AIRSCULPT TECHNOLOGIES, INC. 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 Annual Report on Form 10-K datedMarch 11, 2022 filed with theSecurities and Exchange Commission ("SEC") pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. 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 toAirSculpt Technologies, Inc. and its consolidated subsidiaries and the Professional Associations.
Overview
AirSculpt is an experienced, fast-growing national provider of body contouring procedures delivering a premium consumer experience under its brand,Elite Body Sculpture. At Elite Body Sculpture, we provide custom body contouring using our proprietary AirSculpt® method that removes unwanted fat in a minimally invasive procedure, producing dramatic results. We opened a new center inLas Vegas, NV inMarch 2022 , inBoston, MA inJuly 2022 , and inPhiladelphia, PA inNovember 2022 . We deliver our AirSculpt® procedures through a growing nationwide footprint of 21 centers across 17 states as ofNovember 14, 2022 . For the three and nine months endedSeptember 30, 2022 , we performed 2,879 and 9,726 cases, respectively. For the three and nine months endedSeptember 30, 2022 , we generated approximately$38.9 million and$128.1 million of revenue, respectively, compared to$34.7 million and$95.8 million for the three and nine months endedSeptember 30, 2021 , respectively. This represents approximately 12% growth for the three months endedSeptember 30, 2022 over the same period in prior year and approximately 34% growth for the nine months endedSeptember 30, 2022 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:
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 have
multiple areas treated during one visit. We believe this provides the best
approach for assessing our revenue performance and trends. Our cases per
procedure room is lower in the current period due to the recent addition of four
de novo centers and expansions of existing centers which increased our procedure
rooms by 16 over the prior year. We believe this decline to be temporary as the
new procedure rooms ramp up. The expansion of procedure rooms will provide an
ample platform for the Company's continued future growth.
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Total Case and Revenue Metrics
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Cases 2,879 2,743 9,726 8,165
Case growth 5.0 % N/A 19.1 % N/A
Revenue per case $ 13,509 $ 12,632 $ 13,170 $ 11,728
Revenue per case growth 6.9 % N/A 12.3 % N/A
Number of facilities 20 16 20 16
Number of total procedure rooms 43 27 43 27
Same-Center Information
For the three months ended September 30, 2022 and 2021, 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, 2021 . We define
same-center facilities and procedure rooms based on if a facility has been owned
or operated since July 1, 2021 .
For the nine months ended September 30, 2022 and 2021, 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, 2021 . We define
same-center facilities and procedure rooms as facilities and procedure rooms
that have been owned or operated since January 1, 2021 .
Same-Center Case and Revenue Metrics
Three Months Ended Nine Months Ended
September 30, September 30,
2022 2021 2022 2021
Cases 2,535 2,743 7,983 7,863
Case growth (7.6) % N/A 1.5 % N/A
Revenue per case $ 13,381 $ 12,632 $ 13,132 $ 11,697
Revenue per case growth 5.9 % N/A 12.3 % N/A
Number of facilities 16 16 14 14
Number of total procedure rooms 34 27 28 23
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.
We define Adjusted EBITDA as net income/(loss) excluding depreciation and
amortization, net interest expense, income tax expense/(benefit), sponsor
management fee, pre-opening de novo and relocation costs, restructuring and
related severance costs, IPO related costs, (gain)/loss on disposal of
long-lived assets, and equity-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 equity-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.
We define Adjusted EBITDA Margin as Adjusted EBITDA 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.
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The following table reconciles Adjusted EBITDA and Adjusted EBITDA Margin to net (loss)/income, the most directly comparable GAAP financial measure:
Three Months Ended Nine Months Ended
September 30, September 30,
($ in thousands) 2022 2021 2022 2021
Net (loss)/income $ (7,377) $ 8,054 $ (7,487) $ 24,702
Plus
Sponsor management fee - 417 - 667
Equity-based compensation 7,370 86 21,961 258
Loss on debt modification - - - 682
IPO related costs - - 731 -
Pre-opening de novo and relocation costs 1,089 307 3,185 1,289
Restructuring and related severance costs 108 45 838 314
Depreciation and amortization 1,994 1,641 5,842 4,664
(Gain)/loss on disposal of long-lived
assets (12) - 215 -
Interest expense, net 1,770 1,566 4,821 3,323
Income tax expense 4,232 - 4,083 -
Adjusted EBITDA $ 9,174 $ 12,116 $ 34,189 $ 35,899
Adjusted EBITDA Margin 23.6 % 35.0 % 26.7 % 37.5 %
Impact of COVID-19
Through the first nine months of 2022, we experienced only minor impact at our
centers, primarily due to staffing challenges brought on by COVID-19. We
continue to monitor the current COVID-19 situation in each market we perform
procedures and will react accordingly.
