Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of March 31, ~~2023,~~2024, the registrant had ~~79,786,014~~104,713,619 voting ~~shares and~~ ~~13,421,914~~ ~~non-voting~~ shares of common stock issued and outstanding.



	As of						As of
	March 31, 2023			December 31, 2022			March 31, 2024			December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	22,799		$	32,064		$	65,390		$	27,704
Restricted cash		1,198			1,198			1,198			1,198
Accounts receivable, net		41,760			33,558			43,517			40,784
Inventories, net		51,080			39,835			44,711			47,504
Prepaid expenses		6,404			7,084			3,083			3,172
Other current assets		4,189			4,154			5,671			6,360
Total current assets		127,430			117,893			163,570			126,722
Property and equipment, net		14,781			14,517			15,175			15,006
Operating lease right-of-use assets, net		13,670			13,932			15,667			12,132
Intangible assets, net		561,261			565,467			542,824			546,968
OTHER ASSETS:
Deferred tax asset		—			227			2,340			2,340
Other non-current assets		4,483			5,399			24,030			2,972
Total other assets		4,483			5,626			26,370			5,312
Total assets	$	721,625		$	717,435		$	763,606		$	706,140
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Accounts payable	$	38,634		$	24,124		$	38,744		$	31,705
Accrued expenses		31,791			39,999			46,081			45,991
Current portion of operating leases		2,431			2,239			2,439			2,264
Current portion of long-term debt		2,085			2,085
Other current liabilities		1,366			1,116			1,230			899
Total current liabilities		76,307			69,563			88,494			80,859
Income tax contingency		3,939			3,912
Warrant liabilities		74,800			52,900			163			20,400
Other long-term liabilities		2,449			2,449			7,333			2,449
Long-term operating leases		11,698			12,101			13,527			10,156
Long-term debt, net		200,504			210,701			138,553			158,207
Total liabilities		369,697			351,626			248,070			272,071
Commitments and contingencies (Note 12)
SHAREHOLDERS' EQUITY:
Common stock:
Voting common stock, $0.0001 par value; 225,000,000 shares authorized, 79,786,014 issued and outstanding at March 31, 2023 and 79,544,055 shares issued and outstanding at December 31, 2022		8			8
Non-voting common stock, $0.0001 par value; 25,000,000 shares authorized, 13,421,914 shares issued and outstanding, at both March 31, 2023 and December 31, 2022		1			1
Voting common stock, $0.0001 par value; 225,000,000 shares authorized, 104,713,619 issued and outstanding at March 31, 2024 and 99,734,672 shares issued and outstanding at December 31, 2023								10			10
Additional paid-in capital		703,418			700,612			841,113			777,062
Accumulated deficit		(354,513	)		(338,609	)		(326,324	)		(344,458	)
Accumulated other comprehensive income		3,014			3,797			737			1,455
Total shareholders' equity		351,928			365,809			515,536			434,069
Total liabilities and shareholders' equity	$	721,625		$	717,435		$	763,606		$	706,140

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


	Three Months Ended March 31,						Three Months Ended March 31,
	2023			2022			2024			2023
REVENUES:
Service revenues	$	150,121		$	71,162		$	172,209		$	150,121
Product revenues		32,334			16,501			39,017			32,334
Total revenues		182,455			87,663			211,226			182,455
COST OF REVENUES AND OPERATING EXPENSES:
Cost of services		126,328			62,667			144,025			126,328
Cost of products		28,265			14,652			33,530			28,265
Administrative		3,570			3,833			4,057			3,570
Salaries, benefits and payroll taxes		8,921			8,727			8,493			8,921
Amortization of intangible assets		4,206			4,206			4,144			4,206
Total cost of revenues and operating expenses		171,290			94,085			194,249			171,290
Income (loss) from operations		11,165			(6,422	)
OTHER (EXPENSE) INCOME
Income from operations								16,977			11,165
OTHER INCOME (EXPENSE)
Interest expense, net		(4,610	)		(3,407	)		(2,955	)		(4,610	)
Change in fair value of warrant liabilities		(21,900	)		3,400			7,723			(21,900	)
Total other expense		(26,510	)		(7	)
Loss before income tax expense (benefit)		(15,345	)		(6,429	)
INCOME TAX EXPENSE (BENEFIT)		559			(113	)
NET LOSS	$	(15,904	)	$	(6,316	)
NET LOSS PER VOTING AND NON-VOTING SHARE
Total other income (expense)								4,768			(26,510	)
Income (loss) before income tax expense								21,745			(15,345	)
INCOME TAX EXPENSE								579			559
NET INCOME (LOSS)							$	21,166		$	(15,904	)
NET INCOME (LOSS) PER VOTING AND NON-VOTING SHARE
Basic and diluted	$	(0.17	)	$	(0.07	)	$	0.21		$	(0.17	)
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic and diluted		93,418			92,204

Basic								101,467			93,418
Diluted								102,933			93,418

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS) INCOME~~INCOME(LOSS)

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


																								Three Months Ended March 31, 2024
																			Issued Common Voting Shares			Issued Common Non- 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	)
Accrued dividends cancelled on common stock																				—			—		—		2,449			—			—			2,449
Exercise of Sponsor and Public Warrants (1)																				4,503			—		—		57,628			—			—			57,628
Cashless exercise of 2020 PIPE Warrants (2)																				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) The exercise of Sponsor and Public Warrants includes $51.7 million of cash received and a reduction of warrants liability related to the exercise of the Sponsor and Public Warrants. See Note 5 – “Warrants Liability and Equity” for further details.																		(1) The exercise of Sponsor and Public Warrants includes $51.7 million of cash received and a reduction of warrants liability related to the exercise of the Sponsor and Public Warrants. See Note 5 – “Warrants Liability and Equity” for further details.
(2) As a result of the 2020 PIPE Warrants exercised on a cashless basis, the warrant liability of $6.6 million was reclassified to additional paid-in capital. See Note 5 – “Warrants Liability and Equity” for further details.																		(2) As a result of the 2020 PIPE Warrants exercised on a cashless basis, the warrant liability of $6.6 million was reclassified to additional paid-in capital. See Note 5 – “Warrants Liability and Equity” for further details.
					Three Months Ended March 31, 2023																			Three Months Ended March 31, 2023
	Issued Common Voting Shares		Issued Common Non-Voting Shares		Voting and Non-Voting Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Total Shareholders’ Equity				Issued Common Voting Shares			Issued Common Non- Voting Shares		Voting and Non-Voting Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Total Shareholders’ Equity
BALANCE, December 31, 2022		79,544		13,422	$	9	$	700,612	$	3,797		$	(338,609	)	$	365,809				79,544		$	13,422	$	9	$	700,612		$	3,797		$	(338,609	)	$	365,809
Net loss		—		—		—		—		—			(15,904	)		(15,904	)			—			—		—		—			—			(15,904	)		(15,904	)
Stock-based compensation		—		—		—		2,591		—			—			2,591				—			—		—		2,591			—			—			2,591
Foreign currency translation adjustment		—		—		—		—		188			—			188				—			—		—		—			188			—			188
Unrecognized loss on derivatives		—		—		—				(971	)		—			(971	)			—			—		—		—			(971	)		—			(971	)
Proceeds from exercise of warrants		20		—		—		215		—			—			215				20			—		—		215			—			—			215
Common shares issued under equity incentive plan		222		—		—		—		—			—			—				222			—		—		—			—			—			—
BALANCE, March 31, 2023		79,786		13,422	$	9	$	703,418	$	3,014		$	(354,513	)	$	351,928				79,786		$	13,422	$	9	$	703,418		$	3,014		$	(354,513	)	$	351,928

