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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from __________ to __________.
Commission File Number: 001-39565 
The Beauty Health Company
(Exact name of registrant as specified in its charter)
Delaware85-1908962
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
2165 Spring Street
Long Beach, CA 90806
(800) 603-4996
(Address of principal executive offices, including zip code)Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per shareSKIN
The Nasdaq Capital Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 4, 2022, there were 143,201,041 shares of Class A Common Stock, par value $0.0001 per share issued and outstanding.



Table of Contents
THE BEAUTY HEALTH COMPANY
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2022
TABLE OF CONTENTS

Page
PART I—FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II—OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




















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PART I— FINANCIAL INFORMATION
Item 1. Financial Statements.
THE BEAUTY HEALTH COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except for share amounts)
(Unaudited)
September 30, 2022December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents$684,208$901,886
Accounts receivable, net of allowances for doubtful accounts of $2,894 and $2,681 at September 30, 2022 and December 31, 2021, respectively
83,98346,824
Prepaid expenses and other current assets21,83012,322
Income tax receivable 7054,599
Inventories 101,70635,261
Total current assets892,4321,000,892
Property and equipment, net18,09916,183
Right-of-use assets, net14,29214,992
Intangible assets, net 46,62556,010
Goodwill122,748123,694
Deferred income tax assets, net268330
Other assets 10,3316,705
TOTAL ASSETS$1,104,795$1,218,806
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$32,576$29,049
Accrued payroll-related expenses20,65028,662
Other accrued expenses17,11114,722
Lease liabilities, current4,9703,712
Income tax payable1,131292
Total current liabilities 76,43876,437
Lease liabilities, non-current11,38912,781
Deferred income tax liabilities, net 3,6783,561
Warrant liabilities 22,29593,816
Convertible senior notes, net733,086729,914
TOTAL LIABILITIES846,886916,509
Commitments (Note 13)
Stockholders’ equity:
Class A Common Stock, $0.0001 par value; 320,000,000 shares authorized; 143,201,041 and 150,598,047 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
15 16 
Preferred Stock, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding at September 30, 2022 and December 31, 2021
  
Additional paid-in capital 642,762 722,250 
Accumulated other comprehensive loss(6,725)(1,257)
Accumulated deficit(378,143)(418,712)
Total stockholders’ equity257,909 302,297 
 LIABILITIES AND STOCKHOLDERS’ EQUITY$1,104,795 $1,218,806 

The accompanying notes are an integral part of these unaudited financial statements.
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THE BEAUTY HEALTH COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, except for share and per share amounts)
(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net sales$88,792 $68,147 $267,743 $182,197 
Cost of sales27,217 22,072 82,577 57,131 
Gross profit61,575 46,075 185,166 125,066 
Operating expenses:
Selling and marketing39,767 30,451 121,055 74,530 
Research and development2,167 1,880 6,998 6,320 
General and administrative23,782 19,200 77,628 73,643 
Total operating expenses65,716 51,531 205,681 154,493 
Loss from operations
(4,141)(5,456)(20,515)(29,427)
Other (income) expense:
Interest expense, net3,380 530 9,997 8,289 
Other (income) expense, net (2,509)(24)(3,230)4,290 
Change in fair value of warrant liabilities(4,284)199,306 (71,521)271,333 
Change in fair value of earn-out shares liability 10,575  47,100 
Foreign currency transaction (gain) loss, net(38)431 1,800 663 
Total other (income) expense(3,451)210,818 (62,954)331,675 
Income (loss) before provision for income taxes
(690)(216,274)42,439 (361,102)
Income tax (benefit) expense(821)(1,129)1,870 (3,305)
Net income (loss)
$131 $(215,145)$40,569 $(357,797)
Comprehensive income (loss), net of tax:
Foreign currency translation adjustments(1,636)(1,537)(5,468)(1,818)
Comprehensive income (loss)
$(1,505)$(216,682)$35,101$(359,615)
Net income (loss) per share
Basic
$0.00$(1.63)$0.27$(4.10)
Diluted$(0.03)$(1.63)$(0.20)$(4.10)
Weighted average common shares outstanding
Basic
150,788,695 132,306,346 150,706,795 87,219,681 
Diluted151,417,710 132,306,346 152,018,246 87,219,681 