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Results of Operations
Three Months Ended
The following table and notes summarize certain results from the statements of
operations for each of the periods indicated and the changes between periods.
The table also show the percentage relationship to revenue for the periods
indicated:
Three Months Ended
September 30,
2022 2021
% of % of
($ in thousands) Amount Revenue Amount Revenue
Revenue $ 38,892 100.0 % $ 34,651 100.0 %
Operating expenses:
Cost of service (exclusive of
depreciation and amortization
shown below) 14,888 38.3 % 11,410 32.9 %
Selling, general and
administrative 23,397 60.2 % 11,980 34.6 %
Loss on debt modification - - % - - %
Depreciation and amortization 1,994 5.1 % 1,641 4.7 %
(Gain) on disposal of long-lived
assets (12) - % - - %
Total operating expenses 40,267 103.5 % 25,031 72.2 %
Income from operations (1,375) (3.5) % 9,620 27.8 %
Interest expense, net 1,770 4.6 % 1,566 4.5 %
Pre-tax net (loss)/income (3,145) (8.1) % 8,054 23.2 %
Income tax expense 4,232 10.9 % - - %
Net (loss)/income $ (7,377) (19.0) % $ 8,054 23.2 %
Overview-Our financial results for the three months ended September 30, 2022
compared to the three months ended September 30, 2021 reflect the addition of
four de novo centers and expansions of existing centers which increased our
procedure rooms by 16.
Revenue-Our revenue increased $4.2 million , or 12.2%, compared to the same
period in 2021. The increase is the result of adding four de novo centers which
expanded our footprint from 16 centers to 20 centers and our number of procedure
rooms from 27 to 43 as of September 30, 2022 . We have also experienced strong
revenue per case growth over the prior year of 6.9%. This increase is primarily
due to patients having more areas treated at one visit as compared to prior
periods and we attribute this to our brand awareness focus and more specifically
to AirSculpt TV, which allows prospective patients to see live procedures being
performed.
Same store revenue for the three months ended September 30, 2022 , declined by
2.1%. This was driven by a more pronounced seasonality during the quarter as
several doctors at some of our larger centers took extended vacations which
deferred cases into future periods.
Cost of Service-Our cost of services increased $3.5 million , or 30.5%, compared
to the three months ended September 30, 2021 . This increase is attributable to
opening four centers since the 2021 period. Cost of service was 38.3% and 32.9%
as a percentage of revenue for the three months ended September 30, 2022 and
2021, respectively. This increase is primarily due to adding four de novo
centers over the prior period. Cost of service as a percent of revenue is higher
for a de novo center in the first year until the center reaches maturity, which
can take up to two years. Cost of services was also impacted by clinical
additions to our nursing teams. These investments will further enhance quality
and safety for our patients and better prepare us for future growth in both
existing centers and the new centers we are developing.
Selling, General and Administrative Expenses-Selling, general and administrative
expenses increased $11.4 million , or 95.3%, for the three months ended
September 30, 2022 compared to the same period in 2021. This increase is
primarily related to the addition of public company costs of approximately $1.8
million and an increase in equity-based compensation of $7.2 million . This
increase is also 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
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costs to continue to increase as we open new de novo centers and expand the
support we provide to our centers. Selling, general and administrative expenses
as a percent of revenue was at 60.2% and 34.6% for the three months ended
Selling expenses consist of advertising costs for social, digital and traditional marketing and sales and marketing personnel. Total selling expenses were approximately$7.6 million and$6.0 million for the three months endedSeptember 30, 2022 and 2021, respectively. Our customer acquisition costs were approximately$2,650 and$2,200 per customer in the three months endedSeptember 30, 2022 and 2021, respectively. We intend to continue investing in our sales and marketing capabilities as we add new centers and further increase our brand awareness, which will also drive further same-center growth. As a result, we 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 initiatives and the related impact to our revenue. General and administrative expenses include employee-related expenses, including salaries and related costs (excluding physician and clinical cost included in cost of service), equity-based compensation, technology, operations, finance, legal, corporate office rent and human resources. General and administrative expense were approximately$15.8 million and$6.0 million for the three months endedSeptember 30, 2022 and 2021, respectively. As previously mentioned, equity-based compensation, increasing our corporate overhead, and public company costs were the three main drivers for this increase. We expect our general and administrative expenses to increase over time in absolute dollars due to the additional legal, accounting, insurance, investor relations and other costs that we incur as a public company. We also expect to expand our corporate team to support the opening of new centers and growth at existing facilities.
