Financial Analysis

NOTE 9 COMMITMENTS AND CONTINGENCIES Professional Liability In the ordinary course of business, the Company becomes involved in pending and threatened legal actions and proceedings, most of which involve claims of medical malpractice related to medical services provided by the PAs employed and affiliated physicians. The Company may also become subject to other lawsuits which could involve large claims and significant costs. The Company believes, based upon a review of pending actions and proceedings, that the outcome of such legal actions and proceedings will not have a material adverse effect on its business, financial condition, results of operations, and cash flows. The outcome of such actions and proceedings, however, cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on the Companys business, financial condition, results of operations, and cash flows. Although the Company currently maintains liability insurance coverage intended to cover professional liability and certain other claims, the Company cannot assure that its insurance coverage will be adequate to cover liabilities arising out of claims asserted against it in the future where the outcomes of such claims are unfavorable. Liabilities in excess of the Companys insurance coverage, including coverage for professional liability and certain other claims, could have a material adverse effect on the Companys business, financial condition, results …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

"NOTE 4 DEBT On November 7, 2022, the Company entered into a credit 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 in 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. On March 12, 2025, the Company amended the Credit Agreement (the ""Third Amendment"") to modify certain financial covenants made by the Company in the Credit 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, 3.50x, 3.25x, 3.25x, …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"NOTE 6 STOCKHOLDERS' EQUITY AND EQUITY-BASED COMPENSATION The Company may issue a maximum of 5,564,015 shares under the 2021 Equity Incentive Plan. This amount will automatically increase on January 1 of each year for a period of ten years starting on January 1, 2023, in an amount equal to the lesser of (i) four percent of the total Common Stock outstanding on December 31 of the preceding year and (ii) such smaller number of shares as determined by the Companys board of directors. During the twelve months ended December 31, 2025 and 2024, the Company granted 1,107,531 and 590,279 RSUs, respectively, to certain officers, employees and non-employee directors in accordance with the 2021 Plan. Vesting and payment of these RSUs are generally subject to continuing service of the employee or non-employee director over the ratable vesting periods beginning one year from the date of grant to one or three years after the date of grant. The fair values of these RSUs were determined based on the closing price of the Companys common stock on the trading date immediately prior to the grant date. These RSUs are not considered outstanding until vested. During the twelve months ended December 31, 2025 and 2024, the Company granted 899,919 and 482,165 PSUs, respectively, subject to the achievement of market-based conditions (""market-based PSUs""). The vesting is based on achievement of a total shareholder return relative to a specified peer group (rTSR). Additionally, during the fiscal year …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

