AIRS

Greetings, and welcome to the AirSculpt Technologies first quarter fiscal year twenty 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Allison Malkin, partner with ICR. Thank you. You may begin.

Good morning, everyone. Thank you for joining us to discuss AirSculpt Technologies results for the first quarter of fiscal year 2026. Joining me today on this call are Yogi Jashnani, Chief Executive Officer, and Michael Arthur, Chief Financial Officer. Before we begin, I would like to remind you that this conference call may include forward-looking statements.

These statements may include our future expectations regarding financial results and guidance, market opportunities, and our growth. Risks and uncertainties that may impact these statements and could cause actual future results to differ materially from the currently projected results are described in this morning's press release and the reports we will file with the SEC, all of which can be found on our website at investors.airsculpt.com. We undertake no obligation to revise or update any forward-looking statements or information except as required by law.

During our call today, we will also reference certain non-GAAP financial measures. We use non-GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business. A reconciliation of these measures can be found in our earnings release as filed this morning and in our most recent 10-K, which is available on our website. With that, I'll turn the call over to Yogi.

Thank you, Allison, and good morning, everyone. Nice to speak with you and share our positive start to the year. For this morning's call, I will start with a review of our first quarter performance, followed by an update on strategic priorities which are driving our return to growth. Michael will then take you through our first quarter financials and 2026 outlook. The first quarter marked a key turning point for our company. We stabilized revenue year-over-year and delivered positive same-center sales for the first time in over two years. We expanded gross margin and made important investments in marketing and talent. At the same time, we reduced non-consumer-facing expenses, which combined generated healthy profitability.

We also strengthened our balance sheet, ending the quarter with over $16 million in cash and leverage below 2.5x, a reduction of over 1.0 compared to the same time last year. Our positive start to the year reflects the success of the transformational work completed in 2025. This gives us a solid foundation from which to grow. While still early, we are encouraged by the progress made and the trajectory of our business as we enter the second quarter. Today, we are well-positioned in an attractive and growing industry with the right team and strategies in place to capitalize on the meaningful opportunity ahead. We remain confident in our outlook and our ability to deliver sustained long-term profitable growth and value creation for our shareholders.

Let me now share highlights of our progress on the strategic priorities that have repositioned our company for sustainable and consistent growth. As a reminder, these are introducing new services to capture our GLP-1 market opportunity, enhancing our sales and marketing strategy, and maintaining strong financial discipline. First, introducing new services to capture our GLP-1 market opportunity. GLP-1 medications continue to fundamentally reshape the aesthetics landscape.

The GLP-1 user base is expected to grow from approximately 5 million in 2023 to 25 million by 2030, a roughly 400% increase that creates a significant and durable tailwind for body contouring in a $200 billion GLP-1 market. With 63% of these patients indicating interest in treatment, this translates to nearly 19 million potential patients pursuing body contouring or related procedures. AirSculpt is a desired solution for these patients.

Our minimally invasive procedures have little downtime and address the need for additional fat removal, which is the mainstay of our business and has been a catalyst to expand our offering to address GLP-1 user needs. Our recently introduced procedures, such as standalone skin tightening and skin removal, are the latest examples. Combined, we are effectively addressing the side effects from GLP-1 use and helping patients achieve their desired look.

While not a meaningful contributor today, traction for these newer procedures is growing. We completed over 150 skin excision procedures in Q1 alone. Combined with fat removal and fat transfer, these procedures have the potential to unlock more than $100 million in long-term revenue across our existing centers. Second, enhancing our sales and marketing strategy. The marketing initiatives we launched at the end of 2025 are translating into more consistent demand.

We continue to see benefits from our expanded media mix, including Connected TV, increased influencer engagement, and more targeted campaigns across skin tightening and skin removal. At the same time, improvements to our digital funnel and website are driving higher quality leads and better conversion. Sales execution has improved as well. Through better training, deeper product understanding, and aligned incentives, our teams are converting demand more effectively.

As a result, we are seeing improvement in conversion rates and revenue. Third, maintaining strong financial discipline. Debt reduction remains a key focus of our capital allocation strategy. As discussed in our last call, we repaid nearly $30 million of debt over the last five quarters, bringing our leverage below 2.5 turns, a reduction of over one turn. We are also in process to refinance our term loan and look forward to sharing the details when we report our Q2 results.

As we look ahead, we remain focused on continuing to advance our strategic priorities and are pleased to begin our seasonally strongest quarter of the year with continuing positive momentum. In the second quarter, we are targeting sequential improvement in same-store sales as we build upon the progress made in Q1.

In summary, we had a strong start to 2026 as our actions to reposition the business are bearing fruit. AirSculpt has always had a strong differentiation in the marketplace given its highly effective and minimally invasive body contouring procedures. Our Q1 results demonstrate that our strategic priorities are working. We remain focused on building this momentum and driving sustainable growth to create value for our shareholders. With that, I will now pass it over to Michael.

Thank you, Yogi. Good morning, everyone. As Yogi mentioned, our first quarter results are clear evidence that the improvements we made to our business last year are driving our growth today. We are very pleased with our start to 2026 and the momentum we continue to see in Q2. Turning to the first quarter. Revenue for the quarter was $39.4 million, flat versus the prior year quarter and up 1% on a same-store basis, excluding the impact of London.

Same-store revenue growth was driven by a higher case volume. This also reflects a 19% sequential improvement. Cost of services was $15.6 million, resulting in gross margin expansion of roughly 1% to 60% of revenue. Selling, General, Administrative expenses were approximately $22.6 million, an increase of approximately $800,000 compared to prior year.

This reflects a deliberate choice to increase investment in marketing and brand development, which contributed to our first quarter revenue growth and the first time in nine quarters. Cost discipline continues to be a priority. Equally important is being strategic about where we invest those savings to drive long-term shareholder value. Customer acquisition costs for the quarter was roughly $3,400 per case, compared to $3,130 in the prior year quarter.

Adjusted EBITDA was $3.3 million or roughly 8.4% of revenue, a decrease from 9.5% in the prior year. Turning to our balance sheet. As of 31st March , 2026, cash was $16.7 million. We paid down $11 million of debt in the quarter, resulting in gross debt outstanding of approximately $46 million at quarter end.

Under our credit agreement, we are in compliance with all covenants, and we are making progress to refinance our term loan. We look forward to sharing the details with you when we report our Q2 results. Cash flow from operations for the quarter was approximately $5 million, compared to approximately $1 million in 2025. Turning to our outlook. We are reaffirming our full year 2026 outlook and continue to expect revenue in the range of $151 million-$157 million and Adjusted EBITDA in the range of $15 million-$17 million. We continue to expect the business to build momentum as the year progresses, with the midpoint of our revenue range reflecting approximately 3% comparable growth excluding London from 2025.

As a reminder, our London center contributed 1% to comps in 2025. Our guidance does not contemplate any de novos in the period. As we enter Q2, a seasonally stronger quarter, we expect to deliver sequential improvement in both revenue and EBITDA in absolute $ versus Q1. The initiatives we have in place have strengthened the fundamentals of the business, providing us with solid platform to deliver long-term growth.

Looking ahead, we continue to monitor the broader macro environment, including factors such as consumer sentiment. We will remain agile in managing the business as conditions evolve. As I wrap up, we are pleased with our strong start to the year and the momentum in the business. We remain focused on disciplined execution. We are well-positioned to deliver on our full-year objectives. With that, I'll turn it back to Yogi for closing remarks.

Thank you, Michael. In conclusion, we are pleased with our start to 2026 and the acceleration in our business with our enhanced sales and marketing strategy and new procedures driving growth. We are delivering on what we set out to do and are intently focused on building upon our positive performance and achieving our goal to generate long-term sustainable, profitable growth and value creation for our shareholders. With that, I'd like to turn over the call to the operator to begin the Q&A portion of the call.

Thank you. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you each keep to one question and one follow-up and invite you to rejoin the queue for additional questions. Our first question comes from the line of Sam Eiber with BTIG. Please proceed with your question.

Hi. Good morning. Thanks for taking the questions here. Yogi, maybe I can start on the Q1 results. You know, clearly it looks like, you know, demand has stabilized. Revenue results are starting to trend back up in the right direction. I guess, you know, what's been working well so far in the quarter? You know, how much would you attribute it to the enhanced marketing strategy versus the new skin tightening services versus maybe just a better demand environment overall for body contouring procedures?

Sam, thank you so much for the question. We, we see that, first of all, obviously we are pleased with the results in Q1 and continue to build on that. We've seen that it was the actions we took and we are taking, which is driving the improvements, primarily around the enhanced marketing strategy. What that's doing, not just to leads and consults, but showing up in revenue as well. All of those actions and the underlying performance metrics that are going into it, are working. The building blocks are there to deliver growth. As far as the expanded procedures are concerned, we continue to be excited about the early progress from the pilot and the learnings we've gained to date around skin removals.

They're still in pilot phase and being rolled out across centers, so they've not been a meaningful incremental contributor yet to what we are doing. The consumer environment is still I would say challenging, especially for considered purchases. In summary, the improvement we are seeing we are able to tie back directly to the enhancements to sales and marketing and all of the foundational work we did in 2025. We have more upside, particularly as we go through the year, particularly as we see the new procedures expand and go from there.

Okay. That's really helpful. Thank you, Yogi. Maybe, just a quick follow-up on, you know, the balance sheet now, strengthened. You know, Do you look at maybe the opportunity to look at opening de novo centers again later this year? Is that still maybe a 2027 dynamic? I guess, how should we be thinking about, you know, reinvesting back into opening new centers again?

Hi, Sam Eiber. This is Michael Arthur. Yeah, I mean, as of right now, our plan doesn't contemplate any de novos in 2026. You know, we do continue to be excited about the long-term center opportunity, and we'll open de novos at the appropriate time. In the short term, as Yogesh Jashnani kind of mentioned, we're still, you know, really focused on improving our same-center sales growth. You know, it's our number one priority, Q1 is a big step in that, right, with the positive comp growth. Right now that's our short-term focus. Certainly de novos is an opportunity for us, but nothing contemplated in the year.

Okay. Really helpful. Thanks for taking the questions and nice start to the year here.

Thank you, Sam.

Thank you. Ladies and gentlemen, once again, if you'd like to ask a question, please press star one on your telephone keypad. We'll pause a moment to allow for other questions. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Jashnani for any final comments.

Thank you, Melissa, and thank you everyone again for joining us. We look forward to speaking with you when we report Q2 and meeting with some of you at upcoming investor conferences.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the AirSculpt Technologies, Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Allison Malkin of ICR. Allison, please go ahead.

Good morning, everyone. Thank you for joining us to discuss AirSculpt Technologies results for the fourth quarter and 2025 fiscal year. Joining me on the call today are Yogi Jashnani, Chief Executive Officer; and Michael Arthur, Chief Financial Officer. Before we begin, I would like to remind you that this conference call may include forward-looking statements. These statements may include our future expectations regarding financial results and guidance, market opportunities and our growth. Risks and uncertainties that may impact these statements and could cause actual future results to differ materially from currently projected results are described in this morning's press release and the reports we file with the SEC, all of which can be found on our website at investors.airsculpt.com. We undertake no obligation to revise or update any forward-looking statements or information, except as required by law. During our call today, we will also reference non-GAAP financial measures. We use non-GAAP measures in some of our financial discussions as we believe they more accurately represent the true operational performance and underlying results of our business. A reconciliation of these measures can be found in our earnings release as filed this morning and in our most recent 10-K, which will also be available on our website. With that, I'll turn the call over to Yogi.

