10-Q

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PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and par value data)



	As of
	March 31, 2025			December 31, 2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	22,605		$	57,439
Restricted cash		1,198			1,198
Accounts receivable, net		44,654			46,264
Inventories, net		50,132			46,748
Prepaid expenses		3,763			3,849
Other current assets		7,087			6,007
Total current assets		129,439			161,505
Property and equipment, net		18,220			17,678
Operating lease right-of-use assets, net		13,337			13,898
Intangible assets, net		525,899			530,032
OTHER ASSETS:
Deferred tax asset		1,233			1,233
Other non-current assets		20,587			22,077
Total other assets		21,820			23,310
Total assets	$	708,715		$	746,423
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable	$	30,406		$	29,748
Accrued expenses		35,972			41,218
Current portion of operating leases		2,499			2,555
Current portion of long-term debt		5,000			5,000
Other current liabilities		791			884
Total current liabilities		74,668			79,405
Other long-term liabilities		7			7,333
Long-term operating leases		11,100			11,631
Long-term debt, net		92,376			93,557
Total liabilities		178,151			191,926
Commitments and contingencies (Note 12)
SHAREHOLDERS' EQUITY:
Common stock:
Voting common stock, $0.0001 par value; 225,000,000 shares authorized, 102,697,235 issued and outstanding at March 31, 2025 and 104,551,189 shares issued and outstanding at December 31, 2024		10			10
Additional paid-in capital		816,697			833,979
Accumulated deficit		(285,864	)		(279,889	)
Accumulated other comprehensive (loss) income		(279	)		397
Total shareholders' equity		530,564			554,497
Total liabilities and shareholders' equity	$	708,715		$	746,423

The accompanying notes are an integral part of the condensed consolidated financial statements.

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)


	Three Months Ended March 31,
	2025			2024
REVENUES:
Service revenues	$	178,519		$	172,209
Product revenues		41,111			39,017
Total revenues		219,630			211,226
COST OF REVENUES AND OPERATING EXPENSES:
Cost of services		148,154			144,025
Cost of products		35,297			33,530
Administrative		4,213			4,057
Salaries, benefits and payroll taxes		10,995			8,493
Amortization of intangible assets		4,134			4,144
Total cost of revenues and operating expenses		202,793			194,249
Income from operations		16,837			16,977
OTHER (EXPENSE) INCOME
Interest expense, net		(1,147	)		(2,955	)
Change in fair value of warrant liabilities		—			7,723
Total other (expense) income		(1,147	)		4,768
Income before income tax expense		15,690			21,745
INCOME TAX EXPENSE		419			579
NET INCOME	$	15,271		$	21,166
NET INCOME PER SHARE
Basic	$	0.15		$	0.21
Diluted	$	0.15		$	0.21
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic		104,602			101,467
Diluted		105,077			102,933

The accompanying notes are an integral part of the condensed consolidated financial statements.

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2025			2024
Net Income	$	15,271		$	21,166
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		111			(38	)
Cash flows hedges:
Net unrealized (loss) gain on derivative		(559	)		267
Amount realized and reclassified into earnings		(228	)		(947	)
Total other comprehensive loss, net of tax		(676	)		(718	)
Total comprehensive income	$	14,595		$	20,448

The accompanying notes are an integral part of the condensed consolidated financial statements.

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(in thousands)


				Three Months Ended March 31, 2025
	Issued Common Voting Shares			Voting Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Shareholders’ Equity
BALANCE, December 31, 2024		104,551		$	10	$	833,979		$	397		$	(279,889	)	$	554,497
Net income		—			—		—			—			15,271			15,271
Stock-based compensation		—			—		3,560			—			—			3,560
Foreign currency translation adjustment		—			—		—			111			—			111
Repurchase and retirement of common shares (1)		(2,094	)		—		(16,655	)		—			(21,246	)		(37,901	)
Unrecognized loss on derivatives		—			—		—			(787	)		—			(787	)
Dividends (1)		—			—		(4,187	)		—			—			(4,187	)
Common shares issued under equity incentive plan		240			—		—			—			—			—
BALANCE, March 31, 2025		102,697		$	10	$	816,697		$	(279	)	$	(285,864	)	$	530,564

				Three Months Ended March 31, 2024
	Issued Common Voting Shares			Voting Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Total Shareholders’ Equity
BALANCE, December 31, 2023		99,735		$	10	$	777,062		$	1,455		$	(344,458	)	$	434,069
Net income		—			—		—			—			21,166			21,166
Stock-based compensation		—			—		2,094			—			—			2,094
Foreign currency translation adjustment		—			—		—			(38	)		—			(38	)
Repurchase and retirement of common shares		(606	)		—		(4,704	)		—			(3,032	)		(7,736	)
Unrecognized loss on derivatives		—			—		—			(680	)		—			(680	)
Dividends cancelled on common stock		—			—		2,449			—			—			2,449
Exercise of Sponsor and Public Warrants		4,503			—		57,628			—			—			57,628
Cashless exercise of 2020 PIPE Warrants		484			—		6,584			—			—			6,584
Common shares issued under equity incentive plan		598			—		—			—			—			—
BALANCE, March 31, 2024		104,714		$	10	$	841,113		$	737		$	(326,324	)	$	515,536

(1) See Note 5 – "Equity" for further details.

The accompanying notes are an integral part of the condensed consolidated financial statements.

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2025			2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	15,271		$	21,166
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,179			6,209
Amortization of deferred financing costs		78			346
Change in fair value of warrant liabilities		—			(7,723	)
Stock-based compensation		3,560			2,094
Provision for doubtful accounts		5			4
Noncash lease (income) expense		(26	)		11
Changes in:
Accounts receivable, net		1,605			(2,737	)
Inventories, net		(3,384	)		2,793
Prepaid expenses		86			89
Other current assets		(1,253	)		9
Other noncurrent assets		—			(22,100	)
Accounts payable		658			7,039
Accrued expenses		(12,579	)		90
Other current liabilities		(93	)		331
Other long-term liabilities		—			7,333
Net cash provided by operating activities		10,107			14,954
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(1,697	)		(1,206	)
Net cash used in investing activities		(1,697	)		(1,206	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants		—			51,698
Repurchase of common shares		(37,901	)		(7,736	)
Repayment on first lien and term loan facilities		(1,250	)		(20,000	)
Payment of deferred financing costs		(9	)		—
Dividends		(4,187	)		—
Net cash (used in) provided by financing activities		(43,347	)		23,962
Effect of exchange rate changes on cash		103			(24	)
Net (decrease) increase in cash and cash equivalents and restricted cash		(34,834	)		37,686
Cash and cash equivalents and restricted cash, Beginning of period		58,637			28,902
Cash and cash equivalents and restricted cash, End of period	$	23,803		$	66,588

The accompanying notes are an integral part of the condensed consolidated financial statements.

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(CONTINUED)

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2025		2024
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$	845	$	21
Interest	$	1,559	$	3,727
Non-cash transactions:
Cashless exercise of 2020 PIPE Warrants	$	—	$	6,584
Accrued dividends cancelled on common stock	$	—	$	2,449

The accompanying notes are an integral part of the condensed consolidated financial statements.