					Three Months Ended March 31, 2022
	Issued Common Voting Shares		Issued Common Non-Voting Shares		Voting and Non-Voting Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income			Accumulated Deficit			Total Shareholders’ Equity
BALANCE, December 31, 2021		78,423		13,422	$	9	$	687,660	$	(1,997	)	$	(391,768	)	$	293,904
Net loss		—		—		—		—		—			(6,316	)		(6,316	)
Stock-based compensation		—		—		—		3,286		—			—			3,286
Foreign currency translation adjustment		—		—		—		—		(242	)		—			(242	)
Unrecognized gain on derivatives		—		—		—		—		3,640			—			3,640
Proceeds from 2021 exercise of public warrants		—		—		—		55		—			—			55
Common shares issued under equity incentive plan		286		—		—		—		—			—			—
BALANCE, March 31, 2022		78,709		13,422	$	9	$	691,001	$	1,401		$	(398,084	)	$	294,327

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


	Three Months Ended March 31,						Three Months Ended March 31,
	2023			2022			2024			2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(15,904	)	$	(6,316	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Net income (loss)							$	21,166		$	(15,904	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		5,509			5,477			6,209			5,509
Amortization of deferred financing costs		324			257			346			324
Change in fair value of warrant liabilities		21,900			(3,400	)		(7,723	)		21,900
Stock-based compensation		2,591			3,286			2,094			2,591
Provision for doubtful accounts		5			—			4			5
Loss from write-offs of property and equipment		—			10
Noncash lease expense		51			20			11			51
Deferred income taxes		227			—			—			227
Changes in:
Accounts receivable, net		(8,207	)		(2,227	)		(2,737	)		(8,207	)
Inventories, net		(11,245	)		(220	)		2,793			(11,245	)
Prepaid expenses		680			750			89			680
Other current assets		(179	)		217			9			(179	)
Other noncurrent assets		(139	)		192			(22,100	)		(139	)
Accounts payable		14,510			1,726			7,039			14,510
Accrued expenses		(8,208	)		(210	)		90			(8,208	)
Other current liabilities		250			(56	)		331			250
Income tax contingency		27			(67	)		—			27
Net cash provided by (used in) operating activities		2,192			(561	)
Other long-term liabilities								7,333			—
Net cash provided by operating activities								14,954			2,192
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(1,319	)		(919	)		(1,206	)		(1,319	)
Net cash used in investing activities		(1,319	)		(919	)		(1,206	)		(1,319	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants		215			55			51,698			215
Repurchase of common shares								(7,736	)		—
Repayment on term loan facilities		(10,521	)		(212	)		(20,000	)		(10,521	)
Net cash used in financing activities		(10,306	)		(157	)
Net cash provided by (used in) financing activities								23,962			(10,306	)
Effect of exchange rate changes on cash		168			(246	)		(24	)		168
Net decrease in cash and cash equivalents and restricted cash		(9,265	)		(1,883	)
Net increase (decrease) in cash and cash equivalents and restricted cash								37,686			(9,265	)
Cash and cash equivalents and restricted cash, Beginning of period		33,262			32,833			28,902			33,262
Cash and cash equivalents and restricted cash, End of period	$	23,997		$	30,950		$	66,588		$	23,997

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

1. ORGANIZATION

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 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 Medispa 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.

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, ~~2023~~2024 and ~~2022.~~2023.

Earnings Per Share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income (loss) 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

Table of Contents

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.

~~Table of Contents~~

~~The~~During the first quarter of 2024, the Company ~~has~~had one class of common stock, Voting. During the first quarter of 2023, the Company had two classes of common stock, Voting and Non-Voting. Shares of Non-Voting common stock are in all respects identical to and treated equally with shares of Voting common stock except for the absence of voting rights. Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of Voting and Non-Voting common shares outstanding for the period. Diluted income (loss) per share is computed by dividing net income (loss) by the weighted average number of diluted Voting and Non-voting common 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 Voting and Non-Voting common 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, as their effect would be anti-dilutive. The Company has not presented income (loss) ~~income~~ per share under the two-class method, because the income (loss) per share are the same for both Voting and Non-Voting common stock since they are entitled to the same liquidation and dividend rights.

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


	Three Months Ended March 31,						Three Months Ended March 31,
	2023 (a)			2022 (a)			2024		2023 (a)
Numerator:
Net loss	$	(15,904	)	$	(6,316	)
Net income (loss)							$	21,166	$	(15,904	)
Denominator:
Weighted average shares outstanding – Basic and diluted		93,418			92,204
Loss per share:
Weighted average shares outstanding – Basic								101,467		93,418
Dilutive effect of warrants								864		—
Dilutive effect of stock-based awards								602		—
Weighted average shares outstanding – Diluted								102,933		93,418
Net income (loss) per voting and non-voting share:
Basic and diluted	$	(0.17	)	$	(0.07	)	$	0.21	$	(0.17	)

(a) Potential common shares under the treasury stock method and the if-converted method were antidilutive because the Company reported a net loss in this period and the effect of the change in the fair value of warrants was antidilutive. Consequently, the Company did not have any adjustments in this period between basic and diluted loss per share related to stock options, restricted share units and warrants.

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


	Three Months Ended March 31,				Three Months Ended March 31,
	2023		2022		2024		2023
Sponsor warrants		8,000		8,000		—		8,000
Public warrants		16,128		16,145		—		16,128
2020 PIPE warrants		4,997		5,000		—		4,997
Restricted stock units		1,181		1,580		—		1,181
Performance stock units		1,127		1,044		292		1,127
		31,433		31,769		292		31,433

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 ~~June 2016,~~November 2023, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-07 ("ASU ~~2016-13, “Financial Instruments—Credit Losses~~2023-07"), Segment Reporting (Topic ~~326).” This~~280): Improvements to Reportable Segment Disclosures which requires, among other things, the following: (i) enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included in a segment's reported measure of profit or loss; (ii) disclosure of the amount and description of the composition of other segment items, as defined in ASU ~~amends~~2023-07, by reportable segment; and (iii) reporting the ~~FASB’s guidance on the impairment of financial instruments. The ASU adds to U.S. GAAP an impairment model (known as the current expected credit losses model) that is based~~disclosures about each reportable segment's profit or loss and assets on an ~~expected losses model rather than an incurred losses model. Under the new guidance, an entity recognizes as an allowance its estimate~~annual and interim basis. The provisions of ~~expected credit losses. The~~ ASU is also intended to reduce the complexity of U.S. GAAP by decreasing the number of impairment models that entities use to account for debt instruments. In November 2019, the FASB issued guidance (ASU 2019-10) that defers the effective dates of the Financial Instruments—Credit Losses standard for entities that have not yet issued financial statements adopting the standard. The update is2023-07 are effective for ~~annual periods beginning after December 15, 2022, and interim periods~~fiscal years beginning after December 15, 2023, ~~with~~and interim periods within fiscal years beginning after December 15, 2024; early adoption is permitted. The Company ~~is in the process of starting its initial scoping review and~~ is currently assessing the expected impact of the future adoption of this guidance.

