspect of their overall guest experience. Decades of investment and know-how have allowed us to construct an unmatched global infrastructure to manage the complexity of our operations. We have consistently expanded our onboard offerings with innovative and leading-edge service and product introductions, and developed powerful recruiting, training and logistics platformsplatforms, increasingly powered by emerging technologies, including generative and agentic artificial intelligence applications, to manage our operational complexity, maintain our industry-leading quality standards, and maximize revenue and profitability per health and wellness center. The combination of our personnel recruiting and training platform, deep proprietary global labor pool, global logistics and supply chain infrastructure, and proven health and wellness center operating, revenue, and profitability management capabilities represents a significant competitive advantage that we believe is not economically feasible to replicate.

Average Resort Count. The number of destination resorts on average during the period onin which we operate the health and wellness centers. This is a key metric that impacts revenue and profitability and reflects the fact that during the period destination resort health and wellness centers were in and out of serviceservice, and is calculated by adding the total number of days that each destination resort health and wellness center generated revenue during the period, divided by the number of calendar days during the period.

Service revenues. Service revenues consist primarily of sales of health and wellnesswellness, aesthetics and fitness services, including a full range of massagebody treatments,care, facialskin treatments,care, nutritionalhair care, cosmetics, medi-spa, acupuncture, nutrition/weight management consultations, teeth whitening,and mindfulness servicesservices, andamong medi-spa servicesothers, to cruise ship passengers and destination resort guests. We bill our services at rates which inherently include an immaterial charge for products used in the rendering of such services, if applicable.

Cost of services. Cost of services consists primarily of an allocable portion of payments to cruise linesline partners (which are derived as a percentage of service revenues or a minimum annual rent or a combination of both), an allocable portion of wages paid to shipboard employees, an allocable portion of staff-related shipboard expenses, costs related to recruitment and training of shipboard employees, wages paid directly to destination resort employees, payments to destination resort venue owners,partners, the allocable cost of products consumed in the rendering of a service,services, and health and wellness center depreciation. Cost of services has historically been highly variable; increases and decreases in cost of services are primarily attributable to a corresponding increaseincreases or decreasedecreases in service revenues. Cost of services has improvedremained generally consistent as a percentage of revenueservice due to higher revenues and cost efficiencies.revenues.

Cost of products. Cost of products consists primarily of the cost of products sold through our various methods of distribution, an allocable portion of wages paid to shipboard employees and an allocable portion of payments to cruise linesline and destination resort partners (which are derived as a percentage of product revenues or a minimum annual rent or a combination of both). Cost of products has historically been highly variable,variable; increases and decreases in cost of products are primarily attributable to a corresponding increaseincreases or decreasedecreases in product revenues and includes impairment of the carrying value of inventories. Cost of products has improvedremained generally consistent as a percentage of revenueproduct due to higher revenues and cost efficiencies.revenues.

Salary,Salaries, benefits and payroll taxes. Salary,Salaries, benefits and payroll taxes are comprised of employee expenses associated with corporate and administrative functions that support our business, including fees for employee salaries, bonuses, stock-based compensation, payroll taxes, pension/401(k) and other employee costs.

Amortization of intangible assets. Amortization of intangible assets are comprised of the amortization of intangible assets with definite useful lives (e.g.,e.g. retail concession agreements, destination resort agreements, licensing agreements) and amortization expenses associated with the business combination in March 2019..

Long-lived assets impairment. Long-lived assets impairment is comprised of destination resort agreements-intangible asset,assets, property and equipment charges, operating lease right-of-use assets charges and licensing agreement-intangible charges.

Other income (expense), net. Other income (expense) consists of royaltyinterest income, interest incomeexpense, changes in the fair value of warrant liabilities and interestother expense.

Income tax expense (benefit) expense.. Income tax expense (benefit) expense includes current and deferred federal income tax expenses, as well as state and local income taxes. See “—Critical Accounting Policies—Income Taxes” included elsewhere in this Annual Report on Form 10-K.

Net income (loss) income.. Net income (loss) income consists of income (loss) from operations less other income (expense) and income tax expense (benefit) expense..