Depreciation and Amortization-Depreciation and amortization increased to
approximately
Loss on disposal of long-lived assets-We recognized a$12,000 gain related to the disposal of previous leasehold improvements as a result of relocation to expand certain centers.
Interest Expense, net-Interest expense increased to
Income Tax Expense-As a result of the Reorganization, the Company became subject to taxation as a C corporation for periods afterOctober 28, 2021 . Our effective tax rate is (134.6)% for the three months endedSeptember 30, 2022 . 20
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Nine Months Ended
The following table and notes summarize certain results from the statements of
operations for each of the periods indicated and the changes between periods.
The table also show the percentage relationship to revenue for the periods
indicated:
Nine Months Ended
September 30,
2022 2021
% of % of
($ in thousands) Amount Revenue Amount Revenue
Revenue $ 128,090 100.0 % $ 95,759 100.0 %
Operating expenses:
Cost of service 47,042 36.7 % 31,462 32.9 %
Selling, general and administrative 73,574 57.4 % 30,926 32.3 %
Loss on debt modification - - % 682 0.7 %
Depreciation and amortization 5,842 4.6 % 4,664 4.9 %
Loss on disposal of long-lived assets 215 0.2 % - - %
Total operating expenses 126,673 98.9 % 67,734 70.7 %
Income from operations 1,417 1.1 % 28,025 29.3 %
Interest expense, net 4,821 3.8 % 3,323 3.5 %
Pre-tax net (loss)/income (3,404) (2.7) % 24,702 25.8 %
Income tax expense 4,083 3.2 % - - %
Net (loss)/income $ (7,487) (5.8) % $ 24,702 25.8 %
Overview- Our financial results for the nine months ended September 30, 2022
compared to the nine months ended September 30, 2021 reflect the addition of
four de novo centers and expansions of existing centers which increased our
procedure rooms by 16.
Revenue-Our revenue increased $32.3 million , or 33.8%, compared to the same
period in 2021. The increase is the result of adding 4 de novo centers which
expanded our footprint from 16 centers to 20 centers and our number of procedure
rooms from 27 to 43 as of September 30, 2022 . We have also experienced strong
revenue per case growth over the prior year of 12.3%. This increase is primarily
due to patients having more areas treated at one visit as compared to prior
periods and we attribute this to our brand awareness focus and more specifically
to AirSculpt TV, which allows prospective patients to see live procedures being
performed.
Revenue also increased due to our same-center case volume, which increased to
7,983 cases from 7,863 cases for the nine months ended September 30, 2022
compared to the same period in 2021. This increase at our existing centers
relates to continued expansion of our social media and marketing capabilities to
drive further brand awareness and increase consumer acceptance for our
procedures.
Cost of Service-Our cost of service increased $15.6 million , or 49.5%, compared
to the nine months ended September 30, 2021 . This increase is primarily
attributable to opening four de novo centers since the 2021 period and an
increase in our same center volumes and revenue. Cost of service was 36.7% and
32.9% as a percentage of revenue for the nine months ended September 30, 2022
and 2021, respectively. This increase is primarily due to adding four de novo
centers over the prior period. Cost of service as a percent of revenue is higher
for a de novo center in the first year until the center reaches maturity, which
can take up to two years. Cost of services was also impacted by clinical
additions to our nursing teams. These investments will further enhance quality
and safety for our patients and better prepare us for future growth in both
existing centers and the new centers we are developing.
Selling, General and Administrative Expenses-Selling, general and administrative
expenses increased $42.6 million , or 137.9%, for the nine months ended
September 30, 2022 compared to the same period in 2021. This increase is
primarily related to the addition of public company costs of approximately $6.0
million and an increase in equity-based compensation of $21.7 million . This
increase is also 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.
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Selling, general and administrative expenses as a percent of revenue were 57.4%
and 32.3% for the nine months ended
Selling expenses consist of advertising spend for social, digital and traditional marketing and sales and marketing personnel. Total selling expenses were approximately$22.4 million and$13.5 million for the nine months endedSeptember 30, 2022 and 2021, respectively. Our customer acquisition costs were approximately$2,300 and$1,650 per customer in the nine months endedSeptember 30, 2022 and 2021, respectively. We intend to continue investing in our sales and marketing capabilities as we add new centers and further increase our brand awareness, which will also drive further same-center growth. As a result, we 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 initiatives and the related impact to our revenue. 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$51.2 million and$17.4 million for the nine months endedSeptember 30, 2022 and 2021, respectively. As previously mentioned, equity-based compensation and public company costs were the two main drivers for this increase. We expect our general and administrative expenses to increase over time in absolute dollars due to the additional legal, accounting, insurance, investor relations and other costs that we incur as a public company. We also expect to expand our corporate team to support the opening of new centers and growth at existing facilities. Loss on debt modification-We recognized a$682,000 loss related to amending our existing credit agreement inMay 2021 , adding an incremental$52.0 million of senior secured term loans.