NOTE 2 GOODWILL AND INTANGIBLES, NET On October 2, 2018, EBS Intermediate acquired a controlling interest in EBS Enterprises, LLC in exchange for total consideration of $151.0 million. The fair value of the net identifiable assets at transaction date was $69.3 million, comprised primarily of $17.7 million in intangible assets related to the AirSculpt trademarks and tradenames and $53.6 million in intangible assets related to the AirSculpt technology and know-how. The resulting excess consideration over fair value of identifiable net assets was recorded to goodwill in the amount of $81.7 million. The annual review of goodwill impairment was performed on October 1, 2025 using a qualitative analysis and the Company determined that a quantitative analysis was not required. There were no triggering events during the years ended December 31, 2025, 2024 and 2023. The Company had goodwill of $81.7 million at December 31, 2025 and December 31, 2024. Intangible assets consisted of the following at December 31, 2025 and December 31, 2024 (in 000s): December 31, 2025 December 31, 2024 Useful Life Technology and know-how $ 53,600 $ 53,600 15 years Trademarks and tradenames 17,700 17,700 15 years 71,300 71,300 Accumulated amortization of technology and know-how (25,906) (22,333) Accumulated amortization of tradenames and trademarks (8,555) (7,375) Total intangible assets $ 36,839 $ 41,592 Aggregate amortization expense on intangible assets was approximately $4.8 million for each of the yea …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 8 INCOME TAXES The components of loss before income taxes for the years ended December 31, 2025, 2024 and 2023 are as follows (in 000's): Fiscal Year Ended December 31, 2025 Fiscal Year Ended December 31, 2024 Fiscal Year Ended December 31, 2023 Domestic $ (11,473) $ (6,293) $ 5,145 Foreign (6,165) (1,537) (1,908) Total $ (17,638) $ (7,830) $ 3,237 Significant components of income tax expense were as follows (in 000s): Fiscal Year Ended December 31, 2025 2024 2023 Current U.S. Federal $ (2) $ (81) $ 4,565 State and Local (55) 521 1,570 Total current income tax expense (57) 440 6,135 Deferred U.S. Federal (4,777) (95) 1,192 State and Local (1,155) (199) 431 Foreign 18 42 (281) Total deferred income tax (benefit)/expense (5,914) (252) 1,342 Total $ (5,971) $ 188 $ 7,477 The effective tax rates for the fiscal years ended December 31, 2025, 2024 and 2023 were (33.8)%, (2.3)% and 249.4%. The most significant items impacting the effective tax rate during fiscal years 2025, 2024 and 2023 are non-deductible officer compensation expense and the items listed in the tables below. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025 (in 000's): Fiscal Year Ended December 31, 2025 Income tax expense/(benefit) computed at federal statutory rate $ (3,704) 21.0 % State taxes, net of federal benefit (1) (1,181) 6.7 % Foreign …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 5 LEASES As discussed in Note 13, management identified immaterial errors in the previously issued consolidated financial statements related to the accounting for certain lease arrangements under ASC 842, Leases. Specifically, the Company determined that right-of-use (ROU) operating lease assets and corresponding operating lease liabilities were understated due to errors in the subsequent measurement and accounting for certain leases. The correction of these errors also resulted in immaterial impacts to lease-related expense in the consolidated statements of operations for the affected periods. The revised information for the historical periods is reflected herein. The Companys operating leases are primarily for real estate, including medical office suites and corporate offices. For the twelve months ended December 31, 2025, 2024, and 2023, the Company incurred rent expense of $10.0 million, $6.5 million, and $5.8 million, respectively, related to its medical office suites. The Company ceased use of our leased facility in London on November 15, 2025 and have adjusted the remaining right-of-use asset resulting in accelerated amortization of $3.3 million of rent expense for fiscal year 2025, which is classified in selling, general and administrative expenses. The Companys rent expense related to its medical office suites is classified in cost of services within the Companys consolidated statements of operations. The Company incurred rent expense of $282,661, $364,413, and …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Recently Adopted Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures , which establishes new requirements for the categorization and disaggregation of information in the rate reconciliation as well as for disaggregation of income taxes paid. The ASU is effective for annual periods beginning after December 15, 2024 and interim periods beginning after December 15, 2025. The amendments in this ASU may be applied prospectively or retrospectively to all periods presented and early adoption is permitted. The Company adopted ASU 2023-09 as of December 31, 2025 using a prospective approach and the adoption did not have a material impact on the Company's consolidated financial statements, except for the disclosure requirements. Recent Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public business entities (PBEs) to disclose detailed breakdowns of specific expense captions (e.g., COGS, SG&A) in annual and interim notes. It mandates tabular, disaggregated informationsuch as employee compensation, depreciation, and amortizationto improve transparency for investors. The ASU is effective for annual periods beginning after December 15, 2026 and interim period beginning after December 15, 2027. The Company is evalu …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

NOTE 10 SEGMENT INFORMATION The Company has one operating and one reportable segment: direct medical procedure services. This segment is made up of facilities and medical staff that provide the Companys patented AirSculpt procedures to patients. The accounting policies of the direct medical procedure services segment are the same as those presented in Note 1 - Organization and Summary of Key Accounting Policies. The Companys chief operating decision maker (CODM) is the Companys chief executive officer. The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources. The Companys CODM reviews revenue, gross profit, Adjusted EBITDA and net income/(loss). The CODM uses Adjusted EBITDA as the primary profit metric to evaluate income generated from operations in deciding where to spend additional marketing dollars or allocate additional resources. Gross profit is defined as revenues less cost of service incurred and Adjusted EBITDA as net loss excluding depreciation and amortization, net interest expense, income tax (benefit)/expense, restructuring and related severance costs, loss on impairment of long-lived assets, settlement costs for non-recurring litigation, and equity-based compensation. Segment information is presented below showing revenue, significant expenses and net loss (the closest GAAP measure to Adjusted EBITDA), in the same manner that the CODM reviews the …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing