- Alghazwi v. The Beauty Health Company, et al.
- Class Period:May 10, 2022 - November 13, 2023
- Date Filed:November 16, 2023
- Jurisdiction:U.S. District Court, Central District of California
- Docket Number: 2:23-cv-09733
- Lead Plaintiff Deadline: January 16, 2024
Seek Plaintiff 43
A class action lawsuit captioned Alghazwi v. The Beauty Health Company, et al., has been filed against The Beauty Health Company (“Beauty Health” or the “Company”) (NASDAQ: SKIN) and certain of the Company’s top executive officers alleging that they violated the federal securities laws. The lawsuit seeks to represent all persons and entities who purchased or otherwise acquired Beauty Health securities between May 10, 2022, and November 13, 2023, inclusive (the “Class Period”).
Beauty Health is a health and beauty company which provides “skin health experiences.” Its flagship brand is Hydrafacial™ through which the Company provides goods and services related to hydradermabrasion, a dermatological procedure involving a mechanical exfoliation and infusion of facial serums. Hydrafacial’s leading product is Syndeo, a data-connected hydradermabrasion machine, which launched in the United States in March 2022.
On August 9, 2023, before the market opened, Beauty Health announced that second quarter 2023 gross margin was “unfavorably impacted” by a mix shift “toward lower-margin refurbished devices . . . as U.S. providers awaited Syndeo enhancements in the third quarter 2023 to improve user experience.” The Company also announced the “involuntary separation without cause” of Chief Financial Officer (“CFO”) Liyuan Woo.
On this news, the Company’s shares fell $0.41, or 5.4%, to close at $7.12 per share on August 9, 2023, on unusually heavy trading volume. Then, on November 13, 2023, after the market closed, Beauty Health announced its financial results for the third quarter of 2023.
The Company disclosed that “[t]he quarter was overshadowed by lower-than-expected U.S. revenue and $63.1 million in restructuring charges related to device upgrades of early generation Syndeo devices.” As a result, “the Company is revising its fiscal year 2023 net sales guidance to a range of $385 to $400 million, its fiscal year adjusted EBITDA margin guidance to a range of 5% to 6% and is suspending its long-term 2025 financial outlook.” The Company further disclosed that Andrew Stanleick would depart the Company as President & Chief Executive Officer (“CEO”) and relinquish his Board seat, effective November 19, 2023.
On this news, the Company’s share price fell $2.51, or 64.36%, to close at $1.39 per share on November 14, 2023, on unusually heavy trading volume.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Syndeo 1.0 and 2.0 devices had issues leading to “frequent treatment interruptions;” (2) that, as a result, the Company incurred significant costs to develop enhancements; (3) that, despite the enhancements, providers continued to experience issues with the Syndeo devices; (4) that, as a result, the Company would no longer market Syndeo 1.0 and 2.0 devices and incur significant inventory writedowns; (5) that, as a result, the Company’s profitability would be adversely impacted; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
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If you purchased or otherwise acquired Beauty Health securities between May 10, 2022 and November 13, 2023, inclusive, and suffered substantial losses, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page.
You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at email@example.com.
The deadline to apply to the Court to serve as a lead plaintiff in the Beauty Health lawsuit is January 16, 2024.