ONESPAWORLD HOLDINGS LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

(Unaudited)

1. Description of Business

OneSpaWorld Holdings Limited (“OneSpaWorld,” the “Company,” “we,” “us,” or “our”) is an international business company incorporated under the laws of the Commonwealth of The Bahamas. OneSpaWorld is a global provider and innovator in the fields of health and wellness, fitness and beauty. In facilities on cruise ships and in land-based destination resorts, the Company strives to create a relaxing and therapeutic environment where guests can receive health and wellness, fitness and beauty services and experiences of the highest quality. The Company’s services include traditional and alternative massage, body and skin treatments, fitness, acupuncture, and medi-spa treatments. The Company also sells premium quality health and wellness, fitness and beauty products at its facilities and through its timetospa.com website. The predominant business, based on revenues, is sales of services and products on cruise ships and in land-based resorts, followed by sales of products through the timetospa.com website.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation, Principles of Consolidation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in quarterly financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been omitted or condensed pursuant to the SEC’s rules and regulations. However, management believes that the disclosures contained herein are adequate to make the information presented not misleading. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which are of a normal recurring nature) necessary to present fairly our unaudited financial position, results of operations and cash flows. The unaudited results of operations and cash flows of our interim periods are not necessarily indicative of the results of operations or cash flows that may be expected for the entire fiscal year. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”). The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions. Actual results could differ from those estimates. The accompanying unaudited condensed consolidated financial statements include the condensed consolidated balance sheet and statement of operations, comprehensive income, changes in equity, and cash flows of OneSpaWorld. All significant intercompany items and transactions have been eliminated in consolidation.

Restricted Cash

These balances include amounts held in escrow accounts, as a result of a legal proceeding related to a tax assessment. See Note 12-"Commitment and Contingencies" for further information. The following table reconciles cash, cash equivalents and restricted cash reported in our condensed consolidated balance sheet as of March 31, 2025 and 2024 to the total amount presented in our condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024 (in thousands):


	Balance as of March 31,
	2025		2024
Cash and cash equivalents	$	22,605	$	65,390
Restricted cash		1,198		1,198
Total cash and restricted cash in the condensed consolidated statement of cash flows	$	23,803	$	66,588

Inventories

Inventories, consisting principally of beauty, health and wellness products, are stated at the lower of cost, as determined on a first-in, first-out basis, or market. All inventory balances are comprised of finished goods used in beauty and health and wellness services or held for sale to customers. Inventory reserve is recorded to write down the cost of inventory to the estimated market value. No inventory impairment charge was recorded for the three months ended March 31, 2025 and 2024.

Other Assets-Deferred Costs

Costs incurred to enter into new or renew long-term contracts are capitalized and amortized to cost of revenues over the term of the contract. Deferred contract costs, which relate to fees accrued to cruise line partners, amounted to $20.1 million and $21.0 million as of March 31, 2025 and December 31, 2024, respectively, and is presented within other non-current assets in the accompanying condensed consolidated balance sheets. Amortization of the deferred contract cost was $0.9 million and $1.0 million for the three months ended March 31, 2025 and 2024, respectively. Amortization of deferred costs are included in cost of services in the accompanying condensed consolidated statements of operations.

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income adjusted for the change in fair value of warrant liabilities, if the impact is dilutive, by the weighted average number of diluted shares, as calculated under the treasury stock method, which includes the potential effect of dilutive common stock equivalents, such as options and warrants to purchase common shares, and contingently issuable shares. If the entity reports a net loss, rather than net income for the period, the computation of diluted loss per share excludes the effect of dilutive common stock equivalents, if their effect is anti-dilutive.

The following table provides details underlying OneSpaWorld’s income per basic and diluted share calculation (in thousands, except per share data):


	Three Months Ended March 31,
	2025		2024
Numerator:
Net income	$	15,271	$	21,166
Denominator:
Weighted average shares outstanding – Basic		104,602		101,467
Dilutive effect of warrants		—		864
Dilutive effect of stock-based awards		475		602
Weighted average shares outstanding – Diluted		105,077		102,933
Net income (loss) per voting and non-voting share:
Basic	$	0.15	$	0.21
Diluted	$	0.15	$	0.21

The table below presents the number of antidilutive potential common shares that are not considered in the calculation of diluted income per share (in thousands):


	Three Months Ended March 31,
	2025		2024
Performance stock units		181		292

Recent Accounting Pronouncements

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements that are of significance, or potential significance, to the Company. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement.

In December 2023, the FASB issued ASU No. 2023-09 ("ASU 2023-09"), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, the following for public business entities: (i) enhanced disclosures of specific categories of reconciling items included in the rate reconciliation, as well as additional information for any of these items meeting certain qualitative and quantitative thresholds; (ii) disclosure of the nature, effect and underlying causes of each individual reconciling item disclosed in the rate reconciliation and the judgment used in categorizing them if not otherwise evident; and (iii) enhanced disclosures for income taxes paid, which includes federal, state, and foreign taxes, as well as for individual jurisdictions over a certain quantitative threshold. The amendments in ASU 2023-09 eliminate the requirement to disclose the nature and estimate of the range of the reasonably possible change in unrecognized tax benefits for the 12 months after the balance sheet date. The provisions of ASU 2023-09 are effective for annual periods beginning after

December 15, 2024; early adoption is permitted. The Company is currently assessing the expected impact of the future adoption of this guidance.

In November 2024, the FASB issued ASU No. 2024-03 ("ASU 2024-03"), Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40) amending existing income statement disclosure guidance, primarily requiring more detailed disclosure for expenses. The provisions of ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The amendments can be applied on either a prospective or retroactive basis. The Company is currently assessing the expected impact of the future adoption of this guidance.

3. INTANGIBLE ASSETS

Intangible assets consist of finite and indefinite life assets. The following is a summary of the Company’s intangible assets as of March 31, 2025 (in thousands, except amortization period):


	Cost		Accumulated Amortization and Impairment			Net Balance		Weighted Average Amortization Period (in years)
Retail concession agreements	$	604,700	$	(93,566	)	$	511,134		39
Destination resort agreements		17,900		(8,635	)		9,265		15
Trade name		6,200		(700	)		5,500	Indefinite-life
Licensing agreement		1,000		(1,000	)		-		8
	$	629,800	$	(103,901	)	$	525,899

The following is a summary of the Company’s intangible assets as of December 31, 2024 (in thousands, except amortization period):


	Cost		Accumulated Amortization and Impairment			Net Balance		Weighted Average Amortization Period (in years)
Retail concession agreements	$	604,700	$	(89,691	)	$	515,009		39
Destination resort agreements		17,900		(8,377	)		9,523		15
Trade name		6,200		(700	)		5,500	Indefinite-life
Licensing agreement		1,000		(1,000	)		-		8
	$	629,800	$	(99,768	)	$	530,032

The Company amortizes intangible assets with definite lives on a straight-line basis over their estimated useful lives. Amortization expense for the three months ended March 31, 2025 and 2024 was $4.1 million for each period, respectively. Amortization expense is estimated to be $16.5 million in each of the next five years beginning in 2025.