In March 2020, the FASB issued ASU 2020-4, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides practical expedients and exception for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The FASB also issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope in January 2021, which adds implementation guidance to clarify which optional expedients in Topic 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that is expected to be discontinued, but that are being modified as a

Table of Contents

~~result of the discounting transition.~~ In December ~~2022,~~2023, the FASB issued ASU ~~2022-06,~~No. 2023-09 ("ASU 2023-09"), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which ~~extended~~requires, among other things, the ~~sunset date~~following for public business entities: (i) enhanced disclosures of ~~Topic 848 from~~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 ~~31, 2022 to December 31, 2024.~~15, 2024; early adoption is permitted. The Company ~~continues to assess~~is currently assessing the ~~ultimate~~expected impact of the future adoption of this ~~guidance, that is, the eventual replacement of the LIBOR benchmark interest rate on its consolidated financial statements.~~guidance.

3. ~~GOODWILL AND~~ 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, ~~2023~~2024 (in thousands, except amortization period):




	Cost		Accumulated Amortization and Impairment			Net Balance		Weighted Average Amortization Period (in years)		Cost		Accumulated Amortization and Impairment			Net Balance		Weighted Average Amortization Period (in years)
Retail concession agreements	$	604,700	$	(62,569	)	$	542,131		39	$	604,700	$	(78,062	)	$	526,638		39
Destination resort agreements		17,900		(4,778	)		13,122		15		17,900		(7,214	)		10,686		15
Trade name		6,200		(700	)		5,500	Indefinite-life			6,200		(700	)		5,500	Indefinite-life
Licensing agreement		1,000		(492	)		508		8		1,000		(1,000	)		-		8
	$	629,800	$	(68,539	)	$	561,261			$	629,800	$	(86,976	)	$	542,824

The following is a summary of the Company’s intangible assets as of December 31, ~~2022~~2023 (in thousands, except amortization period):


	Cost		Accumulated Amortization and Impairment			Net Balance		Weighted Average Amortization Period (in years)		Cost		Accumulated Amortization and Impairment			Net Balance		Weighted Average Amortization Period (in years)
Retail concession agreements	$	604,700	$	(58,692	)	$	546,008		39	$	604,700	$	(74,186	)	$	530,514		39
Destination resort agreements		17,900		(4,480	)		13,420		15		17,900		(6,946	)		10,954		15
Trade name		6,200		(700	)		5,500	Indefinite-life			6,200		(700	)		5,500	Indefinite-life
Licensing agreement		1,000		(461	)		539		8		1,000		(1,000	)		-		8
	$	629,800	$	(64,333	)	$	565,467			$	629,800	$	(82,832	)	$	546,968

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, 2024 and 2023 was $4.1 million and ~~2022 was~~ $4.2 million, ~~for each period,~~ respectively. Amortization expense is estimated to be $~~16.8~~16.6 million in each of the next five years beginning in ~~2023.~~2024.

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,
2023

December 31,
2022

Maturities Through

March 31,
2023

December 31,
2022

First lien term loan facility

8.8%

8.3%

2026

$
200,160

$
200,681

Second lien term loan facility

12.3%

11.8%

2027

5,000

15,000

Total debt

$
205,160

$
215,681

Less: unamortized debt issuance cost

(2,571
)

(2,895
)
Total debt, net of unamortized debt issuance cost

$
202,589

$
212,786

Less: current portion of long-term debt

(2,085
)

(2,085
)
Long-term debt, net

$
200,504

$
210,701



	Interest Rate As of			As of
	March 31, 2024	December 31, 2023	Maturities Through	March 31, 2024			December 31, 2023
First lien term loan facility	9.2%	9.2%	2026	$	139,639		$	159,639
Less: unamortized debt issuance cost					(1,086	)		(1,432	)
Long-term debt, net				$	138,553		$	158,207

~~The following~~

During the first quarter of 2024, we repaid $20 million on the First Lien Credit Facilities. As of March 31, 2024, there are ~~scheduled~~no minimum principal repayments on ~~long-term debt as~~the First Lien Credit Facilities until 2026 when the remaining principal balance of ~~March 31, 2023 for each of the next five years (in thousands):~~$139.6 million becomes due.

Table of Contents

Year

Amount

2023

$
2,085

2024

2,085

2025

2,085

2026

193,905

2027

5,000

Total

$
205,160

On March 19, 2019, the Company entered into (i) senior secured first lien credit facilities (the “First Lien Credit Facilities”) with Goldman Sachs Lending Partners LLC, as administrative agent, and certain lenders, consisting of (x) a term loan facility of $2024~~208.5~~ ~~million (of which $~~20 ~~million was borrowed by a subsidiary of the Company) (the “First Lien Term Loan Facility”)~~, ~~(y) a revolving loan facility of up to $~~20 ~~million (the “First Lien Revolving Facility”) and (z) a delayed draw term loan facility of $~~5 ~~million (the “First Lien Delayed Draw Facility”), and (ii) a senior secured second lien term loan facility of $~~25 million with Cortland Capital Market Services LLC, as administrative agent, and Neuberger Berman Alternative Funds, Neuberger Berman Long Short Fund, as lender (the “Second Lien Term Loan Facility” and, together with the First Lien Term Loan Facility, the “Term Loan Facilities”; the New Term Loan Facilities, together with the First Lien Revolving Facility expired in accordance with its terms and ~~the First Lien Delayed Draw Facility, are referred to as the “New Credit Facilities”). The First Lien Revolving Facility includes borrowing capacity available for letters~~was not renewed. As of ~~credit up to $~~March 31, 2024, we had 5no ~~million. Any issuance of letters of credit reduces the amount available under the New First Lien Revolving Facility. The First Lien Term Loan Facility matures~~ ~~seven years~~ ~~after March 19, 2019, the First Lien Revolving Facility matures~~ ~~five years~~ ~~after March 19, 2019 and the Second Lien Term Loan Facility matures~~ ~~eight years~~ ~~after March 19, 2019.~~

~~Loans~~ outstanding ~~under the First Lien Credit Facilities will accrue interest at a rate per annum equal to~~ ~~LIBOR plus a margin of~~ ~~4.00~~%~~, with one step down to~~ ~~3.75% upon achievement of a certain leverage ratio, and undrawn amounts~~borrowings under the First Lien Revolving ~~Facility will accrue a commitment fee at a rate per annum of~~ ~~0.50% on the average daily undrawn portion of the commitments thereunder, with one step down to~~ ~~0.325% upon achievement of a certain leverage ratio. Loans outstanding under the Second Lien Term Loan Facility will accrue interest at a rate per annum equal to~~ ~~LIBOR plus~~ ~~7.50~~%.Facility.