The accompanying notes are an integral part of these unaudited financial statements.
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THE BEAUTY HEALTH COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except for share amounts)
(Unaudited)

Legacy Common StockLegacy Preferred StockCommon StockAdditional Paid-in CapitalNote Receivable from StockholderAccumulated other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’Equity (Deficit)
SharesAmountSharesAmountSharesAmount
BALANCE, December 31, 202054,358 $ 931 $  $ $13,956 $(554)$242 $(43,604)$(29,960)
Retroactive application of recapitalization(54,358) (931) 35,501,743 4 (4)    
Adjusted balance, beginning of period    35,501,743 4 13,952 (554)242 (43,604)(29,960)
Stock-based compensation— — — — — — 34 — — — 34 
Net income (loss)— — — — — — — — — (3,274)(3,274)
Foreign currency translation adjustment— — — — — — — — (5)— (5)
BALANCE, March 31, 2021 $  $ 35,501,743 $4 $13,986 $(554)$237 $(46,878)$(33,205)
Reverse recapitalization transaction, net— — — — 89,827,310 9 183,301 554   183,864 
Issuance of Class A Common Stock in connection with business acquisition— — — — 110,726 — 1,557 — — — 1,557 
Stock-based compensation— — — — — — 3,508 — — — 3,508 
Net income (loss)— — — — — — — — — (139,378)(139,378)
Foreign currency translation adjustment— — — — — — — — (276)— (276)
BALANCE, June 30, 2021 $  $ 125,439,779 $13 $202,352 $ $(39)$(186,256)$16,070 
Issuance of Class A Common Stock in connection with business acquisitions— — — 479,373 — 7,784 — — — 7,784 
Issuance of Earn-out Shares— — — — 7,500,000 1 136,574 — — — 136,575 
Reverse recapitalization transaction, net— — — — 70,860 — (734)— — — (734)
Purchase of capped calls related to Convertible Senior Notes(90,150)(90,150)
Stock-based compensation— — — — — — 5,082 — — — 5,082 
Net income (loss)— — — — — — — — — (215,145)(215,145)
Foreign currency translation adjustment— — — — — — — — (1,537)— (1,537)
BALANCE, September 30, 2021 $  $ 133,490,012 $14 $260,908 $ $(1,576)$(401,401)$(142,055)



The accompanying notes are an integral part of these unaudited financial statements.
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THE BEAUTY HEALTH COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except for share amounts)
(Unaudited)

Common StockAdditional Paid-in CapitalAccumulated other Comprehensive Income (Loss)Accumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmount
BALANCE, December 31, 2021150,598,047 $16 $722,250 $(1,257)$(418,712)$302,297 
Issuance of common stock for vesting of restricted stock units5,184 — — — — — 
Stock-based compensation— — 7,049 — — 7,049 
Net income (loss)— — — — 32,507 32,507 
Foreign currency translation adjustment— — — (145)— (145)
BALANCE, March 31, 2022150,603,231 $16 $729,299 $(1,402)$(386,205)$341,708 
Issuance of Class A Common Stock in connection with asset acquisition28,733 — 500 — — 500 
Issuance of common stock pursuant to equity compensation plan252,536 — — — — — 
Stock-based compensation— — 6,378 — — 6,378 
Shares withheld for tax withholdings on vested stock awards(29,475)— (495)— — (495)
Net income (loss)— — — — 7,931 7,931 
Foreign currency translation adjustment— — — (3,687)— (3,687)
BALANCE, June 30, 2022150,855,025 $16 $735,682 $(5,089)$(378,274)$352,335 
Issuance of common stock pursuant to equity compensation plan64,775 — — — — — 
Shares withheld for tax withholdings on vested stock awards(26,451)— (370)— — (370)
Repurchase and retirement of common stock(7,692,308)(1)(79,999)(80,000)
Purchase of equity forward contract in connection with accelerated share repurchase— — (20,000)— — (20,000)
Stock-based compensation— — 7,449 — — 7,449 
Net income (loss)— — — — 131 131 
Foreign currency translation adjustment— — — (1,636)— (1,636)
BALANCE, September 30, 2022143,201,041 $15 642,762 $(6,725)$(378,143)$257,909 