Thank you, Allison and good morning, everyone. I will begin with a review of our fourth quarter and fiscal year performance, followed by our progress on our strategic priorities, which have returned the business to stabilization and beginning in February inflected to positive same-store sales growth. I'll then provide an overview of our strong liquidity position reinforced by the actions we have taken over the past few months. Michael will then review our fourth quarter and fiscal 2025 financial performance and provide the 2026 outlook. Michael will also discuss what led to the delay in our 10-K filing. In the fourth quarter, we delivered sequential improvement in same-store sales versus the first 9 months of the year and higher adjusted EBITDA compared to Q4 2024. We also saw improvements in our lead and consult volumes, which has continued into 2026 and is now converting into improved revenue trends. Stepping back, 2025 represented a year of rebuilding and transformation. We added talent, improved business processes, implemented a new go-to-market strategy and added new procedures that expanded our market potential. In addition, we strategically exited our only clinic outside of North America to streamline operations. Finally, we strengthened our balance sheet, issuing equity and utilizing our ATM to meaningfully reduce our net debt. The result of this work is already evident. Our core business has stabilized with same-store sales improving from down 22% at the start of 2025 to positive in Feb 2026. Our trends continued favorably in March, and we expect Q1 same-store sales to be flat, which would be the midpoint of the revenue range previously provided. As we prepare for our busiest quarter, we are seeing broad-based improvement in revenue across our centers. This improvement is tied directly to the actions we took starting in Q4. Our achievements reflect strong progress advancing our strategic priorities. As a reminder, these include: first, introducing new services to capture our GLP-1 market opportunity; second, enhancing our sales and marketing strategy; and third, maintaining strong financial discipline, both with margins and capital allocation. Let me share an update on each. First, introducing new services to capture our GLP-1 market opportunity. GLP-1 medications have fundamentally reshaped how consumers' approach weight loss and wellness. They have also created demand for aesthetic procedures such as skin tightening, contour restoration and overall reshaping after weight loss, all of which play into our existing brand and capabilities. Fat removal and skin tightening represent some of the largest opportunities in aesthetics today. According to the American Society of Plastic Surgeons, skin tightening and skin removal market is as large as fat removal when measured in terms of procedures done in 2024. This gives us a $100 million-plus sales opportunity long term. You might recall, we rolled out stand-alone skin tightening to all centers in the second half of last year and introduced a skin excision pilot, also known as skin removal in Q4. Skin removal procedures represent another proof point of our expanded revenue opportunity. And while early, we are pleased with the performance of these additions. Patients are seeing great results, which is giving us terrific exposure as a destination for these procedures. Skin removal provides us with more levers to grow center productivity and utilization. Just in Q4 2025, we have completed more than 100 skin removal surgeries, and we expect this to ramp in 2026 as we expand this capability across all locations. We have also deployed marketing efforts to raise awareness of our unique positioning to serve these patients. These new procedures strengthen our body contouring service and revenue streams using our existing base of centers and clinic talent. Second, enhancing our sales and marketing strategy. Starting Q4 2025, we implemented an enhanced marketing strategy that is beginning to show measurable results. This included expanding into new mediums such as connected TV, increasing influencer engagement, launching focused campaigns for skin tightening and skin removal, improving website functionality and conversion flows and optimizing spend towards higher-value audiences. These marketing enhancements directly contributed to the recent improvement in volume trends, and we expect the momentum to continue. We have also improved our patient financing options to further drive conversion while maintaining our policy of full upfront payment. Turning to our third area of focus, maintaining strong financial discipline, both in our margins and capital allocation. As mentioned in the past, debt reduction has been the focus of our capital allocation strategy. We repaid over $30 million of debt over the last 5 quarters, bringing our leverage below 2.5 as of the current date. Operationally, we simplified the business and reduced costs, generating over $4 million in annualized savings in 2025 while reinvesting selectively in growth initiatives and talent. Speaking to talent, in the first quarter, we added highly experienced executives across finance, legal and operations with significant expertise in managing multiunit operations. These additions, along with our existing sales and marketing organization, provide us with a strong leadership team and the right structure to execute and deliver on our growth goals. In summary, the work completed in 2025 meaningfully repositioned the company, setting the foundation to support long-term sustainable growth by building the engine, infusing talent and strengthening our processes. Our strategy is starting to pay off. In 2026, we are experiencing accelerating sales and demand trends. Our priority is to execute consistently, build on this momentum and drive disciplined growth in order to create value for our shareholders. And with that, I will now pass it over to Michael.