4. LONG-TERM DEBT, NET

Long-term debt consisted of the following (in thousands, except interest rate):


	Interest Rate As of			As of
	March 31, 2025	December 31, 2024	Maturities Through	March 31, 2025			December 31, 2024
Term loan facility	6.2%	6.3%	2029	$	98,750		$	100,000
Less: unamortized debt issuance cost					(1,374	)		(1,443	)
Total debt, net of unamortized debt issuance cost					97,376			98,557
Less: current portion of long-term debt				$	(5,000	)	$	(5,000	)
Long-term debt, net				$	92,376		$	93,557

On September 20, 2024 (the “Closing Date”), the Company and its subsidiaries, Dory Acquisition Sub, Inc. (“Dory Acquisition”) and OneSpaWorld (Bahamas) Limited (“OneSpaWorld Bahamas” and together with Dory Acquisition, the “Borrowers”), entered into a credit agreement (the “New Credit Agreement”) with Bank of America, N.A., as administrative agent, and certain lenders party thereto, providing for senior secured credit facilities consisting of (x) a term loan facility of $100 million (of which $70 million was borrowed by Dory Acquisition and $30 million was borrowed by OneSpaWorld Bahamas) (the “Term Loan Facility”), which was fully drawn on the Closing Date, and (y) a revolving loan facility of up to $50 million (the “Revolving Facility” and, together with the Term Loan Facility, the “Credit Facilities”), which Revolving Facility remained undrawn upon the closing of the Credit Facilities and as of March 31, 2025 and December 31, 2024. The Revolving Facility includes borrowing capacity available for letters of credit up to $5 million. Any issuance of letters of credit reduces the amount available under the Revolving Facility. The Credit Facilities mature on September 20, 2029.

Loans outstanding under the Credit Facilities will accrue interest at a rate per annum equal to Term Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.90%, with three step ups to a maximum margin of 2.65% depending on the most recent consolidated leverage ratio of the Company and its restricted subsidiaries, and undrawn amounts under the Revolving Facility will accrue a commitment fee at a rate per annum of 0.25% on the average daily undrawn portion of the commitments thereunder, with three step ups to a maximum commitment fee of 0.40% depending on the most recent consolidated leverage ratio of the Company and its restricted subsidiaries.

The obligations under the Credit Facilities are guaranteed by the Company and each of its direct or indirect wholly-owned subsidiaries other than certain excluded subsidiaries (the “Subsidiary Guarantors”). The obligations of the Company, the Borrowers and the Subsidiary Guarantors under the Credit Facilities are secured by substantially all of their assets.

The Term Loan Facility requires the Borrowers to make certain mandatory prepayments, with (i) 100% of net cash proceeds of all non-ordinary course asset sales or other dispositions of property, subject to the ability to reinvest such proceeds and certain other exceptions, and (ii) 100% of the net cash proceeds of any debt incurrence, other than debt permitted under the definitive agreements (but excluding debt incurred to refinance the Credit Facilities). The Borrowers also are required to make quarterly amortization payments equal to 1.25% of the original principal amount of the Term Loan Facility commencing on March 31, 2025 (subject to reductions by optional and mandatory prepayments of the loans). The Borrowers may prepay the Credit Facilities at any time without premium or penalty, subject to payment of customary breakage costs.

The New Credit Agreement contains a financial covenant requiring the Company and its restricted subsidiaries to maintain a maximum consolidated total leverage ratio of 4.00 to 1.00, subject to certain exceptions, and a minimum fixed charge coverage ratio of 1.25 to 1.00. Additionally, the New Credit Agreement contains a number of customary negative covenants that restrict, among other things and in each case subject to specified exceptions, the Company's and its restricted subsidiaries' ability to: consummate consolidations, mergers and sales of assets; grant certain liens; incur additional debt; pay certain dividends; and engage in transactions with affiliates. As of March 31, 2025 and December 31, 2024, the Company was in compliance with all of the covenants contained in the New Credit Agreement.

The New Credit Agreement also contains certain customary representations and warranties, affirmative covenants and events of default. If an event of default occurs, the lenders under the Credit Facilities are entitled to take various actions, including the acceleration of amounts due under the Credit Facilities and all actions permitted to be taken by a secured creditor.

The following are scheduled principal repayments on long-term debt as of March 31, 2025 for each of the next five years (in thousands):


Year	Amount
Remainder of 2025		3,750
2026		5,000
2027		5,000
2028		5,000
2029		80,000
Total	$	98,750

Borrowing Capacity:

As of March 31, 2025, our available borrowing capacity under the Revolving Facility was $50 million. Utilization of the borrowing capacity was as follows (in thousands):


	Borrowing Capacity		Amount Borrowed
Revolving Facility	$	50,000	$	-

5. EQUITY

Dividends Declared Per Common Share

On February 12, 2025, our board of directors declared a quarterly dividend of $0.04 per share of common stock which we paid in cash on March 26, 2025 to shareholders of record at the close of business on March 12, 2025. See Note 13-"Subsequent Events" for additional dividends declared and further information.

Share Repurchase Program

On April 24, 2024, the Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $50 million of its common shares (the "2024 Share Repurchase Program”). Share repurchases made under the 2024 Share Repurchase Program were funded through the Company’s available cash.

Under the foregoing program, the Company purchased 2,094,498 common shares during the quarter ended March 31, 2025, at an aggregate cost of $37.9 million. Upon the consummation of the repurchases, such common shares reverted to authorized but unissued common shares of the Company. We allocated the excess of the repurchase price over the par value of the shares acquired between Additional paid-in capital and Accumulated deficit. On April 30, 2025, the Company announced in its earnings press release that its Board of Directors approved a new share repurchase program to repurchase up to $75.0 million of the Company’s common shares (the “2025 Share Repurchase Program”). As of the date of approval of the 2025 Share Repurchase Program, the Company had $900,000 remaining available under the 2024 Share Repurchase Program, which is now cancelled as a result of the new authorization. See Note 13-"Subsequent Events" for additional information about Board authorization for common share repurchases and further information.

6. STOCK-BASED COMPENSATION

The share-based compensation expense for the three months ended March 31, 2025 and 2024 was $3.6 million and $2.1 million, respectively, which is included as a component of salaries, benefits and payroll taxes in the accompanying condensed consolidated statements of operations.

During the three months ended March 31, 2025, the Company accelerated the vesting of certain restricted stock units ("RSUs") and performance stock units ("PSUs"), including those related to a previously announced executive departure in March 2025, making them fully vested, resulting in incremental share-based compensation expense of $1.4 million.

The following is a summary of RSUs activity for the three months ended March 31, 2025:


RSUs Activity	Number of Awards			Weighted-Average Grant Date Fair Value
Non-vested share units as of December 31, 2024		590,739		$	17.10
Vested		(55,423	)		15.34
Forfeited		(3,170	)		14.52
Non-vested share units as of March 31, 2025		532,146		$	17.30

The following is a summary of PSUs activity for the three months ended March 31, 2025:


PSUs activity	Number of Performance -Based Awards			Weighted-Average Grant Date Fair Value
Non-vested share units as of December 31, 2024		591,325		$	14.62
Granted (1)		36,142			12.08
Vested		(185,121	)		13.09
Forfeited		(3,170	)		14.52
Non-vested share units as of March 31, 2025		439,176		$	15.05

(1) The amount shown represents performance adjustments for performance-based awards. These were granted in prior fiscal years and vested during the three months ended March 31, 2025 based on the Company’s achievement of the performance conditions.

