SKIN Q2 Deep Dive: Recurring Consumables Revenue, Margin Expansion, and Strategic Product Initiatives

Skincare company BeautyHealth (NASDAQ:SKIN) announced better-than-expected revenue in Q2 CY2025, but sales fell by 13.7% year on year to $78.19 million. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $67.5 million was less impressive, coming in 2% below expectations. Its non-GAAP profit of $0.22 per share was significantly above analysts’ consensus estimates.

Is now the time to buy SKIN? Find out in our full research report (it’s free).

StockStory’s Take

BeautyHealth’s second quarter results were met with a positive market reaction as management highlighted the ongoing impact of its transformation strategy and disciplined cost management. CEO Marla Beck pointed to strong growth in consumables revenue, which now accounts for more than 70% of the business, as a central driver of improved margins. The launch of the HydraFillic with Pep9 booster and operational improvements contributed to gross margin gains and a reduction in operating expenses. However, Beck acknowledged that device sales continued to face pressure from broader macroeconomic headwinds, leading to a higher churn in the installed base than seen in previous quarters.

Looking ahead, management’s guidance for the remainder of the year is shaped by expectations of continued strength in consumables, new product launches, and increased R&D investment. CFO Michael Monahan noted that upcoming price increases on consumables are already factored into forecasts, while planned launches of back bar products and a new skincare line are expected to support future growth. Beck emphasized that the team is focused on accelerating device sales through a revamped commercial strategy and targeted provider engagement programs, but cautioned that macroeconomic uncertainty and tariff pressures are likely to weigh on the near-term outlook.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to strong recurring consumables revenue, operational cost controls, and significant product innovation, while acknowledging device sales remained challenged by external factors.

• Consumables model resilience: The company’s recurring consumables revenue, central to its razor-razor blade model, continued to grow and now comprises over 70% of total revenue, counterbalancing weaker device sales.
• Product innovation momentum: The HydraFillic with Pep9 booster launch exceeded expectations and quickly became the top-performing HydraFacial-branded booster, demonstrating strong demand for clinically-backed consumables.
• Operational cost discipline: Operating expenses declined by nearly 18%, driven by reductions in personnel, sales commissions, and marketing, as well as improvements in inventory and supply chain management.
• China distributor transition: BeautyHealth completed its shift to a distributor model in China, consolidating production in the U.S. and minimizing tariff exposure on devices, though consumables sold in China remain subject to tariffs.
• Sales organization overhaul: The company introduced new sales leadership and upgraded its CRM to improve pipeline management, aiming to drive future device sales despite current macro headwinds impacting capital equipment spending.

Drivers of Future Performance

Management expects near-term performance to be shaped by macroeconomic pressures, tariff impacts, and new product launches supporting consumables growth and profitability.

• Tariffs and pricing actions: CFO Michael Monahan cited ongoing tariff expenses, particularly in China, as a headwind for the second half of the year. The company’s first consumables price increase in three years is expected to partially offset these costs, but profitability will remain sensitive to changes in tariff policy and demand elasticity.
• Increased R&D investment: Planned launches of back bar products and a new retail skincare line in late 2025 will require heightened R&D spending, with management anticipating $4 million to $5 million in related investments, impacting near-term EBITDA margins but supporting longer-term growth initiatives.
• Device sales recovery plans: While device sales remain pressured by macroeconomic uncertainty and higher interest rates, management is implementing targeted provider engagement programs and leveraging new sales leadership to reverse recent churn and position the business for improved equipment sales when market conditions stabilize.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) the pace of adoption for newly launched and upcoming consumables and skincare products, (2) the effectiveness of provider engagement and sales organization changes in driving device sales recovery, and (3) management’s ability to mitigate ongoing tariff and macroeconomic headwinds. Progress on the loyalty program relaunch and continued margin management will also be important indicators.

BeautyHealth currently trades at $2.10, up from $1.60 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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