The obligations under the New Credit Facilities are guaranteed by the Company and each of its direct or indirect wholly-owned subsidiaries organized under the laws of the United States and the Commonwealth of The Bahamas, in each case, other than certain excluded subsidiaries, including, but not limited to, immaterial subsidiaries, non-profit subsidiaries, and any other subsidiary with respect to which the burden or cost of providing a guarantee is excessive in view of the benefits to be obtained by the lenders therefrom. In addition, under the New Credit Facilities, certain of our direct and indirect subsidiaries have granted the lenders a security interest in substantially all of their assets.

The ~~Term Loan Facilities require the Company 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 subject to step downs if certain leverage ratios are met 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 New Credit Facilities). The Company also is required to make quarterly amortization payments equal to ~~0.25% of the original principal amount of the~~ First Lien Term Loan Facility commencing after the first full fiscal quarter after the closing date of the New Credit Facilities (subject to reductions by optional and mandatory prepayments of the loans). The Company may prepay (i) the First Lien Credit Facilities at any time without premium or penalty, subject to payment of customary breakage costs and a customary “soft call,” and (ii) the Second Lien Term Loan Facility at any time without premium or penalty, subject to a customary make-whole premium for any voluntary prepayment prior to the date that is 30 months following the closing date of the New Credit Facilities (the “Callable Date”), following by a call premium of (x) ~~4.00% on or prior to the first anniversary of the Callable Date, (y)~~ ~~2.50% after the first anniversary but on or prior to the second anniversary of the Callable Date, and (z)~~ ~~1.50% after the second anniversary but on or prior to the third anniversary of the Callable Date. During the fourth quarter of 2019, we prepaid principal amounts of $~~5 ~~million of our First Lien Credit Facilities. During the fourth quarter of 2022 and the first quarter of 2023, we prepaid principal amounts of $~~10 ~~million during each period of our Second Lien Term Loan Facility.~~

~~The New~~ Credit Facilities contain a financial covenant related to the maintenance of a leverage ratio and a number of customary negative covenants including covenants related to the following subjects: consolidations, mergers, and sales of assets; limitations on the incurrence of certain liens; limitations on certain indebtedness; limitations on the ability to pay dividends; and certain affiliate transactions. As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the Company was in compliance with all of the covenants contained in the ~~New~~First Lien Credit Facilities.

If we do not comply with these covenants, we would have to seek amendments to these covenants from our lenders or evaluate the options to cure the defaults contained in the credit agreements. However, no assurances can be made that such amendments would be approved by our lenders. If an event of default occurs, the lenders under the ~~New~~First Lien Credit Facilities are entitled to take various actions, including the acceleration of amounts due under the ~~New~~First Lien Credit Facilities and all actions permitted to be taken by a secured creditor, subject to customary ~~inter creditor~~intercreditor provisions among the first ~~and second~~ lien secured parties, which would have a material adverse impact to our operations and liquidity.

~~Borrowing Capacity~~

~~Table of Contents~~

AsThe following are scheduled principal repayments on long-term debt as of March 31, ~~2023, our available borrowing capacity under the First Lien Revolving Facility was $~~20 ~~million. Utilization~~2024 for each of the ~~borrowing capacity was as follows~~next five years (in thousands):

Borrowing Capacity

Amount Borrowed

First Lien Revolving Facility

$
20,000

$
-



Year	Amount
2024	$	-
2025		-
2026		139,639
2027		-
2028		-
Total	$	139,639

5. WARRANT LIABILITIES AND EQUITY

Sponsor and Public Warrants

As of ~~March~~December 31, 2023, ~~and December 31, 2022,~~ ~~eight~~ ~~million Sponsor Warrantswere issued and outstanding.~~

~~Public Warrants~~

~~As of March 31, 2023 and December 31, 2022,~~ ~~16,128,238~~3,823,847 and ~~16,145,279~~841,414, respectively, Sponsor and Public Warrants were issued and outstanding. During the first quarter of 2024, certain holders of the Sponsor and Public Warrants elected to exercise 4,502,970 warrants for which the Company issued 4,502,970 of common shares. Net cash proceeds from the exercise of the warrants amounted to $51.7 million. Immediately prior to the exercises, the Sponsor and Public Warrants exercised were remeasured to fair value, resulting on a gain of $7.4 million in "Change in fair value of warrant liabilities" on the condensed consolidated statement of operations for the quarter ended March 31, 2024 and a warrant liability of $5.9 million, which was then reclassified to additional paid-in capital on the condensed consolidated balance sheet as of March 31, 2024. The Sponsor and Public Warrants expired on March 19, 2024 and there were no amounts outstanding as of March 31, 2024.

2020 PIPE Warrants

As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, ~~4,996,667~~21,667 and ~~5,000,000~~828,334, respectively, 2020 PIPE Warrants were issued and outstanding. During the first quarter of 2024, certain holders of the 2020 PIPE Warrants elected to exercise 806,667 warrants on a cashless basis pursuant to the agreement governing the warrants, in exchange for which the Company issued 484,040 of common shares. Immediately prior to the exchanges, the 2020 PIPE Warrants exercised were remeasured to fair value, resulting on a gain of $0.3 million in "Change in fair value of warrant liabilities" on the condensed consolidated statement of operations for the quarter ended March 31, 2024 and a warrant liability of $6.6 million, which was then reclassified to additional paid-in capital on the condensed consolidated balance sheet as of March 31, 2024.

~~Exchange Agreements~~Repurchase Agreement

~~Between~~On March 13, ~~and March 15, 2023,~~2024, the Company entered into ~~separate privately negotiated warrant exchange agreements (the “Exchange Agreements”) with certain holders of its Public and Sponsor Warrants to exchange for the Company’s common shares: (i)~~ ~~15,286,824~~ ~~Public Warrants, (ii)~~ ~~928,003~~ ~~Sponsor Warrants from certain non-affiliates, and (iii)~~ ~~3,055,906~~ ~~Sponsor Warrants from certain affiliates.~~

~~The exchange ratio for the Public and Sponsor Warrants from non-affiliates is determined over~~ a ~~thirty-trading day period using a volume-weighted average price measurement. For each Public and Sponsor Warrant from non-affiliates exchanged,~~Shares Repurchase Agreement between the Company ~~will issue a number of~~and Steiner Leisure Limited (the “Seller”), pursuant to which the Company purchased 606,386 common shares, ~~equal to~~par value $0.0001 per share, from the ~~quotient of the warrant~~Seller at a purchase price of $~~1.912~~ ~~divided by the common share price of $10.74~~ ~~or an initial exchange ratio of~~ ~~0.178, with the~~ ~~maximum exchange ratio at the completion of the 30-day volume-weighted average price (“VWAP”) period being no greater than~~ ~~0.220~~.