7. REVENUE RECOGNITION

The Company's revenue generating activities include the following:

Service Revenues

Service revenues consist primarily of sales of health, wellness and beauty services, including a full range of massage treatments, facial treatments, nutritional/weight management consultations, teeth whitening, mindfulness services and medi-spa services to cruise ship passengers and destination resort guests. Each service or consultation represents a separate performance obligation and revenues are generally recognized immediately upon the completion of our service. Given the short duration of our performance obligation, although some services are recognized over time, there is no material difference in the timing of recognition across reporting periods.

Product Revenues

Product revenues consist primarily of sales of health and wellness products, such as facial skincare, body care, hair care, orthotics and nutritional supplements to cruise ship passengers, destination resort guests and timetospa.com customers. Our Shop & Ship program provides guests the ability to buy retail products onboard and have products shipped directly to their home. Each product unit represents a separate performance obligation. Our performance obligations are satisfied, and revenue is recognized when the customer obtains control of the product, which occurs either at the point of sale for retail sales and at the time of shipping for Shop & Ship and timetospa.com product sales. The Company provides no warranty on products sold. Shipping and handling fees charged to customers are included in net sales.

Gift Cards

The Company only offers no-fee, non-expiring gift cards to its customers. At the time gift cards are sold, no revenue is recognized; rather, the Company records a contract liability to customers. The liability is relieved, and revenue is recognized equal to the amount redeemed at the time gift cards are redeemed for products or services. The Company records revenue from an estimate of unredeemed gift cards (breakage) in net sales on a pro-rata basis over the time period gift cards are redeemed. At least three years of historical data, updated annually, is used to determine actual redemption patterns. The liability for unredeemed gift cards is included in “Other current liabilities” on the Company's consolidated balance sheets and was not material as of March 31, 2025 and December 31, 2024.

Customer Loyalty Rewards Program

The Company initiated a customer loyalty program during October 2019 in which customers earn points based on their spending on timetospa.com. The Company recognizes the estimated net amount of the rewards that will be earned and redeemed as a reduction to net sales at the time of the initial transaction and as tender when the points are subsequently redeemed by a customer. The liability for customer loyalty programs was not material as of March 31, 2025 and December 31, 2024.

Contract Balances

Receivables from the Company’s contracts with customers are included within accounts receivables, net. Such amounts are typically remitted to us by our cruise line or destination resort partners, except for online sales, and are net of commissions they withhold. Although paid by our cruise line partners, customers are typically required to pay with major credit cards, reducing our credit risk to individual customers. Amounts are billed immediately, and our cruise line and destination resort partners typically remit payments to us within 30 days. As of March 31, 2025 and December 31, 2024, our receivables from contracts with customers were $44.7 million and $46.3 million, respectively. Our contract liabilities for gift cards and customer loyalty programs are described above.

Disaggregation of Revenue and Segment Reporting

The Company operates facilities on cruise ships and in destination resorts, where we provide health, fitness, beauty and wellness services and sell related products. The Company also sells health and wellness, fitness and beauty related products through its timetospa.com website, which is a post-cruise sales tool where guests may continue their wellness journey after disembarking. The Company’s Maritime and Destination Resorts operating segments are aggregated into a single reportable segment based upon similar economic characteristics, products, services, customers and delivery methods. Additionally, the Company’s operating segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief executive officer, who is the Company’s chief operating decision maker (CODM), in determining how to allocate the Company’s resources and evaluate performance. The following table disaggregates the Company’s revenues by revenue source and operating segment (in thousands):



	Three Months Ended March 31,
	2025		2024
Service revenues:
Maritime	$	169,511	$	161,713
Destination resorts		9,008		10,496
Total service revenues		178,519		172,209
Product revenues:
Maritime		39,940		37,730
Destination resorts		662		711
Timetospa.com		509		576
Total product revenues		41,111		39,017

Total revenues	$	219,630	$	211,226

8. SEGMENT AND GEOGRAPHICAL INFORMATION

The Company operates facilities on cruise ships and in destination resort spas, which provide health and wellness services and sell beauty products onboard cruise ships and in destination resorts. The Company’s Maritime and Destination Resorts operating segments are aggregated into a single reportable segment based upon similar business and economic characteristics, operations, services and product offerings, and customers. Additionally, the Company’s operating segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief executive officer, who is the Company’s CODM, in determining how to allocate the Company’s resources and evaluate performance.

The basis for determining the geographic information below is based on the countries in which the Company operates. The Company is not able to identify the country of origin for the customers to which revenues from cruise ship operations relate. Geographic information is as follows (in thousands):


	Three Months Ended March 31,
	2025		2024
Revenues:
U.S.	$	4,134	$	5,083
Other countries		6,211		6,876
Not connected to a country		209,285		199,267
Total	$	219,630	$	211,226


	As of
	March 31, 2025		December 31, 2024
Property and equipment, net:
U.S.	$	4,937	$	4,977
Other countries		1,691		1,633
Not connected to a country		11,592		11,068
Total	$	18,220	$	17,678

All expense categories on the Condensed Consolidated Statements of Operations are significant and there are no other significant segment expenses that would require disclosure. The Company’s CODM reviews financial information presented on a consolidated basis for the purpose of making operating decisions, allocating resources, assessing financial performance and making strategic decisions related to personnel and capital expenditures, among other specific purposes. The CODM regularly analyzes net income (loss), and the components thereof, as reported on the Company’s consolidated statements of operations, to assess operating trends and performance, including budget-to-actual variances; allocate resources; and make key strategic and operating decisions.

Since the Company operates as one reportable segment, all financial information required by “Segment Reporting” can be found in the accompanying condensed financial statements. The CODM does not review segment assets at a level other than that presented in the Company’s condensed consolidated balance sheets. There are no intra-entity sales or transfers and no significant expense categories regularly provided to the CODM beyond those disclosed in the Consolidated Statements of Operations. Information related to the Company’s services and products is disclosed in Note 7, “Revenue Recognition”.

9. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in accumulated other comprehensive income (loss) by component (in thousands):


	Accumulated Other Comprehensive Income (loss) for the Three Months Ended March 31, 2025									Accumulated Other Comprehensive Income for the Three Months Ended March 31, 2024
	Foreign Currency Translation Adjustments			Changes Related to Cash Flow Derivative Hedge (1)			Accumulated Other Comprehensive Income (loss)				Foreign Currency Translation Adjustments			Changes Related to Cash Flow Derivative Hedge (1)			Accumulated Other Comprehensive Income
Beginning of the period	$	(968	)	$	1,365		$	397			$	(917	)	$	2,372		$	1,455
Other comprehensive income (loss) before reclassifications		111			(559	)		(448	)			(38	)		267			229
Amounts reclassified into earnings		-			(228	)		(228	)			-			(947	)		(947	)
Net current period other comprehensive income (loss)		111			(787	)		(676	)			(38	)		(680	)		(718	)
Ending balance	$	(857	)	$	578		$	(279	)		$	(955	)	$	1,692		$	737

(1) See Note 10.