Depreciation and Amortization-Depreciation and amortization increased to
approximately
Loss on disposal of long-lived assets-We recognized a$0.2 million loss related to the disposal of previous leasehold improvements as a result of relocation to expand certain centers. Interest Expense, net-Interest expense increased to$4.8 million from$3.3 million for the nine months endedSeptember 30, 2022 and 2021, respectively. The increase is the result of adding an incremental$52.0 million of senior secured term loans inMay 2021 .
Income Tax Expense- As a result of the Reorganization, the Company became
subject to taxation as a C corporation for periods after
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 and new procedure room additions, as well as information technology and infrastructure, including our corporate office. We believe that the 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 ofSeptember 30, 2022 , we had$7.6 million in cash and cash equivalents and an available amount of$5.0 million under our revolving credit facility. We do not have any letters of credit outstanding as ofSeptember 30, 2022 . 22
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The following table summarizes the net cash provided by (used for) operating
activities, investing activities and financing activities for the periods
indicated:
Nine Months Ended
September 30,
($ in thousands) 2022 2021
Cash Flows Provided By (Used For):
Operating activities $ 17,807 $ 32,339
Investing activities (10,726) (4,726)
Financing activities (24,828) (17,254)Net (decrease)/increase in cash and cash equivalents (17,747) 10,359
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 endedSeptember 30, 2022 , our operating cash flow decreased by$14.5 million compared to the same period in 2021. This decrease is primarily driven by$6.0 million of public company costs in the nine months endedSeptember 30, 2022 which did not exist in the prior year period. Further, we have increased spending on our clinical infrastructure and brand awareness to support future growth. AtSeptember 30, 2022 , we had working capital of$(3.8) million compared to$13.0 million atDecember 31, 2021 . As a result of the increasing risk of a recession as well as other macroeconomic and geopolitical headwinds, we may experience reduced cash flow from operations if we experience decreased revenues.
Investing Activities
Net cash used in investing activities for the nine months endedSeptember 30, 2022 and 2021 was$10.7 million and$4.7 million , respectively. The increase in investing activities during the nine months endedSeptember 30, 2022 as compared to the nine months endedSeptember 30, 2021 was attributable to capital expenditures for de novo center activities, construction related to adding procedure rooms to existing facilities, and investments in improving our medical equipment and technology. Financing Activities Net cash used in financing activities during the nine months endedSeptember 30, 2022 was$24.8 million . During the nine months endedSeptember 30, 2022 , we made distributions to our former member of$1.2 million , paid cash dividends to shareholders of$22.8 million , and made scheduled principal payments on our debt of$0.6 million . Net cash used in financing activities for the nine months endedSeptember 30, 2021 was$17.3 million . For the nine months endedSeptember 30, 2021 , we made distributions toEBS Parent, LLC of$66.6 million , had borrowings under our credit agreement of$50.0 million and paid scheduled principal payments on our debt of$0.6 million . Long-term Debt
The carrying value of our total indebtedness was
Term Loan and Revolving Credit Agreement
InOctober 2018 , we entered into our credit agreement withFirst 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 inJanuary 2019 and are paid quarterly in the amount of$100,000 through the maturity date onOctober 2, 2023 when all remaining unpaid principal shall be due. The term loan is presented as long-term debt, net of debt issuance costs. 23
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InMay 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 onJune 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). AtSeptember 30, 2022 , 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 onSeptember 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 ofSeptember 30, 2022 andDecember 31, 2021 . OnOctober 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. Additionally, onAugust 11, 2022 the Company amended the Credit Agreement to provide for the payment of cash dividends, including certain securities that are not vested at the time such cash dividend is paid. In doing so, we incurred an amendment fee of$0.2 million . As ofSeptember 30, 2022 , we were in compliance with all revised covenant requirements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as of
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.
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Critical Accounting Policies and Estimates
A summary of significant accounting policies is disclosed in our Annual Report on Form 10-K datedMarch 11, 2022 filed with theSecurities and Exchange Commission ("SEC") pursuant to Section 13 or 15d of the Securities Exchange Act of 1934 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 sinceMarch 11, 2022 .
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