The accompanying notes are an integral part of these unaudited financial statements.
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THE BEAUTY HEALTH COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended September 30,
20222021
Cash flows from operating activities:
Net income (loss)$40,569 $(357,797)
Adjustments to reconcile net income (loss) to net cash from operating activities
Depreciation of property and equipment5,269 2,446 
Amortization of capitalized software1,463 956 
Provision for doubtful accounts1,670 758 
Non-cash lease expense3,547  
Amortization of intangible assets9,600 8,384 
Amortization of other assets525 99 
Amortization of deferred financing costs 3,005 
Stock-based compensation20,876 8,624 
Loss on sale and disposal of long-lived assets4,697  
In-kind interest 4,130 
Deferred income tax benefit32 (5,330)
Change in fair value of earn-out shares liability 47,100 
Change in fair value adjustment of warrant liabilities(71,521)271,333 
Debt prepayment expense 2,014 
Amortization of debt issuance costs3,172  
Changes in operating assets and liabilities:
Accounts receivable(40,630)(17,290)
Prepaid expense and other current assets(11,157)(4,503)
Income taxes receivable4,434 (336)
Inventory(69,340)(2,499)
Other assets(5,408)(2,009)
Accounts payable7,059 (8,048)
Accrued payroll and other expenses(4,085)15,624 
Other long-term liabilities (100)
Lease liabilities(2,817) 
Income taxes payable838 1,799 
Net cash used in operating activities(101,207)(31,640)
Cash flows used in investing activities:
Capital expenditures for intangible assets(4,690)(2,229)
Capital expenditures for property and equipment(9,880)(4,857)
Cash paid for business acquisitions, net of cash acquired (22,896)
Cash paid for asset acquisition(1,475) 
Repayment of notes receivables from shareholders 781 
Net cash used in investing activities(16,045)(29,201)

The accompanying notes are an integral part of these unaudited financial statements.
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THE BEAUTY HEALTH COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
(Unaudited)
Nine Months Ended September 30,
20222021
Cash flows from financing activities:
Repurchase of Class A Common Shares(80,000) 
Payment for equity forward contract in connection with accelerated share repurchase(20,000) 
Payment of contingent consideration related to acquisitions(2,763)
Proceeds from issuance of convertible senior notes 750,000 
Purchase of capped calls related to convertible senior notes (90,150)
Proceeds from revolving facility 5,000 
Repayment of revolving facility (5,000)
Payment of debt issuance costs (21,341)
Repayment of term loan (225,486)
Proceeds from Business Combination, net of transaction costs (See Note 3) 357,802 
Net cash (used in) provided by financing activities(102,763)770,825 
Net (decrease) increase in cash and cash equivalents(220,015)709,984 
Effect of foreign currency translation on cash2,337 (848)
Cash and cash equivalents, beginning of period901,886 9,486 
Cash and cash equivalents, end of period$684,208 $718,622 
Supplemental disclosures of cash flow information and non-cash investing and financing activities:
Cash paid for interest$5,130 $10,249 
Common stock issued for asset acquisition500  
Cash (received) paid for income taxes(2,009)188 
Capital expenditures included in accounts payable1,755 512 
Common stock issued for business acquisitions 1,557 
Issuance of earn-out shares 136,575 
Trade receivables due from seller 6,623 
Notes payable to seller 2,153 
Change in deferred tax liability due to reverse recapitalization 90 


The accompanying notes are an integral part of these unaudited financial statements.
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THE BEAUTY HEALTH COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Description of Business

The Beauty Health Company, formerly known as Vesper Healthcare Acquisition Corp. (the “Company” or “BeautyHealth”), was incorporated in Delaware on July 8, 2020. The Company was originally formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