~~The Sponsor warrants from affiliates are exchanged at a fixed exchange ratio of~~ ~~0.175. Such ratio reflects a price per warrant of $1.62~~ ~~(representing a~~ 10~~% discount to the price per warrant used in the exchange ratio for the Public Warrants and non-affiliate holders of Sponsor Warrants) and a price of $10.74~~12.76 per Common ~~Share. Affiliated holders of Sponsor Warrants also agreed not to transfer Common Shares issuable upon such exchange for a period of 60 days commencing on March 14, 2023.~~Share (the “Repurchase”). The ~~Exchange Agreements executed in connection with such exchanges contain terms substantially similar to the terms set forth the Public Warrants.~~

~~If certain corporate events that constitute a Fundamental Change (as defined~~Repurchase resulted in the ~~Exchange Agreements) occur prior to~~sale of all remaining common shares of the ~~Closing Date (as defined in~~Company held by the Exchange Agreements), then the Public and Sponsor Warrant holders may in their sole discretion, but only prior to the Closing Date, terminate the Exchange Agreements and not participate in the Exchange at any time after a Fundamental Change event. Based on Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Equity (ASC Topic 815), instruments that do not meet the criteriaseller, who ceased to be ~~considered indexed to an entity’s own stock shall be classified as liabilities. The~~a shareholder of the Company has concluded that the Warrants exchanged pursuant the Exchange Agreements do not meet the conditions to be classified as equity under the Standard until the exchange occurs. Therefore, the Exchanged Warrants continue to be classified as liabilities at the estimated fair values as of March 31, 2023, and the changes in the estimated fair value were reported in the statement of operations.

~~The exchanges closed on April 25 and 26, 2023. Following~~after the closing of the ~~above transactions,~~Repurchase. The Repurchase closed on March 20, 2024. Upon the consummation of the Repurchase, such shares reverted to authorized but unissued 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.

Dividends Cancelled

In November 2019, the Company ~~exchanged~~adopted a cash dividend program and declared an ~~aggregate~~initial quarterly payment of $~~15,286,824~~0.04 ~~Public Warrants (or~~per common share. On March 24, 2020, the Company announced that it was deferring payment of its dividend declared on 95February 26, 2020% (the "2020 Dividend"), for payment on May 29, 2020, to shareholders of record on April 10, 2020, until the Board reapproves its payment. The Company also

Table of Contents

announced it was withdrawing its dividend program until further notice. As of December 31, 2023, dividends payable amounted to approximately $2.4 million which was presented as other-long term liabilities and other current liabilities in the accompanying condensed consolidated balance sheets. During the first quarter of 2024, the Board decided that although the Company now has the liquidity to enable it to pay the 2020 Dividend, such payment can no longer be made to the shareholders of record as of the ~~outstanding Public Warrants)~~original record date for the 2020 Dividend and it is therefore in the Company’s best interest to cancel the 2020 Dividend. As a result, we reversed the dividend payable of $~~3,983,909~~2.4 ~~Sponsor Warrants (or~~ 50%million against additional paid-in capital during the first quarter of ~~the outstanding Sponsor Warrants). See Note 13 “Subsequent Events” for further detail.~~2024.

6. STOCK-BASED COMPENSATION

The share-based compensation expense for the three months ended March 31, ~~2023~~2024 and ~~2022~~2023 was $~~2.6~~2.1 million and $~~3.3~~2.6 million, respectively, which is included as a component of salaries, benefits and payroll taxes in the accompanying condensed consolidated statements of operations.

The following is a summary of ~~RSUs activity for the three months ended March 31, 2023:~~

RSUs Activity

Number of Awards

Weighted-Average Grant Date Fair Value

Non-vested share units as of December 31, 2022

1,284,570

$
9.28

Vested

(105,072
)

11.85

Non-vested share units as of March 31, 2023

1,179,498

$
9.05

~~Table of Contents~~

~~The following is a summary of~~ PSUs activity for the three months ended March 31, ~~2023:~~2024:


PSUs activity	Number of Performance -Based Awards			Weighted-Average Grant Date Fair Value		Number of Performance -Based Awards			Weighted-Average Grant Date Fair Value
Non-vested share units as of December 31, 2022		792,108		$	10.48
Non-vested share units as of December 31, 2023							731,889		$	11.19
Granted		75,715			10.17		146,618			10.30
Vested		(174,553	)		11.36		(153,662	)		10.30
Non-vested share units as of March 31, 2023		693,270		$	10.22
Non-vested share units as of March 31, 2024							724,845		$	11.20

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 ~~condensed~~ consolidated balance sheets and was $~~0.7~~ ~~million and $0.8 million,~~not material as of March 31, ~~2023~~2024 and December 31, ~~2022, respectively.~~2023.

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, ~~2023~~2024 and December 31, ~~2022.~~2023.

Contract Balances

Table of Contents

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, ~~2023,~~2024, and December 31, ~~2022,~~2023, our receivables from contracts with customers were $~~41.8~~43.5 million and $~~33.6~~40.8 million, respectively.

Costs incurred to enter into new or to 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 $23.7 million and $2.6 million as of March 31, 2024 and December 31, 2023, respectively, and is presented within other non-current assets in the accompanying condensed consolidated balance sheets.The increase in other non-current assets and other long-term liabilities as of March 31, 2024 was primarily due to fees accrued as a result of a new contract entered into during the first quarter of 2024. Amortization of the deferred contract cost was $1.0 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively. Amortization of deferred costs are included in cost of services in the accompanying condensed consolidated statements of operations. Our contract liabilities for gift cards and customer loyalty programs are described above.

Disaggregation of Revenue and Segment Reporting

~~Table of Contents~~

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,

2023

2022

Service revenues:

Maritime
$
140,333

$
63,361

Destination resorts

9,788

7,801

Total service revenues

150,121

71,162

Product revenues:

Maritime

31,021

15,164

Destination resorts

723

695

Timetospa.com

590

642

Total product revenues

32,334

16,501

Total revenues
$
182,455

$
87,663



	Three Months Ended March 31,
	2024		2023
Service revenues:
Maritime	$	161,713	$	140,333
Destination resorts		10,496		9,788
Total service revenues		172,209		150,121
Product revenues:
Maritime		37,730		31,021
Destination resorts		711		723
Timetospa.com		576		590
Total product revenues		39,017		32,334

Total revenues	$	211,226	$	182,455

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 resort spas. 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 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,

2023

2022

Revenues:

U.S.

$
5,078

$
6,396

Other countries

6,216

4,475

Not connected to a country

171,161

76,792

Total

$
182,455

$
87,663

As of

March 31,
2023

December 31,
2022

Property and equipment, net:

U.S.