Our revenues and financial performance are impacted by a multitude of factors, including, butwithout not limited tolimitation:

The number of health and wellness centers we operate on cruise ships and in destination resorts. The number of cruise ships on which we operate during each period is primarily impacted by our renewal of existing cruise ship partner agreements, introductions of new ships to service under our existing agreements, agreements with new cruise line partners, ships temporarily out of service for maintenance and repair, ships temporarily out of service undergoing enhancements to their facilities and operations, including enhancements to our health and wellness centers, ships and itineraries impacted by temporary adverse weather conditions, and ships prevented from sailing due to outbreaks of illnesses, among other factors. The number of destination resorts in which we operate during each period is primarily attributable to renewal of existing agreements with destination resort partnerspartners, certain of our health and wellness centers undergoing renovations to enhance operations, and destination resorts temporarily prevented from operating due to adverse weather conditions and outbreaks of illnesses, among other factors.

The size and offerings of new health and wellness centers. We have focused on innovating and implementing higher value added and price point services such as medi-spa and advanced facial techniques, which require treatment rooms equipped with specific equipment and staff trained to perform these services. As our cruise line partners continue to invest in new ships and enhancing existing vessels with enhanced health and wellness centers that allow for more advanced treatment rooms and larger staff sizes, we are able to increase the availability of these services, driving an overall shift towards a more profitable service mix.

Expansion of value-added services and products and increased pricing across modalities in existing health and wellness centers. We continue to introduce and expand our higher value added and price point offerings in existing health and wellness centers, including introducing premium medi-spa, acupuncture, light therapies and advanced facialskin care services, among other services and products innovations, resulting in higher guest demand and spending. In addition, we have increased effecting pricing selectively across our brandsservices forand our core services.products.

Collaboration with cruise line partners, including targeted marketing and promotion initiatives, as well asand implementation of proprietary technologies to increase our health and wellness center utilization via pre-booking and pre-payment of health and wellness services. We directly market and promote to onboard passengers as a result of increasing collaboration with our cruise line partners. We also utilize our proprietary health and wellness services pre-booking and pre-payment technology platforms integrated with certain of our cruise line partners’ pre-cruise planning systems. These areas of increased collaboration with cruise line partners are resulting in higher productivity, revenue generation, and profitability across our health and wellness centers.

We fund our operations principally with cash flow from operations. Our principal uses for our liquidity have been funding the operations of our health and wellness centers onboard 199206 cruise ships and in 5047 destination resorts, includingwhich associatedinvolve investments in working capital investment and capital expenditures; for technology, infrastructure, and our global operating platform. During the year ended December 31, 2025, liquidity was also utilized for debt service, including $59.6a $15.0 million repaymentpayment ofon our First Lien Term Loan Facility; purchasingthe 1,395,432payment of our$17.5 commonmillion sharesin from Steiner Leisure Limited pursuantdividends to a Shares Repurchase Agreement,shareholders; and purchasing$75.4 745,302million for the repurchase of our3,878,873 common shares under aour 2024 and 2025 Share Repurchase Program,Programs, among other uses of our liquidity.uses.

OneSpaWorld Holdings Limited (“OneSpaWorld,” the “Company,” “we,” “our,” “us” and other similar terms refer to OneSpaWorld Holdings Limited and its consolidated subsidiaries) is the pre-eminent global operator of health and wellness centers onboard cruise ships and a leading operator of health and wellness centers at destination resorts worldwide. We are positioned as a leader in the hospitality-based health and wellness industry. Our highly trained and experienced staff offer guests a comprehensive suite of premium health, wellness, aesthetics and fitness services and products onboard cruise ships and at destination resorts globally. Over the last 50 years, we have built our leading market position on our depth of staff expertise, broad and innovative service and product offerings, expansive global recruitment, training and logistics platform, as well as decades-long relationships with cruise line and destination resort partners. Throughout our history, our mission has been simple: helping guests look and feel their best during and after their stay.

Average Weekly Revenue Per Destination Resort. A key indicator of productivity per destination resort health and wellness center. Revenue per destination resort health and wellness center in a period can be affected by the geographic mix of health and wellness centers in operation for such period. Typically, our U.S. and Caribbean health and wellness centers are larger and produce substantially more revenues per location than our AsianAsia centers. Additionally, average weekly revenue can also be negatively impacted by renovations of our destination resort health and wellness centers.