Thank you, Yogi, and good morning, everyone. I'm pleased to join you today on my first conference call as CFO of AirSculpt. This morning, I will share my background and then provide perspective regarding the delay in our 10-K filing. Following this, I will review our 2025 fourth quarter and fiscal year results and 2026 outlook. I come to AirSculpt with experience across public, consumer and lifestyle businesses, most recently serving as Chief Financial Officer of Inspirato, a luxury subscription travel company. During my 3 years there, I helped lead a comprehensive turnaround, strengthening operating disciplines, improving margins and restoring profitability, which ultimately culminated in a take-private transaction at a 50% premium to the prevailing trading price. I chose to join AirSculpt for 2 primary reasons; first and foremost, the underlying economics and long-term opportunity of the business is highly compelling. AirSculpt combines strong unit level performance, a differentiated offering and a brand with the right to win in a growing aesthetics market. With attractive clinic level contribution margins and a significant white space for expansion, both geographically and across adjacent procedures, the platform is well positioned for sustained scalable growth; second, I was drawn to the team and the culture. There's an alignment across the organization to improve operational discipline, ensure accountability and create long-term value. It is clear the leadership team understands the opportunities ahead and the work required to unlock them. That level of focus and commitment is energizing to step into as the CFO. We have the right strategic initiatives underway to advance our turnaround, and I'm excited to partner with Yogi and his team to accelerate those efforts. Before I discuss business performance, I want to address a few reporting items that came up at year-end. During the close process, we identified a reconciliation matter related to intercompany transactions, which led us to conduct a broader review of certain accounting treatments, including lease accounting under ASC 842. As a result of that review, we recorded immaterial changes to prior year balances in our 10-K filing. This had no impact to revenue, cash or our day-to-day operations, and we remain fully compliant with our bank covenants. The correction included the gross up of our ROU asset and lease liability by approximately $3.8 million and $3.5 million, respectively, for the prior year ending December 31, 2024. Additionally, there was corrections to prior year rent expense that decreased expense by $239,000 in 2023 and $233,000 in 2024. We recognize these issues should have been identified earlier and hold ourselves accountable. We are taking steps to strengthen our financial processes and controls going forward. Now let me turn to a review of our fourth quarter. Revenue for the quarter was $33.4 million, down approximately 15% versus the prior year quarter. Same-store revenue, which excludes centers opened for less than a year, declined 16%. The decline in revenue reflects lower case volume amidst a challenging consumer spending environment. The percentage of patients using financing to pay for procedures was approximately 50%. As a reminder we received full payment for all procedures upfront, and we have no recourse related to patients who financed their procedures with third-party vendors. Cost of services decreased $3.1 million to $13.7 million, a decline of 18% compared to prior year period, contributing gross margin expansion of roughly 2% to approximately 59%. The Selling, General and Administrative expenses were approximately $18.2 million, a decline of approximately $5 million in the quarter compared to the same period in fiscal 2024. SG&A decline was primarily a byproduct of the cost initiatives taken throughout 2025, as Yogi called out earlier. Our customer acquisition cost for the quarter was roughly $3,300 per case flat to prior year quarter. Adjusted EBITDA was $2.5 million or 7.4% of revenue, an increase of $0.6 million and 2.8% margin expansion versus prior year, driven by gross margin expansion and operational leverage in SG&A. For the full year, we reported revenue of $151.8 million, a decrease of approximately 15.8% than fiscal 2024. Adjusted EBITDA was approximately $15 million, resulting in an adjusted EBITDA margin of approximately 10%. This compares to adjusted EBITDA of approximately $21 million or an adjusted EBITDA margin of 12% in fiscal 2024. Turning to our balance sheet. As of December 31, 2025, cash was $8.4 million. We paid down $19 million of debt in 2025, $14 million on the term loan and $5 million on the revolving credit facility. Gross debt outstanding was $56 million at year end. Under our credit agreement, our leverage ratio was below 3x and we are in compliance with all covenants at year-end. Furthermore, as Yogi mentioned, we raised an additional $14.8 million from the at-the-market facility in Q1 and paid down an additional $11 million of debt principal in the period. We expect to refinance our term loan before it becomes current, targeting a net debt leverage ratio below 2.5x. The cash flow from operations for the year was $3.1 million compared to $11.4 million in fiscal 2024. Turning to our outlook. In 2026, we expect revenue in the range of $151 million to $157 million. We expect the business to build momentum as the year progresses, but the midpoint of our revenue range, reflecting approximately 3% comparable growth, excluding London from 2025. As a reminder, our London center contributed 1% to comps in 2025. We expect fiscal 2026 adjusted EBITDA in the range of $15 million to $17 million. This outlook incorporates the benefit of improved revenue growth and the annualization of our 25 cost actions. At the same time, we plan to reinvest a portion of these savings in the targeted growth initiatives to support top line expansion. As it relates to de novos, while we have plenty of runway ahead to open new centers, our guidance does not contemplate any openings this year as we continue to focus our efforts and resources on revenue growth in our existing base. As many of you are aware, helium plasma continue to perform skin tightening procedures. While we maintain a diversified network of suppliers, a meaningful portion of the global supply is currently offline due to the Iran conflict. We are monitoring the situation closely, and we will manage the business accordingly. Lastly, before I turn it back to Yogi, I want to reiterate how excited I am to be part of AirSculpt and the leadership team and to engage with our investors. There is significant opportunity ahead, and I look forward to helping unlock long-term value for all shareholders. And with that, back to Yogi for closing remarks.