On May 4, 2021 (the “Closing Date”), the Company consummated the previously announced business combination pursuant to that certain Agreement and Plan of Merger, dated December 8, 2020 (the “Merger Agreement”), by and among Vesper Healthcare Acquisition Corp. (“Vesper”), Hydrate Merger Sub I, Inc. (“Merger Sub I”), Hydrate Merger Sub II, LLC (“Merger Sub II”), LCP Edge Intermediate, Inc., the indirect parent of Edge Systems LLC d/b/a The Hydrafacial Company (“Hydrafacial”), and LCP Edge Holdco, LLC (“LCP,” or “Former Parent,” and, in its capacity as the stockholders’ representative, the “Stockholders’ Representative”), which provided for: (a) the merger of Merger Sub I with and into Hydrafacial, with Hydrafacial continuing as the surviving corporation (the “First Merger”), and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, the merger of Hydrafacial with and into Merger Sub II, with Merger Sub II continuing as the surviving entity (the “Second Merger” and, together with the First Merger, the “Mergers” and, together with the other transactions contemplated by the Merger Agreement, the “Business Combination”). As a result of the First Merger, the Company owns 100% of the outstanding common stock of Hydrafacial and each share of common stock and preferred stock of Hydrafacial has been cancelled and converted into the right to receive a portion of the consideration payable in connection with the Mergers. As a result of the Second Merger, the Company owns 100% of the outstanding interests in Merger Sub II. In connection with the closing of the Business Combination (the “Closing”), the Company owns, directly or indirectly, 100% of the stock of Hydrafacial and its subsidiaries and the stockholders of Hydrafacial as of immediately prior to the effective time of the First Merger (the “Hydrafacial Stockholders”) hold a portion of the Company’s Class A Common Stock, par value $0.0001 per share (the “Class A Common Stock”).

In connection with the Closing, the Company changed its name from “Vesper Healthcare Acquisition Corp.” to “The Beauty Health Company.” Following the Closing, on May 6, 2021, the Company’s Class A Common Stock and publicly traded warrants were listed on the Nasdaq Capital Market (“Nasdaq”) under the symbols, “SKIN” and “SKINW”, respectively. The transactions set forth in the Merger Agreement constitute a “Business Combination” as contemplated by Vesper’s Second Amended and Restated Certificate of Incorporation.

Unless the context otherwise requires, in this Quarterly Report on Form 10-Q, the “Company” refers to Vesper Healthcare Acquisition Corp. prior to the closing of the Business Combination and to the combined company and its subsidiaries following the Closing and “Hydrafacial” refers to the business of LCP Edge Intermediate, Inc. and its subsidiaries prior to the Closing. References to “Vesper” refer to Vesper Healthcare Acquisition Corp. prior to the consummation of the Business Combination.

The Company is a category-creating beauty health company focused on bringing innovative products to market. The Company and its subsidiaries design, develop, manufacture, market, and sell a/esthetic technologies and products. The Company’s flagship brand, Hydrafacial, is a non-invasive and approachable beauty health platform and ecosystem. Hydrafacial uses a unique delivery system to cleanse, extract, and hydrate with their patented hydradermabrasion technology and serums that are made with nourishing ingredients.

The COVID-19 pandemic has had, and may continue to have adverse impacts on our business. As government authorities around the world continue to implement significant measures intended to control the spread of the virus and institute restrictions on commercial operations, while simultaneously implementing policies designed to reopen certain markets, we are working to ensure our compliance and maintain business continuity for essential operations. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous factors we cannot reliably predict, including the duration and scope of the pandemic; businesses and individuals’ actions in response to the pandemic; and the impact on economic activity including the possibility of recession or financial market instability.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting
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principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.

These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in, or presented as exhibits to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Note 2 – Summary of Significant Accounting Policies

Information regarding the Company’s significant accounting policies is contained in Note 2, “Summary of Significant Accounting Policies”, to the consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2022.

New Accounting Pronouncements Not Yet Adopted

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ASU 2021-08, Business Combinations (Topic 805), which primarily relates to the accounting for contract assets and contract liabilities from contracts with customers in a business combination. The standard will be effective for annual reporting periods beginning after December 31, 2022, including interim reporting periods within those periods, with early adoption permitted. We are currently evaluating the impact of adopting this new accounting guidance on our consolidated financial statements.


Note 3 – Business Combinations and Asset Acquisitions

Business Combination — Reverse Recapitalization

The closing of the Business Combination occurred on May 4, 2021. In connection with the Business Combination:

Certain accredited investors (the “PIPE Investors”) entered into subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors agreed to purchase 35,000,000 shares (the “PIPE Shares”) of the Company’s Class A Common Stock at a purchase price per share of $10.00 for an aggregate purchase price of $350.0 million (the “PIPE Investment”). The PIPE Investment was consummated substantially concurrently with the Closing of the Business Combination.

