The following discussion and analysis of our financial condition and results of
operations should be read together with our financial statements and related
notes and other financial information appearing in our Prospectus dated
October 28, 2021 filed with the Securities and Exchange Commission ("SEC")
pursuant to Rule 424(b) of the Securities Act of 1933. This discussion and
analysis contains forward-looking statements that involve risk, uncertainties
and assumptions. See the section entitled "Cautionary Note Regarding
Forward-Looking Statements" in this Quarterly Report on Form 10-Q. Our actual
results could differ materially from those anticipated in the forward-looking
statements as a result of many factors, including those discussed in "Risk
Factors" and elsewhere in this Quarterly Report on Form 10-Q.
Unless otherwise indicated or the context otherwise requires, references in this
Quarterly Report on Form 10-Q to the "Company," "Elite Body Sculpture," "we,"
"us" and "our" refer to EBS Intermediate Parent LLC and its consolidated
subsidiaries and the Professional Associations.
Overview
Elite Body Sculpture is an experienced, fast-growing national provider of body
contouring procedures delivering a premium consumer experience. We provide
custom body contouring using our proprietary AirSculpt® procedure that removes
unwanted fat in a minimally invasive procedure, producing dramatic results. In
November 2021, we opened two new centers in Miami Beach, FL and Salt Lake City,
UT. We now deliver our AirSculpt® procedures through a growing nationwide
footprint of 18 centers across 14 states as of December 2, 2021.
For the three and nine months ended September 30, 2021, we performed 2,743 and
8,165 cases, respectively. For the three and nine months ended September 30,
2021, we generated approximately $34.7 million and $95.8 million of revenue,
respectively, compared to $17.8 million and $39.9 million for the three and
nine months ended September 30, 2020, respectively. This represents
approximately 94% growth for the three months ended September 30, 2021 over the
same period in prior year and approximately 140% growth for the nine months
ended September 30, 2021 over the same period in prior year.
Key Operational and Business Metrics
In addition to the measures presented in our condensed consolidated financial
statements, we use the following key operational and business metrics to
evaluate our business, measure our performance, develop financial forecasts and
make strategic decisions:
Three months ended September 30, 2021 and 2020
? Cases performed were 2,743 and 1,710 in 2021 and 2020, respectively;
? Revenue per case was $12,632 and $10,431 in 2021 and 2020, respectively;
? Same-center cases performed were 2,174 and 1,674 in 2021 and 2020,
respectively;
? Same-center revenue per case was $12,519 and $10,408 in 2021 and 2020,
respectively;
? Net income was $8.1 million and $2.9 million in 2021 and 2020, respectively;
? Adjusted EBITDA was $12.1 million and $5.3 million in 2021 and 2020,
respectively; and
? Adjusted EBITDA Margin was 35.0% and 29.9% in 2021 and 2020, respectively.
Nine months ended September 30, 2021 and 2020
? Cases performed were 8,165 and 3,879 in 2021 and 2020, respectively;
? Revenue per case was $11,728 and $10,292 in 2021 and 2020, respectively;
? Same-center cases performed were 6,733 and 3,843 in 2021 and 2020,
respectively;
? Same-center revenue per case was $11,591 and $10,281 in 2021 and 2020,
respectively;
? Net income was $24.7 million and $2.0 million in 2021 and 2020, respectively;
? Adjusted EBITDA was $35.9 million and $9.4 million in 2021 and 2020,
respectively; and
? Adjusted EBITDA Margin was 37.5% and 23.5% in 2021 and 2020, respectively.
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Cases Performed and Revenue per Case
Our case volumes in the table below, which are used for calculating revenue per
case, represent one patient visit; notwithstanding that, a patient may incur
multiple procedures during one visit. We believe this provides the best approach
for assessing our revenue performance and trends.
Total Case and Revenue Metrics
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Cases 2,743 1,710 8,165 3,879
Case growth 60.4 % N/A 110.5 % N/A
Revenue per case $ 12,632 $ 10,431 $ 11,728 $ 10,292
Revenue per case growth 21.1 % N/A 14.0 % N/A
Number of facilities 16 13 16 13
Number of total procedure rooms 27 21 27 21
Same-Center Information
For the three months ended September 30, 2021 and 2020, we define same-center
case and revenue growth as the growth in each of our cases and revenue at
facilities that have been owned and operated since July 1, 2020. We define
same-center facilities and procedure rooms as facilities and procedure rooms
that have been owned or operated since July 1, 2020.