Thank you, Michael. In conclusion, we begin 2026 with positive momentum and enhanced marketing strategy, strengthen liquidity and the opportunity for stronger future growth. With that, I'd like to turn the call over to the operator to begin the question-and-answer portion of the call.

[Operator Instructions] Our first question is coming from Josh Raskin from Nephron Research.

I've got 2 here. I guess just first on the numbers. The guidance for 1Q, the revenues indicate a slight decline on a year-over-year basis, whereas full year 2026 revenue is expected to be up slightly. So I heard the building momentum commentary, but what's causing a little bit of that change in seasonality to make the revenues a little more back-end loaded this year?

Josh, this is Yogi. Thank you for the question. Look, we are being measured in how we guide over here. The trends have improved meaningfully, as we mentioned, exiting the year and our trajectory has gone from down 2022, '24 to positive comps. That underpins our confidence in the full year outlook. But at the same time, we do recognize that we must deliver consistent results to make sure that we can hit our numbers, and we are focused on execution at the moment.

Okay. Perfect. And then maybe if we could just take a step back, bigger picture on the body sculpting trends outside of GLP-1-related procedures, is there any way for you to isolate just sort of market-like trends for the core business prior to the skin tightening and skin removal in some of the new products?

Josh, great question. We continue to see that the core business around body contouring and fat removal is holding relatively steady. I think all of aesthetics saw a bit of a boom coming out of COVID. And our belief is now we're also starting to find a baseline. Now with this industry, there is constant change, and we do see GLP-1s being the next wave of that change where we are well positioned to take advantage of that. And the demand that arises from skin laxity or loose skin does play really well into our brand and our capabilities. That's why you hear the focus on GLP-1s.

Thank you. Next question is from Sam Eiber from BTIG.

Maybe I can start on the excisional procedures. I think I caught in the prepared remarks about 100 procedures in Q4 as part of that pilot. I guess I would love to hear what you're hearing from customers and surgeons that were part of the pilot phase and then how that maybe is going to inform the go-to-market as this rolls out into more of a broader launch across all your centers?

Sam, nice to talk to you as well. So what we are seeing is that we are able to provide excellent results for our patients. Our patients are coming in. They are getting good results from the procedures. We are -- as you know, for our procedures, it takes a few months before you see the final results, but the early signs are very encouraging. From surgeons as well, this is something that they are -- many of them are comfortable with. All of them are highly effective at it. So thus far, we are pleased with both the volume and also the quality of results that we are getting with the excisional procedures. As the year goes along, we would ramp it up. As a reminder, typically, these -- as I said, it takes about 3 months minimum to see the full results for a patient. So we want to make sure we look through those, make any corrections that are needed. Thus far, we've not seen anything major and then expand it from there.

Okay. That's very helpful. And maybe I can just squeeze a follow-up here on a question on the balance sheet. I know you guys paid down some debt this quarter, leverage ratio is down to 2.5x. I guess how should we be thinking about capital allocation going forward, appetite for continued debt paydown versus the comfort right now at the 2.5x?

Sam, this is Michael Arthur. Thanks for the question. Yes, we -- our #1 priority still is to get the balance sheet in a healthy position. And we've done a lot of that work over the last year or so. As I mentioned, we are in early stages, but looking to refinance the debt, but targeting around the levels we're at now and somewhere below net debt of 2.5x. Beyond that, the capital allocation strategy hasn't changed much, which is really investing back into the business, both on sales and marketing and then ultimately, probably not in 2025, but new de novos as well as we look to expand our clinic portfolio.

We've reached end of our question-and-answer session. I'd like to turn the floor back over to Yogi for any further closing remarks.

Thank you, Kevin, and team, thank you for joining us this morning. I also want to thank the AirSculpt team and our network of surgeons that provide excellent care and results to our patients. Together, we are powering the next chapter in AirSculpt's growth. We look forward to sharing our progress when we report Q1 results.

Thank you. That does conclude today's teleconference webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.