$
5,313

$
5,363

Other countries

1,896

1,728

Not connected to a country

7,572

7,426

Total

$
14,781

$
14,517

Table of Contents


	Three Months Ended March 31,
	2024		2023
Revenues:
U.S.	$	5,083	$	5,078
Other countries		6,876		6,216
Not connected to a country		199,267		171,161
Total	$	211,226	$	182,455


	As of
	March 31, 2024		December 31, 2023
Property and equipment, net:
U.S.	$	5,012	$	4,536
Other countries		1,909		2,022
Not connected to a country		8,254		8,448
Total	$	15,175	$	15,006

9. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE ~~(LOSS)~~ INCOME

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

Accumulated Other Comprehensive (Loss) Income for the Three Months Ended March 31, 2023

Accumulated Other Comprehensive (Loss) Income for the Three Months Ended March 31, 2022

Foreign Currency Translation Adjustments

Changes Related to Cash Flow Derivative Hedge (1)

Accumulated Other Comprehensive (Loss) Income

Foreign Currency Translation Adjustments

Changes Related to Cash Flow Derivative Hedge (1)

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss, beginning of period
$
(1,229
)

$
5,026

$
3,797

$
(673
)

$
(1,324
)

$
(1,997
)

Other comprehensive (loss) income before reclassifications

188

(232
)

(44
)

(242
)

3,243

3,001

Amounts reclassified from accumulated other comprehensive (loss) income

-

(739
)

(739
)

-

397

397

Net current period other comprehensive (loss) income

188

(971
)

(783
)

(242
)

3,640

3,398

Accumulated other comprehensive (loss) income, end of period
$
(1,041
)

$
4,055

$
3,014

$
(915
)

$
2,316

$
1,401


	Accumulated Other Comprehensive Income for the Three Months Ended March 31, 2024									Accumulated Other Comprehensive Income for the Three Months Ended March 31, 2023
	Foreign Currency Translation Adjustments			Changes Related to Cash Flow Derivative Hedge (1)			Accumulated Other Comprehensive Income				Foreign Currency Translation Adjustments			Changes Related to Cash Flow Derivative Hedge (1)			Accumulated Other Comprehensive Income
Accumulated other comprehensive income, beginning of period	$	(917	)	$	2,372		$	1,455			$	(1,229	)	$	5,026		$	3,797
Other comprehensive (loss) income before reclassifications		(38	)		267			229				188			(232	)		(44	)
Amounts reclassified from accumulated other comprehensive income		-			(947	)		(947	)			-			(739	)		(739	)
Net current period other comprehensive (loss) income		(38	)		(680	)		(718	)			188			(971	)		(783	)
Accumulated other comprehensive income, end of period	$	(955	)	$	1,692		$	737			$	(1,041	)	$	4,055		$	3,014

(1) See Note 10.

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, 2023

Fair Value Measurements at December 31, 2022

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

$
2,974

$
-

$
2,974

$
-

$
3,117

$
-

$
3,117

$
-

Derivative financial instruments (1)

Other non-current assets

$
1,082

-

1,082

-

1,909

-

1,909

-

Total assets

$
4,056

$
-

$
4,056

$
-

$
5,026

$
-

$
5,026

$
-

Liabilities:

Warrants

Warrant liabilities

74,800

-

74,800

-

52,900

-

52,900

-

Total liabilities

$
74,800

$
-

$
74,800

$
-

$
52,900

$
-

$
52,900

$
-

The fair value of the Public Warrants and 2020 PIPE Warrants are considered a Level 2 valuation and are determined using the Monte Carlo model. ~~In March 2023, the Company entered into Exchange Agreements with certain holders of its~~The Public Warrants expired on March 19, 2024, with warrants remaining unexercised as of the expiration date cancelled, and there were no amounts outstanding as of March 31, 2024 (See Note 5)~~. Certain assumptions were used to determine the fair value of the Public Warrants to be Exchanged ("Public Warrants to be Exchanged"). The~~.The significant assumptions which the Company used in the model ~~are:~~are presented in the table below.

March 31, 2023

December 31, 2022

Public Warrants to Be Exchanged

Public Warrants

2020 PIPE Warrants

Public Warrants

2020 PIPE Warrants

Stock price

$
11.99

$
11.99

$
11.99

$
9.33

$
9.33

Strike price

$
-

$
11.50

$
5.75

$
11.50

$
5.75

Remaining life (in years)

0.06

0.97

2.20

1.22

2.45

Volatility

19
%

40
%

45
%

44
%

44
%
Interest rate

4.68
%

4.60
%

3.97
%

4.61
%

4.28
%
Redemption price

$
-

$
18.00

$
14.50

$
18.00

$
14.50


	March 31, 2024			December 31, 2023
	2020 PIPE Warrants			Public Warrants			2020 PIPE Warrants

Stock price	$	13.04		$	14.10		$	14.10
Strike price	$	5.75		$	11.50		$	5.75
Remaining life (in years)		1.28			0.22			1.45
Volatility		37	%		34	%		38	%
Interest rate		4.85	%		5.36	%		4.49	%
Redemption price	$	14.50		$	18.00		$	14.50

The fair value of the Sponsor Warrants is considered a Level 2 valuation and is determined using the ~~Black-Sholes~~Black-Scholes model. ~~In March 2023, the Company entered into Exchange Agreements with certain holders of its~~The Sponsor Warrants expired on March 19, 2024 and there were no amounts outstanding as of March 31, 2024 (See Note 5). ~~Certain assumptions were used to determine the fair value of the Sponsor Warrants to be Exchanged ("Sponsor Warrants to be exchanged").~~ The significant assumptions which the Company used in the model ~~are:~~are presented in the table below.


	December 31, 2023
	Sponsor Warrants
Stock price	$	14.10
Strike price	$	11.50
Remaining life (in years)		0.22
Volatility		38	%
Interest rate		5.36	%
Dividend yield		0.0	%

Table of Contents

March 31, 2023

December 31, 2022

Sponsor Warrants to Be Exchanged

Sponsor Warrants

Sponsor Warrants

Stock price

$
11.99

$
11.99

$
9.33

Strike price

$
-

$
11.50

$
11.50

Remaining life (in years)

0.06

0.97

1.22

Volatility

18.80%

40
%

44
%
Interest rate

4.68%

4.60
%

4.61
%
Dividend yield

0.0%

0.0
%

0.0
%

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 overthe life of the respective agreement without anexchange 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 2019, the Company entered into a floating-to-fixed interest rate swap agreement to make a series of payments based on a fixed interest rate of 1.457% and receive a series of payments based on the greater of 1 Month USD LIBOR or Strike which is used to hedge the Company’s exposure to changes in cash flows associated with its variable rate Term Loan Facilities and has designated this derivative as a cash flow hedge. Both the fixed and floating payment streams are based on a notional amount of $174.7 million at the inception of the contract. In June 2023, the interest rate swap agreement was amended to replace the reference rate from LIBOR to SOFR, to be consistent with the amended First Lien Credit Facilities.

The interest rate swap agreement has a maturity date of September 19, 2024. As of March 31, ~~2023~~2024 and December 31, ~~2022,~~2023, the notional amount iswas $95.4 ~~million and $101.0~~ ~~million, respectively.~~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 $~~1.0~~1.7 million of income from accumulated other comprehensive income (loss) into interest expense ~~within~~over the ~~next twelve months.~~remainder of the term of the swap which expires on September 19, 2024 .

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.