For the nine months ended September 30, 2021 and 2020, we define same-center
case and revenue growth as the growth in each of our cases and revenue at
facilities that have been owned and operated since January 1, 2020. We define
same-center facilities and procedure rooms as facilities and procedure rooms
that have been owned or operated since January 1, 2020.
Same-Center Case and Revenue Metrics
Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Cases 2,174 1,674 6,733 3,843
Case growth 29.9 % N/A 75.2 % N/A
Revenue per case $ 12,519 $ 10,408 $ 11,591 $ 10,281
Revenue per case growth 20.3 % N/A 12.7 % N/A
Number of facilities 11 11 11 11
Number of total procedure rooms 18 18 18 18
Non-GAAP Financial Measures-Adjusted EBITDA and Adjusted EBITDA Margin
We report our financial results in accordance with GAAP, however, management
believes the evaluation of our ongoing operating results may be enhanced by a
presentation of Adjusted EBITDA and Adjusted EBITDA Margin, which are non-GAAP
financial measures.
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We define Adjusted EBITDA as net income excluding depreciation and amortization,
net interest expense, loss on debt modification, sponsor management fee,
pre-opening de novo and relocation costs, restructuring and related severance
costs, and unit-based compensation. We include Adjusted EBITDA because it is an
important measure on which our management assesses and believes investors should
assess our operating performance. We consider Adjusted EBITDA to be an important
measure because it helps illustrate underlying trends in our business and our
historical operating performance on a more consistent basis. Adjusted EBITDA has
limitations as an analytical tool including: (i) Adjusted EBITDA does not
include results from unit-based compensation and (ii) Adjusted EBITDA does not
reflect interest expense on our debt or the cash requirements necessary to
service interest or principal payments. Adjusted EBITDA increased 127% between
the three months ended September 30, 2021 and 2020 and 283% between the
nine months ended September 30, 2021 and 2020 due to organic growth, opening de
novo centers and the 2020 period being negatively impacted by the COVID-19
pandemic.
We define Adjusted EBITDA Margin as net income excluding depreciation and
amortization, net interest expense, loss on debt modification, sponsor
management fee, pre-opening de novo and relocation costs, restructuring and
related severance costs, and unit-based compensation calculated as a percentage
of revenue. We included Adjusted EBITDA Margin because it is an important
measure on which our management assesses and believes investors should assess
our operating performance. We consider Adjusted EBITDA Margin to be an important
measure because it helps illustrate underlying trends in our business and our
historical operating performance on a more consistent basis. Adjusted EBITDA
Margin increased to 35.0% for the three months ended September 30, 2021 compared
to 29.9% for the three months ended September 30, 2020 and to 37.5% for the
nine months ended September 30, 2021 compared to 23.5% for the nine months ended
September 30, 2020, due to organic growth.
The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to net
income (loss), the most directly comparable GAAP financial measure:
Three Months Ended Nine Months Ended
September 30, September 30,
($ in thousands) 2021 2020 2021 2020
Net income $ 8,054 $ 2,919 $ 24,702 $ 2,011
Plus
Depreciation and amortization 1,641 1,432 4,664 4,165
Interest expense, net 1,566 529 3,323 1,776
Loss on debt modification - - 682 -
Pre-opening de novo and relocation costs 307 247 1,289 687
Restructuring and related severance costs 45 - 314 115
Sponsor management fee 417 125 667 375
Unit-based compensation 86 81 258 244
Adjusted EBITDA $ 12,116 $ 5,333 $ 35,899 $ 9,373
Adjusted EBITDA Margin 35.0 % 29.9 % 37.5 % 23.5 %
Impact of COVID-19
The COVID-19 global pandemic has significantly affected our centers, employees,
customers, communities, business operations and financial performance, as well
as the U.S. economy and financial markets. The COVID-19 pandemic materially
impacted our financial performance for the year ended December 31, 2020. Through
the first nine months of 2021, we have not experienced a negative impact at our
centers; however, we continue to monitor the current COVID-19 situation in each
market we perform procedures and will react accordingly should events require us
to temporarily close.
Our operating structure also allows for some flexibility in the cost structure
according to the volume of cases performed, including much of our cost of
services. As a result of this flexibility and the return of volumes in the
second half of the year, we did not request or receive any proceeds from the
CARES Act and other governmental assistance programs. Other than the temporary
decrease in revenue and cost of service, we did not incur any significant costs
attributable to the pandemic.