10. FAIR VALUE MEASUREMENTS AND DERIVATIVES

Fair Value Measurements

Cash and cash equivalents at March 31, 2025 and December 31, 2024 are comprised of cash and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions. Restricted cash at March 31, 2025 and December 31, 2024 is comprised of amounts held in escrow accounts, as a result of a legal proceeding related to a tax assessment and is categorized as a Level 1 instrument. The fair value of outstanding long-term debt as of December 31, 2024 is estimated using a discounted cash flow analysis based on current market interest rates for debt issuances with similar remaining years-to-maturity and adjusted for credit risk, which represents a Level 3 measurement in the fair value hierarchy. The carrying amounts and estimated fair values of the Company's cash, restricted cash and long-term debt were as follows (in thousands):


	March 31, 2025				December 31, 2024
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Cash	$	22,605	$	22,605	$	57,439	$	57,439
Restricted cash		1,198		1,198		1,198		1,198
Total cash	$	23,803	$	23,803	$	58,637	$	58,637
Term loan facility (a)	$	98,750	(b)		$	100,000	$	100,740

(a)

The debt amounts above do not include the impact of the interest rate swap or debt issuance costs.

(b)

The Company’s outstanding long-term debt as of March 31, 2025 was recently originated and bears variable interest rates that are tied to SOFR plus an applicable margin. As a result, the Company believes that the fair value of long-term debt as of March 31, 2025 approximates its carrying amount.

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company’s financial instruments recorded at fair value on a recurring basis (in thousands):


		Fair Value Measurements at March 31, 2025								Fair Value Measurements at December 31, 2024
Description	Balance Sheet Location	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Derivative financial instruments (1)	Other current assets	$	480	$	-	$	480	$	-	$	653	$	-	$	653	$	-
Derivative financial instruments (1)	Other non-current assets		104		-		104		-		711		-		711		-
Total assets		$	584	$	-	$	584	$	-	$	1,364	$	-	$	1,364	$	-
Liabilities:
Derivative financial instruments (1)	Other long-term liabilities		7		-		7		-		-		-		-		-
Total liabilities		$	7	$	-	$	7	$	-	$	-	$	-	$	-	$	-

(1)

Consists of an interest rate swap.

Derivatives

Market risk associated with the Company’s long-term floating rate debt is the potential increase in interest expense from an increase in interest rates. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. These instruments are recorded on the balance sheet at their fair value and are designated as hedges. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged.

The Company assesses whether derivatives used in hedging transactions are “highly effective” in offsetting changes in the cash flow of its hedged forecasted transactions. The Company uses regression analysis for this hedge relationship and high effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the fair values of the derivative and the hedged forecasted transaction. Cash flows from the derivatives are classified in the same category as the cash flows from the underlying hedged transaction. These agreements involve the receipt of variable-rate amounts in exchange for fixed-rate interest payments over the life of the respective agreement without an exchange of the underlying notional amount. The Company classifies derivative instrument cash flows from hedges of benchmark interest rate as operating activities due to the nature of the hedged item. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive income (loss) until the underlying hedged transactions are recognized in earnings. If it is determined that the hedged forecasted transaction is no longer probable of occurring, then the amount recognized in accumulated other comprehensive income (loss) is released to earnings.

The Company monitors concentrations of credit risk associated with financial and other institutions with which the Company conducts significant business. Credit risk, including, but not limited to, counterparty nonperformance under derivatives, is not considered significant, as the Company primarily conducts business with large, well-established financial institutions with which the Company has established relationships, and which have credit risks acceptable to the Company. The Company does not anticipate non-performance by its counterparty. The amount of the Company’s credit risk exposure is equal to the fair value of the derivative when any of the derivatives are in a net gain position.

In September 2024, the Borrowers entered into two floating-to-fixed interest rate swap agreements with a notional amount of $70 million and $30 million, respectively, with Bank of America, N.A. to make a series of payments based on a fixed interest rate of 3.341% and 3.564%, respectively, and receive a series of payments based on the 1 Month USD-SOFR CME term which is used to hedge the Company’s exposure to changes in cash flows associated with its variable rate Term Loan Facility and has designated this derivative as a cash flow hedge. The interest rate swap agreements expire on September 20, 2027 and December 20, 2026, respectively. As of March 31, 2025, the aggregate notional amount of the interest rate swap agreements was $98.7 million.

There was no ineffectiveness related to the interest rate swaps. The gain or loss on the derivative is recorded as a component of accumulated other comprehensive income (loss) and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. The Company expects to reclassify $0.5 million of income from accumulated other comprehensive (loss) income into interest expense within the next twelve months.

The fair value of the interest rate swap contract is measured on a recurring basis by netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on the expectation of future interest rates (forward curves) derived from observable market interest rate curves. The interest rate swap contract was categorized as Level 2 in the fair value hierarchy. The Company is not required to post cash collateral related to this derivative instrument.

The effect of the interest rate swap contract designated as cash flows hedging instrument on the condensed consolidated financial statements was as follows (in thousands):


	Three Months Ended March 31,
	2025			2024
(Losses) gain recognized in accumulated other comprehensive (loss) income	$	(559	)	$	267

Amounts reclassified from accumulated other comprehensive (loss) income to interest expense	$	(228	)	$	(947	)

11. INCOME TAXES

For the three months ended March 31, 2025 and 2024, the Company recorded an income tax expense of $0.4 million and $0.6 million, respectively. The difference between the expected provision for income taxes using the 21% U.S. federal income tax rate and the Company’s actual provision is primarily attributable to foreign rate differential, including income earned in jurisdictions not subject to income taxes, withholding taxes due in various jurisdictions and the change in valuation allowance.

12. COMMITMENTS AND CONTINGENCIES

We are routinely involved in legal proceedings, disputes, regulatory matters, and various claims and lawsuits that have been filed or are pending against us, including as noted below, arising in the ordinary course of our business. Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability is typically limited to our deductible amount. Nonetheless, the ultimate outcome of those claims and lawsuits that are not covered by insurance cannot be determined at this time. We have evaluated our overall exposure with respect to all of our legal proceedings, threatened and pending litigation and, to the extent required, we have accrued amounts for all estimable probable losses associated with our deemed exposure. We are currently unable to estimate any other potential contingent losses beyond those accrued, as discovery is not complete and adequate information is not available to estimate such range of loss or potential recovery. However, based on our current knowledge, we do not believe that the aggregate amount or range of reasonably possible losses with respect to these matters will be material to our consolidated results of operations, financial condition or cash flows. We intend to vigorously defend our legal position on all claims and, to the extent necessary, seek recovery.

In February 2020, the Company received a formal assessment of $1.9 million by a foreign tax authority over how the value added tax (“VAT”) law was applied on the change in the ultimate beneficial ownership of one of our subsidiaries as result of the business combination in March 2019. The Company is disputing the assessment and has recorded an accrual of $1.2 million for this matter during the year ended December 31, 2020 and is included in “Accrued expenses” on the Company's condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024. The Company believes the ultimate outcome of this matter will not have a material adverse impact on the consolidated financial statements.

13. SUBSEQUENT EVENTS

The Company announced on April 30, 2025 that the Board of Directors approved a quarterly dividend payment of $0.04 per common share payable on June 4, 2025 to shareholders of record as of the close of business on May 21, 2025.

