Shares of The Beauty Health Company (SKIN), a global leader in beauty and health, known for its flagship brand HydraFacial, jumped almost 6% in Tuesday’s extended trading session after the company delivered blowout second-quarter net sales growth and raised its sales guidance for Fiscal 2021.
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The beat was driven by strong sales growth that exceeded even pre-COVID levels across all segments and regions as more stores reopened after the easing of COVID-19-induced restrictions.
Net sales more than quadrupled to $66.5 million compared to net sales of $14.1 million in the prior-year quarter. Furthermore, net sales grew over 1.5 times compared to $42.3 million in the second quarter of 2019. (See Beauty Health stock charts on TipRanks)
The increase in sales reflected a surge in Delivery Systems sales, which grew 9x to $34.9 million, and Consumables net sales, which jumped almost 4x to $31.6 million.
Furthermore, gross margins jumped 40.7 percentage points to 71% versus 30.3% in the prior-year quarter.
The margin improvement was attributable to a host of factors that include fixed cost leverage from increased sales, higher average selling prices for Delivery Systems, and positive contributions from cost savings initiatives.
However, the company reported a net loss of $1.52 per share versus a loss of $0.30 per share reported in the prior-year period. The loss included non-cash charges related to certain earn-out shares liabilities.
Increased Fiscal 2021 Sales Guidance
Based on the impressive sales growth in Q2, the company increased its net sales guidance for Fiscal 2021.
The company now forecasts net sales to be in the range of $230 – $240 million, versus the previously guided sales expectations of $200 million.
However, the company continues to forecast Adjusted EBITDA of $25 million as it plans to reinvest for future growth by enhancing its global infrastructure.
Beauty Health’s CEO Clint Carnell commented, “The key strategic initiatives implemented late last year are taking shape, and are further strengthened by the underlying trends in consumer behavior towards health and wellness, a shift we believe is lasting.”
Looking forward, he further added, “A significant priority is to use our outsized revenue growth to increase investments in our branding and infrastructure initiatives, accelerating our positioning in this nascent global beauty health category.”
Following the upbeat Q2 results, Piper Sandler analyst Erinn Murphy increased the price target from $24 to $27 (44% upside potential) and maintained a Buy rating.
Murphy stated that Beauty Health’s increased revenue guidance could still be “conservative” based on her belief that the company has several revenue drivers to significantly capture potential growth in the hybrid consumer/medtech space.
Consensus among analysts is a Strong Buy based on 5 unanimous Buys. The average Beauty Health price target of $23.70 implies 26.4% upside potential to current levels.
SKIN scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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