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Results of Operations
Three Months Ended September 30, 2021 Compared to Three Months Ended
September 30, 2020
The following tables summarize certain results from the statements of income for
each of the periods indicated and the changes between periods. The tables also
show the percentage relationship to revenue for the periods indicated:
Three Months Ended
September 30,
2021 2020
% of % of
($ in thousands) Amount Revenue Amount Revenue
Revenue $ 34,651 100.0 % $ 17,837 100.0 %
Operating expenses:
Cost of service 11,410 32.9 % 6,758 37.9 %
Selling, general and administrative 11,980 34.6 % 6,199 34.8 %
Depreciation and amortization
1,641 4.7 % 1,432 8.0 %
Total operating expenses 25,031 72.2 % 14,389 80.7 %
Income from operations 9,620 27.8 % 3,448 19.3 %
Interest expense, net 1,566 4.5 % 529 3.0 %
Net income 8,054 23.2 % 2,919 16.4 %
Pro forma income tax expense 1,933 5.6 % 496 2.8 %
Pro forma net income $ 6,121 17.7 % $ 2,423 13.6 %
Overview-Our financial results for the three months ended September 30, 2021
compared to the three months ended September 30, 2020 reflect the addition of
three de novo centers which increased our procedure rooms by six.
Revenue-Our revenue increased $16.8 million, or 94.3%, compared to the same
period in 2020. The increase is the result of adding three de novo centers which
expanded our footprint from 13 centers to 16 centers and our number of procedure
rooms from 21 to 27 as of September 30, 2021.
Revenue also increased due to our same-center case volume, which increased to
2,174 cases from 1,674 cases for the three months ended September 30, 2021
compared to the same period in 2020. This increase was primarily due to
continued growth at our existing centers as we continue to increase our social
media and marketing capabilities to drive our brand awareness and increase
consumer acceptance for our procedures.
Cost of Service-Our cost of services increased $4.7 million, or 68.8%, compared
to the three months ended September 30, 2020. This increase is primarily
attributable to opening three de novo centers. The increase in our cost of
service also relates to the increase in our same center volumes and revenue.
Cost of service was 32.9% and 37.9% as a percentage of revenue for the three
months ended September 30, 2021 and 2020, respectively. This decrease is due to
leveraging certain fixed costs, such as rent at our facilities, as well as
improved efficiencies with our clinical staff.
Selling, General and Administrative Expenses-Selling, general and administrative
expenses increased $5.8 million, or 93.3%, for the three months ended September
30, 2021 compared to the same period in 2020. This increase is related to
additional expenses we incurred for marketing and corporate support as we grow
our center count through de novo expansion and providing support for our
centers. We expect these costs to continue to increase as we continue to open de
novo centers and expand the support we provide to our centers. Selling, general
and administrative expenses as a percent of revenue remained relatively
consistent at 34.6% and 34.8% for the three months ended September 30, 2021 and
2020, respectively.
Selling expenses consist of advertising spend for social, digital and
traditional marketing and sales and marketing personnel. Total selling expenses
were approximately $6.0 million and $2.6 million for the three months ended
September 30, 2021 and 2020, respectively. We intend to continue investing in
our sales and marketing capabilities and expect these costs to increase on an
absolute dollar basis. Additionally, selling expenses as a percentage of revenue
may fluctuate from quarter to quarter based on the timing and scope of our
investments.
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General and administrative expenses include employee-related expenses, including
salaries and related costs (excluding physician and clinical cost included in
cost of service), unit-based compensation, technology, operations, finance,
legal, corporate office rent and human resources. General and administrative
expense were approximately $6.0 million and $3.6 million for the three months
ended September 30, 2021 and 2020, respectively. We expect our general and
administrative expenses to increase over time in absolute dollars following the
closing of our IPO due to the additional legal, accounting, insurance, investor
relations and other costs that we will incur as a public company.
Depreciation and Amortization-Depreciation and amortization increased to
approximately $1.6 million for the three months ended September 30, 2021
compared to $1.4 million for the same period in 2020. This increase is the
result of opening three de novo centers during the 12 months ended September 30,
2021 and having a full three months of depreciation in 2021 for facilities
opened during the 2020 period.
Interest Expense, net-Interest expense increased to $1.6 million from $0.5
million for the three months ended September 30, 2021 and 2020, respectively.
The increase is the result of adding an incremental $52.0 million of senior
secured term loans in May 2021.