On April 30, 2025, the Company also announced in its earnings press release that its Board of Directors approved a new share repurchase program to repurchase up to $75.0 million of the Company’s common shares (the “2025 Share Repurchase Program”). The share repurchases will be funded through the Company’s available cash. The Company may repurchase shares of its outstanding common stock from time to time on the open market, including through Rule 10b5-1plans, in privately negotiated transactions, through block purchases, or otherwise in

compliance with applicable laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of share repurchases will depend on a variety of factors, including business and market conditions. The 2025 Share Repurchase Program may be suspended, modified, or discontinued at any time and the Company has no obligation to repurchase any specific value or number of its common shares under the program. As of the date of authorization of the 2025 Share Repurchase Program, the Company had $900,000 remaining available under the 2024 Share Repurchase Program, which is now cancelled as a result of the new authorization.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

In addition to historical information, the following discussion contains forward-looking statements, such as statements regarding our expectation for future performance, liquidity and capital resources that involve risks, uncertainties and assumptions that could cause actual results to differ materially from those contained in or implied by any forward-looking statements. Factors that could cause such differences include those identified below and those described in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” and in “Risk Factors” in our Form 10-K for the fiscal year ended December 31, 2024. We assume no obligation to update any of these forward-looking statements.

OneSpaWorld Holdings Limited (“OneSpaWorld,” the “Company,” “we,” “our, “us” and other similar terms refer to OneSpaWorld Holdings Limited and its consolidated subsidiaries) is the pre-eminent global operator of health and wellness centers onboard cruise ships and a leading operator of health and wellness centers at destination resorts worldwide. Our highly trained and experienced staff offer guests a comprehensive suite of premium health, fitness, beauty and wellness services and products onboard cruise ships and at destination resorts globally. We are the market leader at more than 18x the size of our closest maritime competitor. Over the last 50 years, we have built our leading market position on our depth of staff expertise, broad and innovative service and product offerings, expansive global staff recruitment, training and logistics platform, global operations infrastructure, as well as decades-long relationships with cruise line and destination resort partners. Throughout our history, our mission has been simple: helping guests look and feel their best during and after their stay.

At our core, we are a global services company. We serve a critical role for our cruise line and destination resort partners, operating a complex and increasingly important aspect of their overall guest experience. Decades of investment and know-how have allowed us to construct an unmatched global infrastructure to manage the complexity of our operations. We have consistently expanded our onboard offerings with innovative and leading-edge service and product introductions, and developed the powerful recruiting, training and logistics platforms to manage our operational complexity, maintain our industry-leading quality standards, and maximize revenue and profitability per health and wellness center. The combination of our renowned recruiting and training platform, deep proprietary labor pool, global logistics and supply chain infrastructure, and proven health and wellness center and revenue management capabilities represents a significant competitive advantage that we believe is not economically feasible to replicate.

A significant portion of our revenues are generated from our cruise ship operations. Historically, we have been able to renew substantially all of our cruise line agreements.

Key Performance Indicators

In assessing the performance of our business, we consider key performance indicators used by management, including, among others:

•

Average Ship Count. The number of ships, on average during the period, on which we operate health and wellness centers. This is a key metric that impacts revenue and profitability and reflects the fact that during the period ships were in and out of service, and is calculated by adding the total number of days that each of the ships generated revenue during the period, divided by the number of calendar days during the period.

•

Period End Ship Count: The number of ships at period end on which we operate health and wellness centers. This is a key metric that impacts revenue and profitability.

•

Average Weekly Revenue Per Ship. A key indicator of productivity per ship. Revenue per ship can be affected by the various sizes of health and wellness centers and categories of ships on which we serve.

•

Average Revenue Per Shipboard Staff Per Day. We utilize this performance metric to assist in determining the productivity of our onboard staff, which we believe is a critical element of our operations.

•

Revenue Days. Revenue days are the days on which the health and wellness centers are open onboard a revenue generating cruise with passengers.

•

Average Resort Count. The number of destination resorts on average during the period in which we operate the health and wellness centers. This is a key metric that impacts revenue and profitability and reflects the fact that during the period destination resort health and wellness centers were in and out of service, and is calculated by adding the total number of days that each destination resort health and wellness center generated revenue during the period, divided by the number of calendar days during the period.

•

Period End Resort Count. The number of destination resorts at period end on which we operate the health and wellness centers. This is a key metric that impacts revenue and profitability.

•

Average Weekly Revenue Per Destination Resort. A key indicator of productivity per destination resort health and wellness center. Revenue per destination resort health and wellness center in a period can be affected by the geographic mix of health and wellness centers in operation for such period. Typically, our U.S. and Caribbean health and wellness centers are larger and produce substantially more revenues per location than our Asian centers. Additionally, average weekly revenue can also be negatively impacted by renovations of our destination resort health and wellness centers.


	Three Months Ended March 31
	2025		2024
Average Ship Count		193		188
Period End Ship Count		199		193
Average Weekly Revenue Per Ship	$	84,177	$	81,708
Average Revenue Per Shipboard Staff Per Day	$	562	$	549
Revenue Days		17,401		17,076
Average Resort Count		49		51
Period End Resort Count		50		51
Average Weekly Revenue Per Resort	$	15,247	$	16,791

Key Financial Definitions

Revenues. Revenues consist primarily of sales of services and sales of products to cruise ship passengers and destination resort guests. The following is a brief description of the components of our revenues:

•

Service revenues. Service revenues consist primarily of sales of health and wellness services, including a full range of massage treatments, facial treatments, nutritional/weight management consultations, teeth whitening, mindfulness and medi-spa services to cruise ship passengers and destination resort guests. We bill our services at rates which inherently include an immaterial charge for products used in the rendering of such services, if applicable.

•

Product revenues. Product revenues consist primarily of sales of health and wellness products, such as facial skincare, body care, orthotics, and detox supplements to cruise ship passengers, destination resort guests and timetospa.com customers.

Cost of services. Cost of services consists primarily of an allocable portion of payments to cruise lines (which are derived as a percentage of service revenues or a minimum annual rent or a combination of both), an allocable portion of wages paid to shipboard employees, an allocable portion of staff-related shipboard expenses, costs related to recruitment and training of shipboard employees, wages paid directly to destination resort employees, payments to destination resort venue owners, the allocable cost of products consumed in the rendering of a service, and health and wellness center depreciation. Cost of services has historically been highly variable; increases and decreases in cost of services are primarily attributable to a corresponding increase or decrease in service revenues. Cost of services has improved as a percentage of revenue due to higher revenues and cost efficiencies.

Cost of products. Cost of products consists primarily of the cost of products sold through our various methods of distribution, an allocable portion of wages paid to shipboard employees and an allocable portion of payments to cruise lines and destination resort partners (which are derived as a percentage of product revenues or a minimum annual rent or a combination of both). Cost of products has historically been highly variable; increases and decreases in cost of products are primarily attributable to corresponding increases or decreases in product revenues and includes impairment of the carrying value of inventories. Cost of products has improved as a percentage of revenue due to higher revenues and cost efficiencies.

Administrative. Administrative expenses are comprised of expenses associated with corporate and administrative functions that support our business, including fees for professional services, insurance, headquarters rent and other general corporate expenses.