Service revenues. Service revenues consist primarily of sales of health and wellness, aesthetics and fitness services, including a full range of body care, skin care, hair care, cosmetics, medi-spa, acupuncture, systemic detoxification and nutrition/weight managementregimens, and mindfulness services, among others, to cruise ship passengers and destination resort guests. We bill our services at rates which inherently include an immaterial charge for products used in the rendering of such services, if applicable.

Product revenues. Product revenues consist primarily of sales of healthhealth, wellness, aesthetics and wellnessfitness related products, such as facial skincare, body care, orthotics and detox supplements to cruise ship passengers, destination resort guests and timetospa.com customers.

Comparison of Results for the Threethree Monthsmonths Endedended MarchJune 31,30, 2026 andcompared to three months ended June 30, 2025

Revenues. Total revenues increased 13%9% to $247.6$261.2 million compared to $219.6$240.7 million for the firstsecond quarter of 2025, driven by a 4% increase in revenue days, a 2% increase in average guest spend, and health and wellness center expansion from 2026 new ship builds, and a 1.2% increase in average guest spend, contributing $23.1$14.5 million, $5.0$4.8 million and $1.2$2.7 million, respectively, to the increase in Totaltotal revenues, of which $5.4$4.7 million was attributable to increased guest pre-booked services. Growth in our Maritime Total revenues was offset by a $1.2$1.3 million decrease in destination resorts Totaltotal revenues, partially due to the closure of hotels where we had previously operated. The decrease in Product revenues was driven by the previously announced reorganization of operations in the United Kingdom and Italy.

Service revenues. Service revenues for the three months ended MarchJune 31,30, 2026 were $203.7$214.4 million, an increase of $25.1$21.1 million, or 14%,11%, compared to $178.5$193.4 million for the three months ended MarchJune 31,30, 2025.

Product revenues. Product revenues for the three months ended MarchJune 31,30, 2026 were $44.0$46.8 million, ana increasedecrease of $2.9$0.5 million, or 7%,(1)%, compared to $41.1$47.4 million for the three months ended MarchJune 31,30, 2025.

Cost of services. Cost of services for the three months ended MarchJune 31,30, 2026 were $168.3$176.9 million, an increase of $20.2$15.6 million, or 14%,10%, compared to $148.2$161.2 million for the three months ended MarchJune 31,30, 2025. The increase was primarily attributable to costs associated with increased serviceService revenues of $203.7$214.4 million in the quarter from our operating health and wellness centers at sea and on land, compared with serviceService revenues of $178.5$193.4 million in the firstsecond quarter of 2025.

Cost of products. Cost of products for the three months ended MarchJune 31,30, 2026 were $37.8$39.8 million, ana increasedecrease of $2.5$0.2 million, or 7%,(1)%, compared to $35.3$40.0 million for the three months ended MarchJune 31,30, 2025. The increasedecrease was primarily attributable to costs associated with increaseddecreased productProduct revenues of $44.0$46.8 million in the quarter from our operating health and wellness centers at sea and on land, compared to productProduct revenues of $41.1$47.4 million in the firstsecond quarter of 2025.

Administrative. Administrative expenses for the three months ended June 30, 2026 were $6.2$7.2 million, an increase of $2.8 million, or 63%, compared to $4.2$4.4 million infor the firstthree quartermonths ofended June 30, 2025. The increase was primarily due to $1.9$2.0 million in third-party fees for certain management and logisticlogistics services as a result of our previously announced restructuring, which were previously performed internally by company staff, and as such, the related costs have shifted from Salaries, benefits and payroll taxes to Administrative.

Salaries, benefits and payroll taxes. Salaries, benefits and payroll taxes were $8.8 million for both the three months ended MarchJune 31,30, 2026 were $8.4 million, a decrease of $2.6 million, or (24)%, compared to $11.0 million for the three months ended March 31,and 2025. The decrease was primarily attributable to the non-recurrence of $2.5 million in separation-related expenses incurred during the first quarter of 2025 associated with the termination of the Company’s former Chief Commercial Officer. The variance alsoconsistency reflects a reduction in internal personnel costs induring the firstthree quartermonths ofended June 30, 2026 resulting from the transition of certain management and logistics services to third-party providers, as discussed above, partially offset by annual merit increases and higher incentive-based compensation.