Pro Forma Income Tax Expense-As a result of the Reorganization, the Company
became subject to taxation as a C corporation for periods after October 28,
2021. Our pro forma effective tax rate is 24.0% and 17.0% for the three months
ended September 30, 2021 and 2020, respectively.
Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30,
2020
The following tables summarize certain results from the statements of income for
each of the periods indicated and the changes between periods. The tables also
show the percentage relationship to revenue for the periods indicated:
Nine Months Ended
September 30,
2021 2020
% of % of
($ in thousands) Amount Revenue Amount Revenue
Revenue $ 95,759 100.0 % $ 39,923 100.0 %
Operating expenses:
Cost of service 31,462 32.9 % 15,853 39.7 %
Selling, general and administrative 30,926 32.3 % 16,118 40.4 %
Loss on debt modification 682 0.7 % - - %
Depreciation and amortization 4,664 4.9 % 4,165 10.4 %
Total operating expenses 67,734 70.7 % 36,136 90.5 %
Income from operations 28,025 29.3 % 3,787 9.5 %
Interest expense, net 3,323 3.5 % 1,776 4.4 %
Net income 24,702 25.8 % 2,011 5.0 %
Pro forma income tax expense 5,908 6.2 % 496 1.2 %
Pro forma net income $ 18,794 19.6 % $ 1,515 3.8 %
Overview- Our financial results for the nine months ended September 30, 2021
compared to the nine months ended September 30, 2020 reflect the addition of
three de novo centers which increased our procedure rooms by six. Additionally,
our 2020 results were more negatively impacted by the COVID-19 pandemic.
Beginning in March 2020, as a result of federal, state, and local guidelines, we
cancelled or postponed most procedures scheduled at our facilities during the
second half of March 2020, much of the second quarter and a portion of the third
quarter of 2020. As a result, case volumes and revenue across most of our
centers were significantly impacted during the nine months ended September 30,
2020. For the nine months ended September 30, 2021, we have continued to
experience improved case volumes.
Revenue-Our revenue increased $55.8 million, or 139.9%, compared to the same
period in 2020. The increase is the result of adding three de novo centers which
expanded our footprint from 13 centers to 16 centers and our number of procedure
rooms from 21 to 27 as of September 30, 2021.
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Revenue also increased due to our same-center case volume, which increased to
6,733 cases from 3,843 cases for the nine months ended September 30, 2021
compared to the same period in 2020. This increase was primarily due to the
lessening effect of the COVID-19 pandemic which decreased case volume primarily
in the second and third quarters of 2020. Further, the increase is partially due
to our continued investment in social media and marketing capabilities to drive
our brand awareness and increase consumer acceptance for our procedures.
Cost of Service-Our cost of service increased $15.6 million, or 98.5%, compared
to the nine months ended September 30, 2020. This increase is primarily
attributable to opening three de novo centers. The increase in our cost of
service also relates to the increase in our same center volume and revenue which
was due to the lessening effect of the COVID-19 pandemic during the nine months
ended September 30, 2021 compared to the nine months ended September 30, 2020.
Cost of service was 32.9% and 39.7% as a percentage of revenue for the nine
months ended September 30, 2021 and 2020, respectively. This decrease is due to
leveraging certain fixed costs, such as rent at our facilities, as well as
improved efficiencies with our clinical staff.
Selling, General and Administrative Expenses-Selling, general and administrative
expenses increased $14.8 million, or 91.9%, for the nine months ended September
30, 2021 compared to the same period in 2020. This increase is related to
additional expenses we incurred for marketing and corporate support as we grow
our center count through de novo expansion and providing support for our
centers. We expect these costs to continue to increase as we continue to open de
novo centers and expand the support we provide to our centers. Selling, general
and administrative expenses as a percent of revenue were 32.3% and 40.4% for the
nine months ended September 30, 2021 and 2020, respectively. This decline was
due to leveraging some of our fixed general and administrative costs discussed
further below.
Selling expenses consist of advertising spend for social, digital and
traditional marketing and sales and marketing personnel. Total selling expenses
were approximately $13.5 million and $6.3 million for the nine months ended
September 30, 2021 and 2020, respectively. We intend to continue investing in
our sales and marketing capabilities and expect these costs to increase on an
absolute dollar basis. Additionally, selling expenses as a percentage of revenue
may fluctuate from quarter to quarter based on the timing and scope of our
investments.
