BeautyHealth (SKIN) Shares Skyrocket, What You Need To Know

Radek Strnad /
2024/03/13 12:55 pm EDT

What Happened:

Shares of skincare company BeautyHealth (NASDAQ:SKIN) jumped 38.5% in the morning session after the company reported fourth-quarter results that blew past analysts' revenue expectations, driven by outperformance in "Americas consumables net sales and strong device placement in Asia-Pacific". This also enabled the company to beat Wall Street's EPS estimates. On the other hand, its gross margin missed analysts' expectations as it had "higher inventory related charges and higher product and warranty costs". Lastly, its full-year revenue and EBITDA guidance aligned with analysts' forecasts. Overall, this was a great quarter because of the topline beat.

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What is the market telling us:

BeautyHealth's shares are quite volatile and over the last year have had 61 moves greater than 5%. But moves this big are very rare even for BeautyHealth and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 4 months ago, when the st ockdropped 36.1% on the news that the company reported third quarter results with revenue, EBITDA, and EPS falling below Wall Street's estimates. It also lowered its full-year guidance for virtually every metric we track. Furthermore, the company observed a negative gross margin this quarter, driven by $63 million in restructuring charges related to device upgrades of its early generation Syndeo product - its versions 1 and 2 experienced quality issues and were marked as obsolete, resulting in a one-time impairment to its inventory/cost of goods sold. Following the results, the company noted that CEO Andrew Stanleick will depart on November 19, 2023. 

Overall, this was a terrible quarter for Beauty Health and the stock move suggested there could be concerns about the long-term viability and existence of the business.

BeautyHealth is up 44.7% since the beginning of the year, but at $4.48 per share it is still trading 67.3% below its 52-week high of $13.70 from April 2023.

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