~~Table of Contents~~

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,

2023

2022

(Losses) gain recognized in accumulated other comprehensive income (loss)

$
(232
)

$
3,243

(Losses) gains reclassified from accumulated other comprehensive income (loss) to interest expense

$
(739
)

$
397


	Three Months Ended March 31,
	2024			2023
Gain (losses) recognized in accumulated other comprehensive income	$	267		$	(232	)

Gains reclassified from accumulated other comprehensive income to interest expense	$	(947	)	$	(739	)

11. INCOME TAXES

Table of Contents

For the three months ended March 31, ~~2023~~2024 and ~~2022,~~2023, the Company recorded an income tax expense ~~(benefit)~~ of $0.6 million ~~and $(0.1) million, respectively.~~for each period. 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 ~~the change in valuation allowance,~~ foreign rate differential, including income earned in jurisdictions not subject to income taxes, ~~and~~ withholding taxes due in various ~~jurisdictions. We believe that it is reasonably possible that a decrease of up to $3.4~~ ~~million~~jurisdictions and the change in ~~uncertain tax benefits related to foreign tax exposures may be necessary within the coming year as a result of our potential participation in a tax amnesty program to settle the liability.~~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 ~~as of March 31, 2023 and~~during the year ended December 31, ~~2022~~2020 and is included in “Accrued expenses” on the Company's condensed consolidated balance ~~sheets.~~sheets as of March 31, 2024 and December 31, 2023. The Company believes the ultimate outcome of this matter will not have a material adverse impact on the consolidated financial statements.

13. SUBSEQUENT EVENTS

~~On April 25, 2023, the Company closed the exchange of the Sponsor Warrants. Certain directors and affiliates of the Company exchanged~~ ~~3,055,906~~ ~~Sponsor Warrants at a fixed exchange ratio of~~ ~~0.175~~ ~~Common Shares per Sponsor Warrant for an aggregate of~~ ~~534,780~~ ~~Common Shares, and non-affiliated holders of Sponsor Warrants exchanged~~ ~~928,003~~ ~~Sponsor Warrants at an exchange ratio of~~ ~~0.2047~~ ~~Common Shares per Sponsor Warrant for an aggregate of~~ ~~189,958~~ ~~Common Shares.~~ ~~The exchange ratio was determined pursuant to the Exchange Agreements and was based on the 30-day VWAP of Common Shares, ending on April 24, 2023. On April 26, 2023, the Company closed the exchange of the Public Warrants, and holders of Public Warrants exchanged~~ ~~15,286,824~~ ~~Public Warrants at an exchange ratio of~~ ~~0.2047~~ ~~Common Shares per Public Warrant for an aggregate of~~ ~~3,129,200~~ ~~Common Shares. As a result of the closing of the above-described transactions, the Company has exchanged an aggregate of approximately~~ 95~~% of the outstanding Public Warrants and approximately~~ 50~~% of the outstanding Sponsor Warrants. Following the transaction,~~ ~~83,697,994~~ ~~voting shares and~~ ~~13,421,914~~ ~~non-voting shares of common stock are issued and outstanding. See Note 5 "Warrant Liabilities" for further detail.~~

On April ~~6, 2023, we repaid an aggregate principal~~24, 2024, the Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $50 million of its common shares. 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 10b5-1 plans, 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 $~~5.0~~ ~~million~~stock repurchases will depend on ~~our Second Lien Term Loan Facility, together with all accrued interest thereon. Accordingly, as~~a variety of factors, including business and market conditions. The share repurchase program may be suspended, modified, or discontinued at any time and the ~~date~~Company has no obligation to repurchase any specific value or number of ~~this quarterly report, our Second Lien Term Loan Facility has been fully repaid.~~its common shares under the program.

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

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, ~~2022.~~2023. We assume no obligation to update any of these forward-looking statements.

During the first quarter of 2023, we continued to execute the resumption of our health and wellness center operations on cruise ships and in destination resorts, and have substantially returned to normal operations. Despite the impacts of the recent pandemic on the travel leisure industry and our business, we believe we have certain strengths that have positioned us as a leader in the hospitality-based health and wellness industry and as a participant in the continued recovery of the cruise and hospitality industries.

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 20x 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 recruitment, training and logistics platform, 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 our cruise line and destination resort partners’ 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 back-end recruiting, training and logistics platforms to manage our operational complexity, maintain our industry-leading quality standards, and maximize revenue and profitability per 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 almost all of our cruise line agreements that expired or were scheduled to expire.

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

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:

Cost of services. Cost of services consists primarily of an allocable portion of payments to cruise line partners (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, wages paid directly to destination resort employees, payments to destination resort partners, the allocable cost of products consumed in the rendering of services, 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 corresponding increases or decreases in service revenues. Cost of services has tended to remain consistent as a percentage of service revenues.

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 line 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 tended to remain consistent as a percentage of product revenues.

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 prior transactions.~~

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

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

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

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

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

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

Table of Contents

Three Months
Ended
March 31, 2023

% of Total
Revenue

Three Months
Ended
March 31, 2022

% of Total
Revenue

(dollars in thousands, except per share amounts)

REVENUES:

Service revenues

$
150,121

82
%

$
71,162

81
%
Product revenues

32,334

18
%

16,501

19
%
Total revenues

182,455

100
%

87,663

100
%
COST OF REVENUES AND OPERATING EXPENSES:

Cost of services

126,328

69
%

62,667

71
%
Cost of products

28,265

15
%

14,652

17
%
Administrative

3,570

2
%

3,833

4
%
Salaries, benefits and payroll taxes

8,921

5
%

8,727

10
%
Amortization of intangible assets

4,206

2
%

4,206

5
%
Total cost of revenues and operating expenses

171,290

94
%

94,085

107
%
Income (loss) from operations

11,165

6
%

(6,422
)

-7
%
OTHER (EXPENSE) INCOME

Interest expense, net

(4,610
)

-3
%

(3,407
)

-4
%
Change in fair value of warrant liabilities

(21,900
)

-12
%

3,400

4
%
Total other expense

(26,510
)

-15
%

(7
)

-0
%
Loss before income tax expense (benefit)

(15,345
)

-8
%

(6,429
)

-7
%
INCOME TAX EXPENSE (BENEFIT)

559

0
%

(113
)

0
%
NET LOSS

$
(15,904
)

-9
%

$
(6,316
)

-7
%
NET LOSS PER VOTING AND NON-VOTING SHARE

Basic and diluted

$
(0.17
)

$
(0.07
)

WEIGHTED-AVERAGE SHARES OUTSTANDING

Basic and diluted

93,418

92,204

Comparison of Results for the Three Months Ended March 31, ~~2023~~2024 and ~~2022~~

~~Results of operations for the first quarter of~~ 2023 ~~continued to accelerate from 2022 as the Company has substantially returned to normalized operations since the advent of the COVID-19 pandemic.~~

Revenues. Revenues for the three months ended March 31, 2024 and 2023 ~~and 2022~~ were ~~$182.5~~$211.2 million and ~~$87.7~~$182.5 million, respectively. The increase was ~~primarily~~ attributable to our average ship count ~~of 173~~increasing 9% to 188 health and wellness centers onboard ships operating during the quarter, compared with our average ship count of ~~104~~173 health and wellness centers onboard ships operating during the first quarter of ~~2022~~2023. In addition, we benefited from our initiatives to drive revenue growth in each of our on-board health and wellness centers through enhanced guest engagement and experiences, our guest service and product offering innovations, and the ~~occupancy~~disciplined execution of ~~the average ships in service in the respective quarters.~~our complex operating protocols by our on-board and corporate teams.