Salaries, benefits and payroll taxes. Salaries, benefits and payroll taxes are comprised of employee expenses associated with corporate and administrative functions that support our business, including fees for employee salaries, bonuses, stock-based compensation, payroll taxes, pension/401(k) and other employee costs.

Amortization of intangible assets. Amortization of intangible assets are comprised of the amortization of intangible assets with definite useful lives (e.g. retail concession agreements, destination resort agreements, licensing agreements) and amortization expenses associated with the business combination in March 2019.

Other (expense) income. Other (expense) income consists of interest income, interest expense and changes in the fair value of warrant liabilities.

Income tax expense. Income tax expense includes current and deferred federal income tax expenses, as well as state and local income taxes.

Net income. Net income consists of income from operations less other (expense) income and income tax expense.

Revenue Drivers and Business Trends

Our revenues and financial performance are impacted by a multitude of factors, including, but not limited to:

•

The number of health and wellness centers we operate on cruise ships and in destination resorts. The number of cruise ships on which we operate during each period is primarily impacted by our renewal of existing cruise ship partner agreements, introductions of new ships to service under our existing agreements, agreements with new cruise line partners, ships temporarily out of service for maintenance and repair, and ships prevented from sailing due to outbreaks of illnesses, among other factors. The number of destination resorts in which we operate during each period is primarily attributable to renewal of existing agreements with destination resort partners and destination resorts prevented from operating due to outbreaks of illnesses, among other factors.

•

The size and offerings of new health and wellness centers. We have focused on innovating and implementing higher value added and price point services such as medi-spa and advanced facial techniques, which require treatment rooms equipped with specific equipment and staff trained to perform these services. As our cruise line partners continue to invest in new ships with enhanced health and wellness centers that allow for more advanced treatment rooms and larger staff sizes, we are able to increase the availability of these services, driving an overall shift towards a more profitable service mix.

•

Expansion of value-added services and products and increased pricing across modalities in existing health and wellness centers. We continue to introduce and expand our higher value added and price point offerings in existing health and wellness centers, including introducing premium medi-spa, acupuncture, and advanced facial services, resulting in higher guest demand and spending. In addition, we have increased pricing across our brands for our core services.

•

The mix of ship count across contemporary, premium, luxury and budget categories. Revenue generated per shipboard health and wellness center differs across contemporary, premium, luxury and budget ship categories due to the size of the health and wellness centers, services offered and guest socioeconomic factors.

•

The mix of cruise itineraries. Revenue generated per shipboard health and wellness center is influenced by cruise itinerary, including length of cruise, number of sea days versus port days, which impacts center utilization, and the geographic sailing region, which may impact ship category and offerings of services and products to align with guest socioeconomic mix and preferences.

•

Collaboration with cruise line partners, including targeted marketing and promotion initiatives, as well as implementation of proprietary technologies to increase center utilization via pre-booking and pre-payment of health and wellness services. We directly market and promote to onboard passengers as a result of increasing collaboration with our cruise line partners. We also utilize our proprietary health and wellness services pre-booking and pre-payment technology platforms integrated with certain of our cruise line partners’ pre-cruise planning systems. These areas of increased collaboration with cruise line partners are resulting in higher productivity, revenue generation, and profitability across our health and wellness centers.

•

The impact of weather. Our health and wellness centers onboard cruise ships and in select destination resorts may be negatively affected by the frequency and intensity of hurricanes, which may be impacted by climate change. The negative impact of hurricanes in the Northern Hemisphere is highest during peak season, from August through October.

•

Our revenues and financial performance may be impacted by other risks and uncertainties, including, without limitation, those set forth under the section entitled “Risk Factors” in Part II, Item 1A of the Company’s 2024 Form 10-K.

The effect of each of these factors on our revenues and financial performance varies from period to period.

Recent Accounting Pronouncements

Refer to Note 2 to the Condensed Consolidated Financial Statements in this report for a discussion of recent accounting pronouncements.

Results of Operations


	Three Months Ended March 31, 2025			Three Months Ended March 31, 2024
(dollars in thousands, except per share amounts)
REVENUES:
Service revenues	$	178,519		$	172,209
Product revenues		41,111			39,017
Total revenues		219,630			211,226
COST OF REVENUES AND OPERATING EXPENSES:
Cost of services		148,154			144,025
Cost of products		35,297			33,530
Administrative		4,213			4,057
Salaries, benefits and payroll taxes		10,995			8,493
Amortization of intangible assets		4,134			4,144
Total cost of revenues and operating expenses		202,793			194,249
Income from operations		16,837			16,977
OTHER (EXPENSE) INCOME
Interest expense, net		(1,147	)		(2,955	)
Change in fair value of warrant liabilities		—			7,723
Total other (expense) income		(1,147	)		4,768
Income before income tax expense		15,690			21,745
INCOME TAX EXPENSE		419			579
NET INCOME	$	15,271		$	21,166
NET INCOME PER SHARE
Basic and diluted	$	0.15		$	0.21
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic		104,602			101,467
Diluted		105,077			102,933

Comparison of Results for the Three Months Ended March 31, 2025 and 2024

Revenues. Revenues for the three months ended March 31, 2025 and 2024 were $219.6 million and $211.2 million, respectively. The increases in each of service revenues and product revenues were driven by a 2% increase in Revenue Days, which impacted revenue by $5.3 million, and a 2% increase in average guest spend, which positively impacted revenue by $4.7 million. Contributing to the increased volume and spend was $2.3 million in increased pre-booked revenues on health and wellness centers included in our ship count as of March 31, 2025. This was offset by a $1.5 million decrease in our land-based spa business, partially due to the closure of hotels where we had previously operated.

The break-down of revenue growth between service and product revenues was as follows:

•

Service revenues. Service revenues for the three months ended March 31, 2025 were $178.5 million, an increase of $6.3 million, or 4%, compared to $172.2 million for the three months ended March 31, 2024.

•

Product revenues. Product revenues for the three months ended March 31, 2025 were $41.1 million, an increase of $2.1 million, or 5%, compared to $39.0 million for the three months ended March 31, 2024.

Cost of services. Cost of services for the three months ended March 31, 2025 were $148.2 million, an increase of $4.1 million, or 3%, compared to $144.0 million for the three months ended March 31, 2024. The increase was primarily attributable to costs associated with increased service revenues of $178.5 million in the quarter from our operating health and wellness centers at sea and on land, compared with service revenues of $172.2 million in the first quarter of 2024.

Cost of products. Cost of products for the three months ended March 31, 2025 were $35.3 million, an increase of $1.8 million, or 5%, compared to $33.5 million for the three months ended March 31, 2024. The increase was primarily attributable to costs associated with increased product revenues of $41.1 million in the quarter from our operating health and wellness centers at sea and on land, compared to product revenues of $39.0 million in the first quarter of 2024.

Administrative. Administrative expenses for the three months ended March 31, 2025 were $4.2 million, an increase of $0.1 million, or 4%, compared to $4.1 million for the three months ended March 31, 2024.

Salaries, benefits and payroll taxes. Salaries, benefits and payroll taxes for the three months ended March 31, 2025 were $11.0 million, an increase of $2.5 million, or 29%, compared to $8.5 million for the three months ended March 31, 2024. The increase was primarily attributable to expenses associated with the termination of employment of the Company’s former Chief Commercial Officer, including $1.1 million of severance expense and $1.4 million of expense related to vesting treatment in respect to restricted stock units and performance stock units.