Amortization of intangible assets. Amortization of intangible assets was $4.1 million for each of the threethree-month monthsperiods ended MarchJune 31,30, 2026 and 2025.

Interest expense, net. Interest expense, net was $1.2 million for the three months ended March 31, 2026, compared to $1.1 million for the three months ended MarchJune 31,30, 2026, compared to $1.4 million for the three months ended June 30, 2025. The nominal increasedecrease was primarily due to a $0.2 million decrease in interest income resulting from lower average interest-bearing cash balances. This was partially offset by a decrease in interest expense driven by a $15.0 million reduction in the principal balance of the Term Loan Facility since MarchJune 31,30, 2025, which includedincluding a $10.0 million discretionary prepayment in the third quarter of 2025 andthat $5.0 million insatisfied scheduled principalamortization payments.through 2027.

NetIncome income.tax Netexpense. incomeIncome tax expense for the three months ended MarchJune 31,30, 2026 was $21.3an expense of $0.2 million, ana increasedecrease of $6.1$0.6 million, or 40%,(71)%, compared to a net income of $15.3$0.8 million tax expense for the three months ended MarchJune 31,30, 2025. ThisThe increasedecrease was primarily attributable to a $6.0mix millionof improvementincome earned in operatinglower income.taxed jurisdictions.

We fund our operations principally with cash flow from operations. Our principal uses for our liquidity during the threesix months ended MarchJune 31,30, 2026,2026 included (i) funding investment in support of the operations of our health and wellness centers onboard cruise ships and in destination resorts, including working capital and capital expenditures for technology, infrastructure, and global operating infrastructure; (ii) a $1.3$2.5 million principal payment on our Term Loan Facility; and (iii) the payment of $5.1$10.2 million in Dividends.

The following table shows summary cash flow information for the threesix months ended MarchJune 31,30, 2026 and the six months ended June 30, 2025.

Comparison of Results for the Threesix Monthsmonths Endedended MarchJune 31,30, 2026 and 2025

The $15.0$21.5 million cash outflowsoutflow from working capital for the threesix months ended MarchJune 31,30, 2025,2026 was primarily driven by: (i) a $5.1$10.1 million netdecrease paymentin accounts payable, primarily related to the timing of bonusesvendor to employeespayments; (ii) a payment$5.7 million increase in accounts receivable due to higher revenues relative to the prior year period; (iii) a $2.7 million increase in prepaid expenses, primarily due to an increase in prepaid software costs; and (iv) a $2.4 million use of $7.3 million to a cruise line partnercash related to accrued fees, and (iii) a $3.4 million increase in inventories, as a result of increased purchases reflecting the growth in revenues and anticipation of increased shipments in the second quarter of 2025.expenses.

Investing activities. Our net cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 werewas $3.0$5.3 million and $1.7$4.4 million, respectively. The increase in cash used was primarily driven by continued investments in technology hardware and software, including artificial intelligence, partially offset by $1.3 million in proceeds received from the divestiture of two immaterial subsidiaries previously disclosed in our 2025 Form 10-K.

Financing activities. Our net cash used in financing activities for the threesix months ended MarchJune 31,30, 2026 and 2025 werewas $(6.3)$13.0 million and $(43.3)$48.7 million, respectively. For the threesix months ended MarchJune 31,30, 2026, the Company utilized $0.4 million to repurchase 16,134 of our common shares, repaid $1.3$2.5 million on the Term Loan Facility and paid dividendsDividends of $5.1$10.2 million. For the threesix months ended MarchJune 31,30, 2025, the Company utilized $37.9 million to repurchase 2,094,000 of our common shares, repaid $1.3$2.5 million on the Term Loan Facility and paid dividendsDividends of $4.2$8.3 million.

As of MarchJune 31,30, 2026, our net future contractual obligations have not changed significantly from the amounts disclosed in our 2025 Form 10-K.

Our critical accounting policies are included in our 2025 Form 10-K. We believe that there have been no significant changes during the threesix months ended MarchJune 31,30, 2026 to the critical accounting policies disclosed in our 2025 Form 10-K.