Beauty Health lifts 2026 EBITDA outlook as equipment stays weak

Beauty Health raised its 2026 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) outlook to $48 million-$50 million after posting $13.4 million in the third quarter of 2026. Revenue fell 2.1% to $69.2 million, near the upper end of $65 million-$70 million guidance.

The year-on-year revenue decline narrowed from 7.8% in the second quarter and 6.7% in the first. Consumables growth offset weaker equipment sales, keeping the contraction at 2.1%.

What did the operating results show?

Consumables revenue (products used with treatment systems) rose 1.2% to $50.4 million and supplied about 73% of total sales. Delivery systems revenue (equipment used to deliver treatments) fell 9.9% to $18.8 million, leaving the larger consumables stream to offset equipment weakness.

The company placed 798 systems during the quarter, down from 875 a year earlier, and ended with 37,342 active systems globally (devices in operation). CEO Pedro Malha said the company was making progress in stabilizing Hydrafacial and improving profitability, while equipment sales and system utilization remained challenges. He added: “The priority now is to sustain those improvements while returning revenue to growth.”

Which regions drove the quarter?

Americas revenue increased 1.4% to $48.9 million, with consumables up 4.3%. Europe, the Middle East and Africa (EMEA) revenue fell 11.7% to $14.2 million as delivery systems weighed on results. Asia-Pacific revenue declined 4.2% to $6.1 million, primarily reflecting the transition to a distributor model in Australia and New Zealand.

Malha said execution in Germany had fallen below expectations. The company strengthened regional leadership and was working to improve customer engagement, while CFO Mike Monahan said the EMEA decline had moderated from 19% in the second quarter.

U.S. consumables improved partly through commercial execution, stronger signature consumables and the HydraScalp relaunch. Malha said consumables revenue per system remained below the prior-year level despite the segment's higher revenue.

How much of the margin gain was structural?

Gross profit as a share of revenue, calculated under generally accepted accounting principles (GAAP), rose to 68.2% from 64.6%. Adjusted gross margin increased to 71.8% from 68%, marking the company's third consecutive quarter above 70%.

Monahan attributed the improvement to lower inventory-related charges, a greater share of consumables sales and approximately $1 million in one-time tariff refunds. The refunds contributed about 140 basis points (1.4 percentage points) to adjusted gross margin, so the headline gain overstated the recurring component.

Beauty Health reported operating income of approximately $5 million, compared with a $6.2 million operating loss a year earlier. It still posted a net loss of approximately $0.9 million, while adjusted EBITDA increased to $13.4 million from $8.9 million.

Management cautioned that some of the quarterly earnings outperformance reflected one-time items and expense timing. Approximately $1.3 million of planned third-quarter expenses shifted into the fourth quarter, so fourth-quarter costs include expenses carried over from the prior period.

What does the raised outlook imply?

The company narrowed 2026 revenue guidance to $281 million-$287 million from $280 million-$290 million. It raised adjusted EBITDA guidance to $48 million-$50 million from $39 million-$46 million, lifting the lower bound by $9 million and the upper bound by $4 million.

Management expects continued equipment pressure and a lower adjusted gross margin in the fourth quarter than in the third. Equipment's larger share of sales and the absence of the tariff benefit explain that comparison, while operating expenses should rise sequentially, including a meaningful increase in research and development spending.

Monahan declined to provide 2027 growth or margin guidance. He said the company expected to provide more detail on its next call, leaving 2026 as the only quantified full-year outlook.

How does the rental program change unit economics?

The company introduced a U.S. rental program during the quarter to reduce the upfront cost for qualified providers. Malha said it was too early to attribute a meaningful share of third-quarter performance to the program.

Under the structure, the company sells a unit to a financing partner when a provider chooses rental, allowing revenue to be booked upfront. The arrangement carries slightly lower gross margin than a direct sale because the partner receives part of the economics and assumes default risk. For providers, the trade lowers upfront cost; for Beauty Health, it lowers gross margin.

What is the product pipeline targeting?

Management said it was seeking to increase treatment volumes from existing systems. Recent launches include treatment enhancers introduced in September and the HydraClear booster for blemish-prone skin, launched in October. The company targets a next-generation Hydrafacial platform for 2028 and plans another complementary device for 2027.

SkinStylus consumables grew 39% year over year, against 1.2% for total consumables revenue. The company recently expanded the microneedling product into six European markets.

What changed after the debt repayment?

On September 30, the company repaid the remaining $103.2 million principal on its 2026 convertible senior notes (debt that can convert into equity), along with approximately $645,000 in accrued interest. It ended the quarter with $112.4 million in cash and cash equivalents.

Approximately $250 million of convertible debt remains outstanding and matures in the fourth quarter of 2028. Monahan said the company expects to address that debt in 2027 and will evaluate its alternatives, leaving financing choice a stated 2027 priority.

Referred to as SkinHealth Systems on its earnings call, Beauty Health serves global aesthetic and skincare businesses with technology, products and services. Its HydraFacial flagship combines cleansing, exfoliation, extraction and hydration through proprietary devices and consumables. It also sells professional skincare products, treatment systems and related solutions to physicians, dermatologists, aestheticians and other licensed practitioners.