Prior to the Business Combination, the Company issued an aggregate of 11,500,000 shares of the Company’s Class B Common Stock (the “Founder Shares”) to the Sponsor for an aggregate purchase price of $25,000 in cash. All outstanding Founder Shares were automatically converted into shares of the Company’s Class A Common Stock on a one-for-one basis at the Closing and will continue to be subject to the transfer restrictions applicable to such shares of Founder Shares.

In connection with the Closing, holders of 2,672,690 shares of the Company’s Class A Common Stock exercised their rights for the Company to redeem their respective shares for cash at an approximate price of $10.00 per share, for an aggregate of approximately $26.7 million, which was paid to such holders at Closing.

Immediately after giving effect to the Merger and the PIPE Investment, there were 125,329,053 shares of the Company’s Class A Common Stock issued and outstanding.

The aggregate gross cash consideration received by the Company in connection with the Business Combination was $783 million, which consisted of proceeds of $350 million from the PIPE Investment, plus approximately $433 million of cash from the Company’s trust account that held the proceeds from the Company’s initial public offering (the “Trust Account”). The aggregate gross cash consideration received was reduced by $368 million, which consisted of cash payments made to the former shareholders of Hydrafacial, and further reduced by an additional $57 million for the payment of direct transaction costs incurred by Hydrafacial and the Company which were reflected as a reduction of proceeds. The Company used the net proceeds to repay all of its outstanding indebtedness at the Closing. The remainder of the consideration paid to the Hydrafacial Stockholders consisted of 35,501,743 newly issued shares of Class A Common Stock (the “Stock Consideration”). The net cash received from the Business Combination was
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subject to a working capital adjustment of $0.9 million. The Company also issued 70,860 shares related to the working capital adjustment.

The following table reconciles the elements of the Business Combination to the Company’s Consolidated Statements of Cash Flows and the Consolidated Statements of Stockholders’ Equity (Deficit) for the year ended December 31, 2021:
(in thousands)Recapitalization
Cash in trust, net of redemptions$433,382 
Cash — PIPE350,000 
Less: Cash paid out to Former Parent(367,870)
Less: Transaction costs and advisory fees(56,976)
Less: Cash paid out from net working capital adjustment related to acquisitions(902)
Net Cash Received from Business Combination$357,634 

The number of shares of Class A Common Stock issued following the consummation of the Business Combination:
Number of Shares
Class A common stock outstanding prior to Business Combination46,000,000 
Less: Redemption of Vesper Class A Common Stock(2,672,690)
Class A common stock of Vesper43,327,310 
Founder shares (Vesper Class B Common Stock)11,500,000 
PIPE Shares35,000,000 
Business Combination and PIPE shares89,827,310 
Legacy Hydrafacial shares (1)
35,501,743 
Working capital adjustment Class A Common Stock issued70,860 
Total Shares of Class A Common Stock after Business Combination125,399,913 
_______________
(1)    The number of Legacy Hydrafacial shares was determined from the 54,358 shares of Hydrafacial common stock outstanding immediately prior to the closing of the Business Combination multiplied by the Exchange Ratio of 653.109.

Distributor Acquisitions

On June 4, 2021, the Company acquired High Tech Laser, Australia Pty Ltd (“HTL”), a distributor of the Company’s products in Australia. On July 1, 2021, the Company acquired Wigmore Medical France (“Wigmore”), Ecomedic GmbH (“Ecomedic”) and Sistemas Dermatologicos Internacionales (“Sidermica”), distributors of the Company’s products in France, Germany and Mexico, respectively. Through these acquisitions, the Company plans to directly sell to the respective markets and improve services for its products. Cash paid for the four distributors totaled $23.7 million.

The Company applied the acquisition method of accounting and established a new basis of accounting on the dates of the respective acquisitions. The assets acquired by the Company are accordingly measured at their estimated fair values as of the acquisition date. The goodwill arising from the acquisitions consists largely of the business reputation of the acquired company in the marketplace and its assembled workforce. The goodwill is not deductible for income tax purposes.
The Company finalized the valuation of assets acquired and liabilities assumed for the distributor acquisitions as of June 30, 2022.