General and administrative expenses include employee-related expenses, including
salaries and related costs (excluding physician and clinical cost included in
cost of service), unit-based compensation, technology, operations, finance,
legal, corporate office rent and human resources. General and administrative
expense were approximately $17.4 million and $9.8 million for the nine months
ended September 30, 2021 and 2020, respectively. We expect our general and
administrative expenses to increase over time in absolute dollars following the
closing of our IPO due to the additional legal, accounting, insurance, investor
relations and other costs that we will incur as a public company.
Depreciation and Amortization-Depreciation and amortization increased to
approximately $4.7 million for the nine months ended September 30, 2021 compared
to $4.2 million for the same period in 2020. This increase is the result of
opening three de novo centers during the 12 months ended September 30, 2021 and
having a full nine months of depreciation in 2021 for facilities opened during
the 2020 period.
Loss on debt modification-We recognized a $682,000 loss related to amending our
existing credit agreement in May 2021, adding an incremental $52.0 million of
senior secured term loans.
Interest Expense, net-Interest expense increased to $3.3 million from $1.8
million for the nine months ended September 30, 2021 and 2020, respectively. The
increase is the result of adding an incremental $52.0 million of senior secured
term loans in May 2021.
Pro Forma Income Tax Expense- As a result of the Reorganization, the Company
became subject to taxation as a C corporation for periods after October 28,
2021. Our pro forma effective tax rate is 23.9% and 24.7% for the nine months
ended September 30, 2021 and 2020, respectively.
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Liquidity and Capital Resources
We principally rely on cash flows from operations as our primary source of
liquidity and, if needed, up to $5.0 million in revolving loans under our
revolving credit facility. Our primary cash needs are for payroll, marketing and
advertisements, rent, capital expenditures associated with de novo locations, as
well as information technology and infrastructure, including our corporate
office. We believe that cash expected to be generated from operations and the
availability of borrowings under the revolving credit facility will be
sufficient for our working capital requirements, liquidity obligations,
anticipated capital expenditures relating to the opening of de novo centers,
adding new procedure rooms to our existing locations and payments due under our
existing credit facilities for at least the next 12 months.
As of September 30, 2021, we had $20.7 million in cash and cash equivalents and
an available amount of $5.0 million under our revolving credit facility. We do
not have any letters of credit outstanding as of September 30, 2021.
The following table summarizes the net cash provided by (used for) operating
activities, investing activities and financing activities for the periods
indicated:
Nine Months Ended
September 30,
($ in thousands) 2021 2020
Cash Flows Provided By (Used For):
Operating activities $ 32,339 $ 6,757
Investing activities (4,726) (2,543)
Financing activities (17,254) (2,428)
Net increase (decrease) in cash and cash equivalents 10,359 1,786
Operating Activities
The primary source of our operating cash flow is the collection of patient
payments received prior to performing surgical procedures. For the nine months
ended September 30, 2021, our operating cash flow increased by $25.6 million
compared to the same period in 2020. This increase is primarily driven by
improved income from operations related to opening three new centers in the
12 months ended September 30, 2021 and an increase in same center volumes and
revenue which were impacted by the COVID-19 pandemic in the second and third
quarters of 2020. At September 30, 2021, we had working capital of $8.5 million
compared to $2.1 million at December 31, 2020.
Investing Activities
Net cash used in investing activities for the nine months ended September 30,
2021 and 2020 was $4.7 million and $2.5 million, respectively. These
expenditures were used to open new de novo centers and invest in improvements to
our medical equipment and technology during the period.
The increase in investing activities during the nine months ended September 30,
2021 as compared to the nine months ended September 30, 2020 was partially
attributable to the impact of COVID-19 limiting our ability to fully execute our
de novo center growth strategy during 2020 and an increased investment in
improving our medical equipment and technology.
Financing Activities
Net cash used in financing activities during the nine months ended September 30,
2021 was $17.3 million. During the nine months ended September 30, 2021, we
received cash (net of fees) of $50.0 million from amending our existing credit
agreement, adding an incremental $52.0 million in senior secured term loans. We
used the proceeds from these borrowings plus approximately $10.0 million of cash
from our balance sheet to pay $59.7 million of distributions to our member. We
had further distributions to our member during the nine months ended
September 30, 2021 of $6.9 million and made scheduled principal payments on our
debt of $626,000.
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Net cash used in financing activities for the nine months ended September 30,
2020 was $2.4 million. For the nine months ended September 30, 2020, we made
distributions to our member of $4.6 million and paid scheduled principal
payments on our debt of $301,000. This was offset by borrowings on our revolver
of $2.5 million during the nine months ended September 30, 2020.
