AirSculpt Technologies, Inc. (NASDAQ:AIRS) has entered into an amendment to its existing credit agreement, modifying certain financial covenants and adjusting interest rates, as disclosed in a recent 8-K filing with the Securities and Exchange Commission (SEC).
The amendment, effective as of today, adjusts the Consolidated Fixed Charge Coverage Ratio and Consolidated Leverage Ratio requirements for the upcoming fiscal quarters, providing the company with more flexible financial benchmarks.
Specifically, the coverage ratio requirement has been reduced for the quarters ending December 31, 2024, and March 31, 2025, from 1.25:1.00 to 1.10:1.00. The leverage ratio limits have been increased for the quarters ending September 30, 2024, through June 30, 2025, with varying thresholds set for each quarter.
Additionally, AirSculpt Technologies and its subsidiaries are now required to maintain a minimum liquidity of $6.75 million and $7.5 million at the end of the fiscal quarters ending September 30, 2024, and December 31, 2024, through June 30, 2025, respectively.
The company has also agreed to an increase in interest rates for SOFR Loans, ABR Loans, Swingline Loans, and Letters of Credit during the period from today until approximately June 30, 2025. The applicable margin for calculating these interest rates will increase based on the company's Consolidated Leverage Ratio, with higher margins applying to ratios above 1.00:1.00.
Moreover, AirSculpt Technologies has committed to providing Silicon Valley Bank with monthly "key performance indicator" reports, starting from the month ending July 31, 2024, and concluding with the month ending June 30, 2025. These reports will include details on month-end unrestricted cash and the number of cases per facility.
In other recent news, AirSculpt Technologies reported a decrease in second-quarter earnings due to challenging demand conditions. The company's revenue fell by 8.4% to $51 million, with same-store sales also experiencing a 17% drop.
The adjusted EBITDA saw a significant decline to $6.9 million, a $7.7 million decrease from the same period last year. In response to these challenges, AirSculpt has revised its full-year revenue guidance to between $180 million and $190 million, and adjusted EBITDA to between $23 million and $28 million. Alongside these financial adjustments, the company announced management changes, with Dennis Dean stepping in as Interim CEO and CFO.
As part of its strategy to navigate current economic conditions, AirSculpt plans to improve conversion rates through refocused marketing efforts and sales team realignment. Despite the challenges, the company maintains its long-term aspiration to return to a 30% EBITDA margin rate.
InvestingPro Insights
In light of AirSculpt Technologies, Inc.'s recent amendment to its credit agreement, investors may find the following InvestingPro Insights particularly relevant. The company's market capitalization stands at roughly $225.76 million, indicating its size within the market. Despite not having paid dividends, the company has shown a significant return over the last week, with a 1 Week Price Total Return of 8.89%. This could suggest investor optimism in the short term, perhaps in response to the amended credit terms.
InvestingPro Tips reveal that while analysts have revised their earnings expectations downwards for the upcoming period, they also predict that the company will be profitable this year. This dual perspective underscores the importance of monitoring AirSculpt Technologies' financial performance closely, especially as the company navigates through the amended covenants of its credit agreement.
For those looking for more in-depth analysis, there are additional InvestingPro Tips available, which could offer further guidance on the company's financial health and stock performance. Visit InvestingPro for a comprehensive list of tips and real-time data to inform your investment decisions.
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