What happened
Shares of The Beauty Health Company (SKIN 3.19%), which is known for its Hydrafacial treatments, soared on Tuesday after the company announced that it was using its strong balance sheet to reward shareholders. As of 12:45 p.m. ET, BeautyHealth stock was up 11%.
So what
According to today's official press release, BeautyHealth's management is using $200 million to repurchase shares. Of this $200 million plan, $100 million is designated for accelerated use. The plan is to repurchase roughly 7.7 million shares on Sept. 29, just two days from now.
Keep in mind that the market capitalization of BeautyHealth stock was about $1.6 billion at the close of the market yesterday. Today's share buyback plan, therefore, represents around 12% of total shares outstanding -- a substantial announcement.
Now what
This repurchase plan will be easy for BeautyHealth to accomplish, considering its stellar cash position. As of the end of the second quarter of 2022, the company had about $820 million in cash and equivalents compared with $732 million in convertible senior note debt.
More importantly, BeautyHealth is growing fast as its Hydrafacial treatments increase in popularity. Q2 revenue was up nearly 56% year over year. The company enjoys a razor-and-blades business model where it can sell consumable products once systems are installed. Through the first half of 2022, consumable revenue is up 36% year over year to $72.5 million, leading to greater predictability in revenue.
For those new to BeautyHealth stock, it certainly has some traits that make it worthy of deeper research to see if it could be a company worth owning for the long term.