Amortization of intangible assets. Amortization of intangible assets for the three months ended March 31, 2025 and 2024 were both $4.1 million, respectively.

Other (expense) income. Other (expense) income includes interest expense and change in the fair value of the warrant liabilities. Interest expense, net for the three months ended March 31, 2025 was $1.1 million, a decrease of $1.8 million, or 61%, compared to $3.0 million for the three months ended March 31, 2024. The decrease was primarily attributable to lower debt balances and lower effective interest rates. Since the year ended December 31, 2023, we have repaid a total of $60.9 million in debt instruments. The change in fair value of the outstanding warrants during the three months ended March 31, 2025 was zero compared to a gain of $7.7 million during the three months ended March 31, 2024. The Company had no outstanding warrants during the three months ended March 31, 2025; accordingly, there was no impact on the Condensed Consolidated Statement of Operations during this period.

Income tax expense. Income tax expense for the three months ended March 31, 2025 was $0.4 million, a decrease of $0.2 million, or 28%, compared to an expense of $0.6 million for the three months ended March 31, 2024. The decrease is primarily attributable to a lower effective tax rate, driven by higher earnings in foreign jurisdictions and lower earnings in the U.S.

Net income. Net income for the three months ended March 31, 2025 was $15.3 million, a decrease of $5.9 million, or 28%, compared to a net income of $21.2 million for the three months ended March 31, 2024. The change was primarily attributable to a $7.7 million benefit resulting from the change in the fair value of warrant liabilities in the first quarter of 2024. The first quarter of 2025 benefited from a $1.8 million decrease in Interest expense.

Liquidity and Capital Resources

Overview

We fund our operations principally with cash flow from operations. Our principal uses for our liquidity have been funding the operations of our health and wellness centers onboard 199 cruise ships and in 50 destination resorts, including associated working capital investment and capital expenditures; capital expenditures in technology and infrastructure assets to enhance our complex global operating platform; debt service, including $1.2 million repayment of our Term Loan Facility; payment of our $4.2 million quarterly dividend; and purchasing 2,094,000 of our common shares under our 2024 Share Repurchase Program, among other uses of our liquidity.

We have concluded that we will have sufficient liquidity to satisfy our existing and planned capital requirements over the next twelve months and thereafter and to comply with all debt covenants as required by our debt agreements.

Cash Flows

The following table shows summary cash flow information for the three months ended March 31, 2025 and 2024.



(in thousands)	Three Months Ended March 31, 2025			Three Months Ended March 31, 2024

Net income	$	15,271		$	21,166
Depreciation and amortization		6,179			6,209
Amortization of deferred financing costs		78			346
Change in fair value of warrant liabilities		—			(7,723	)
Stock-based compensation		3,560			2,094
Provision for doubtful accounts		5			4
Noncash lease (income) expense		(26	)		11
Change in working capital		(14,960	)		(7,153	)
Net cash provided by operating activities		10,107			14,954
Capital expenditures		(1,697	)		(1,206	)
Net cash used in investing activities		(1,697	)		(1,206	)
Proceeds from exercise of warrants		—			51,698
Repurchase of common shares		(37,901	)		(7,736	)
Repayment on first lien and term loan facilities		(1,250	)		(20,000	)
Payment of deferred financing costs		(9	)		—
Dividends		(4,187	)		—
Net cash (used in) provided by financing activities		(43,347	)		23,962
Effect of exchange rate changes on cash		103			(24	)
Net (decrease) increase in cash and cash equivalents and restricted cash	$	(34,834	)	$	37,686

Comparison of Results for the Three Months Ended March 31, 2025 and 2024

Operating activities. Our net cash provided by operating activities for the three months ended March 31, 2025 and 2024 were $10.1 million and $15.0 million, respectively. This decrease of $4.9 million was due to a change in working capital of ($7.8) million offset by an increase in Net income, net of non-cash items of $2.9 million. The increase in Net income, net of non-cash items was primarily attributable to: (i) increased revenues from a higher number of health and wellness center guests on our existing fleet, expansion of our fleet by five ships, and higher guest spend, and (ii) reduced Interest expense, which was attributable to lower debt balances. For further discussion, see “Results of Operations”, above. The $7.8 million change in working capital was attributable to cash outflows of $15.0 million and $7.2 million for the three months ended March 31, 2025 and 2024, respectively. The cash outflows from working capital for the three months ended March 31, 2025, were primarily driven by a $5.1 million net payment of bonuses to employees, a payment of $7.3 million to cruise line partners related to fees accrued, and a $3.4 million increase in Inventories, as a result of increased purchases reflecting the growth in Revenues and anticipation of increased shipments in the second quarter of 2025. The cash outflows from working capital for the three months ended March 31, 2024 were primarily driven by a $22.1 million increase in Other non-current assets reflecting capitalized contract costs incurred to enter into new or to renew long-term contracts, partially offset by an increase in other long-term liabilities of $7.3 million, which relate to fees accrued to cruise line partners and a $7.0 million increase in Accounts payable, primarily related to the timing of vendor payments.

Investing activities. Our net cash used in investing activities for the three months ended March 31, 2025 and 2024 were $1.7 million and $1.2 million, respectively. During the three months ended March 31, 2025, we continued to make investments in technology hardware and software, including artificial intelligence, and medi-spa equipment.

Financing activities. Our net cash (used in) provided by financing activities for the three months ended March 31, 2025 and 2024 were ($43.3) million and $24.0 million, respectively. For the three months ended March 31, 2025, the Company utilized $37.9 million to repurchase 2,094,000 of our common shares, repaid $1.2 million on the Term Loan Facility and paid Dividends of $4.2 million. For the three months ended March 31, 2024, the Company received proceeds from the exercise of public and private warrants of $51.7 million, repaid $20.0 million on its prior term loan facility, which was fully paid off and terminated as of December 31, 2024, and utilized $7.7 million to repurchase 606,386 of our common shares.


Commonwealth of The Bahamas		Not Applicable
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Harry B. Sands, Lobosky Management Co. Ltd. Office Number 2 Pineapple Business Park Airport Industrial Park P.O. Box N-624 Nassau, Island of New Providence, Commonwealth of The Bahamas		Not Applicable
(Address of principal executive offices)		(Zip Code)


Exhibit No.

31.1*		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Section 1350 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Section 1350 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

104		The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101


ONESPAWORLD HOLDINGS LIMITED

By:		/s/ Leonard Fluxman
		Leonard Fluxman
		Executive Chairman, Chief Executive Officer and Director
		Principal Executive Officer

By:		/s/ STEPHEN B. LAZARUS
		Stephen B. Lazarus
		President, Chief Financial Officer and Chief Operating Officer
		Principal Financial and Accounting Officer


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


		Page
PART I - FINANCIAL INFORMATION		1

Item 1.	Unaudited Financial Statements	1

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25

Item 4.	Controls and Procedures	25

PART II - OTHER INFORMATION		26

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26

Item 4.	Mine Safety Disclosures	26

Item 5.	Other Information	26

Item 6.	Exhibits	26