Long-term Debt
The carrying value of our total indebtedness was $83.0 million and $32.5
million, which includes unamortized deferred financing costs and issuance
discount of $1.5 million and $0.6 million, as of September 30, 2021 and December
31, 2020, respectively.
Term Loan and Revolving Credit Agreement
In October 2018, we entered into our credit agreement with First Eagle
Alternative Capital (formerly known as THL Corporate Finance). Under the terms
of the credit agreement, we obtained a $34.0 million term loan and a
$5.0 million revolving credit facility. Principal payments on the term loan
commenced in January 2019 and are paid quarterly in the amount of $100,000
through the maturity date on October 2, 2023 when all remaining unpaid principal
shall be due. The term loan is presented as long-term debt, net of debt issuance
costs.
In May 2021, we amended the credit agreement by adding an incremental
$52.0 million senior secured term loan to the existing term loan. The proceeds
from this incremental loan plus excess cash on our balance sheet were used to
pay a distribution to our member of approximately $59.7 million and the related
fees for this transaction. Beginning on June 30, 2021, our quarterly principal
payments increased from $100,000 to $212,500.
Under the credit agreement, we are obligated to make interest payments on the
last day of each month. All outstanding loans bear interest based on either a
base rate or LIBOR (in all cases, the LIBOR component has a floor of 1%) plus an
applicable per annum margin of 4.5% (base rate) or 5.5% (LIBOR) if our total
leverage ratio, as defined in the credit agreement, is equal to or greater than
2.5x and less than 4.25x. If our total leverage ratio is equal to or greater
than 4.25x, the interest is based on either a base rate or LIBOR plus an
applicable per annum margin of 5.0% (base rate) or 6.0% (LIBOR). If our total
leverage ratio is below 2.5x, the interest is based on either a base rate or
LIBOR plus an applicable per annum margin of 4.0% (base rate) or 5.0% (LIBOR).
At September 30, 2021, the applicable per annum margins under the credit
agreement were 4.0% (base rate) and 5.0% (LIBOR). Additionally, we are required
to pay an unused credit facility fee equal to 0.5% per annum on the unused
amount of the revolving line of credit.
If our total leverage ratio exceeds 4.25x for the preceding twelve-month period
the principal payment on the term loan is $250,000 per quarter or, beginning on
September 30, 2021, $531,250 per quarter. Also, additional principal prepayments
could be required if excess cash flow exists, as defined in the credit
agreement.
All borrowings under the credit facility are collateralized by substantially all
our assets. We are subject to certain restrictive financial covenants including
quarterly total leverage ratio and fixed charge ratio requirements and a limit
on capital expenditures. We are in compliance with all covenants and have no
letters of credit outstanding as of September 30, 2021 and December 31, 2020.
On October 25, 2021, we amended certain provisions in our credit agreement
related to the IPO transaction. The amendment revises certain definitions and
covenant requirements but does not change the timing or amount of principal
payments or interest due under the agreement. As of October 25, 2021, we were in
compliance with all revised covenant requirements. We did not make any payments
on our debt with the IPO proceeds received during the period.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as of September 30, 2021 and
December 31, 2020.
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JOBS Act Accounting Election
We are an "emerging growth company," as defined in the Jumpstart Our Business
Startups Act of 2012, or the JOBS Act. Under the JOBS Act, emerging growth
companies can delay adopting new or revised accounting standards issued
subsequent to the enactment of the JOBS Act until such time as those standards
apply to private companies. We have irrevocably elected not to avail ourselves
of this exemption from new or revised accounting standards and, therefore, will
be subject to the same new or revised accounting standards as other public
companies that are not emerging growth companies.
Subject to certain conditions set forth in the JOBS Act, if, as an "emerging
growth company," we choose to rely on such exemptions we may not be required to,
among other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the financial statements
(auditor discussion and analysis), and (iv) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our initial public offering or until we are no
longer an "emerging growth company," whichever is earlier.
Critical Accounting Policies and Estimates
A summary of significant accounting policies is disclosed in our Prospectus
dated October 28, 2021 filed with the Securities and Exchange Commission ("SEC")
pursuant to Rule 424(b) of the Securities Act of 1933 under the caption
"Critical Accounting Policies and Estimates" in the Management's Discussion and
Analysis of Financial Condition and Results of Operations section. There have
been no material changes in the nature of our critical accounting policies and
estimates or the application of those policies since October 28, 2021.
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