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

Cost of services. Cost of services for the three months ended March 31, ~~2023~~2024 were ~~$126.3~~$144.0 million, an increase of ~~$63.7~~$17.7 million, or ~~102%~~14%, compared to ~~$62.7~~$126.3 million for the three months ended March 31, ~~2022.~~2023. The increase was primarily attributable to costs associated with increased service revenues of ~~$150.1~~$172.2 million in the quarter from our operating health and wellness centers at sea and on land, compared with service revenues of ~~$71.2~~$150.1 million in the first quarter of ~~2022.~~2023.

Cost of products. Cost of products for the three months ended March 31, ~~2023~~2024 were ~~$28.3~~$33.5 million, an increase of ~~$13.6~~$5.3 million, or ~~93%~~19%, compared to ~~$14.7~~$28.3 million for the three months ended March 31, ~~2022.~~2023. The increase was primarily attributable to costs associated with increased product revenues of ~~$32.3~~$39.0 million in the quarter from our operating health and wellness centers at sea and on land, compared to product revenues of ~~$16.5~~$32.3 million in the first quarter of ~~2022.~~2023.

Administrative. Administrative expenses for the three months ended March 31, ~~2023~~2024 were ~~$3.6~~$4.1 million, ~~a decrease~~an increase of ~~$0.2~~$0.5 million, or 7%14%, compared to ~~$3.8~~$3.6 million for the three months ended March 31, ~~2022.~~2023. The ~~decrease~~increase was primarily attributable to ~~a reduction of costs~~professional fees incurred in the three months ended March 31, ~~2023~~2024 in connection ~~to administrative~~with increased public company costs ~~related to recruitment, travel, housing and training of shipboard employees at our London Wellness Academy and professional fees.~~as the Company emerged from emerging growth company status.

Salaries, benefits and payroll taxes. Salaries, benefits and payroll taxes for the three months ended March 31, ~~2023~~2024 were ~~$8.9~~$8.5 million, ~~an increase~~a decrease of ~~$0.2~~$0.4 million, or 2%5%, compared to ~~$8.7~~$8.9 million for the three months ended March 31, ~~2022.~~2023. The ~~increase~~decrease was primarily attributable the ~~measured increase~~lower stock-based compensation expense in ~~corporate head count to account for~~ the ~~return to normal operations.~~three months ended March 31, 2024.

Amortization of intangible assets. Amortization of intangible assets for the three months ended March 31, ~~2023 and 2022 was~~2024 were $4.1 million, a decrease of $0.1 million, or 1% compared to $4.2 million for ~~both periods.~~the three months ended March 31, 2023.

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, ~~2023~~2024 was ~~($4.6)~~$3.0 million, ~~an increase~~a decrease of ~~$1.2~~$1.7 million, or ~~35%~~36%, compared to ~~($3.4)~~$4.6 million for the three months ended March 31, ~~2022.~~2023. The ~~increase~~decrease was primarily attributable to ~~the interest rate increase partially offset by~~ lower debt balances. Since the year ended December 31, 2022, we have repaid a total of $76.0 million in debt instruments. The change in fair value of the outstanding warrants during the three months ended March 31, ~~2023~~2024 was a gain of $7.7 million compared to a loss of ($21.9) ~~million compared to a gain of $3.4~~ million during the three months ended March 31, ~~2022.~~2023. Net gain in the change in fair value of warrant liabilities was the result of the remeasurement to fair value of the warrants exercised during the first quarter of 2024 and changes in market prices of our common stock and other observable inputs deriving the value of these financial instruments.

Income tax expense.Income tax expense for the three months ended March 31, 2024 and 2023 was $0.6 million for each period.

Net income (loss). Net income for the three months ended March 31, 2024 was $21.2 million, an increase of $37.1 million, or 233%, compared to a net loss of ($15.9) million for the three months ended March 31, 2023. The $37.1 million increase in net income was attributable to: (i) a $29.6 million positive change in fair value of warrant liabilities; (ii) a $1.7 million decrease in interest expense; and (iii) a $5.8 million positive change in income from operations. The change in fair value of warrant liabilities ~~is the result of changes in market prices deriving the value of the financial instruments.~~

~~Income tax expense (benefit)~~ ~~Income tax expense (benefit) for~~during the three months ended March 31, ~~2023~~2024 was ~~$0.6~~a gain of $7.7 million ~~an increase of $0.7 million, or 595%,~~ compared to ~~an income tax benefit~~a loss of ($~~0.1)~~21.9) million ~~for~~during the three months ended March 31, ~~2022. The increase was primarily driven by a change in valuation allowance, withholding taxes due in various jurisdictions and the decrease in availability of net operating losses.~~

~~Net loss~~. Net loss for the three months ended March 31, 2023 was ($15.9) million, a decrease of $9.6 million, or 152%, compared to a net loss of ($6.3) million for the three months ended March 31, 2022. The decrease was primarily attributable to the negative change in fair value of warrant liabilities as a result of the increased share price.2023. The change in fair value of warrant liabilities was ~~a loss~~the result of ~~($21.9) million~~changes in ~~the quarter, compared to a gain~~market prices of ~~$3.4 million in~~our common stock and other observable inputs deriving the ~~first quarter of 2022. Excluding the change in fair~~ value of ~~warrant liabilities~~ the improvement in the first quarter of 2023 was primarily a result of the $17.6 million change in income from operations derived primarily from the increase in the number of wellness centers onboard ships operating during the quarter.financial instruments.

~~Prior to~~Since our resumption of operations following the conclusion of the COVID-19 pandemic, we have funded our operations principally with cash flow from operations. Upon the onset of the COVID-19 pandemic in March 2020, we took prudently aggressive actions to increase our financial flexibility by securing and reallocating capital resources, including: (i) eliminating all non-essential operating and capital expenditures, (ii) withdrawing the Company dividend program until further notice, (iii) deferring payment of a dividend declared on February 26, 2020 until approved by the Board of Directors, (iv) completing the 2020 Private Placement on June 12, 2020; (v) borrowing $7 million, net, on our First Lien Revolving Facility, leaving $13 million available and undrawn; and (vi) entering into an agreement to allow for the Company to operate its ATM Program, which permitted the Company to sell, from time to time, common shares up to an aggregate offering price of $50.0 million, pursuant to which, as of July 31, 2022, shares representing approximately $10 million remained available for sale under the Agreement, and which Agreement was terminated by the Company on August 1, 2022.

~~Since the substantial easing of COVID-19 pandemic restrictions, our~~Our principal uses for our liquidity have been funding our return to service ~~on 179~~of our health and wellness centers onboard 193 cruise ships and in 51 destination resorts, including associated working capital investment and capital expenditures; debt service, ~~and~~including full repayment of $7 million borrowed under our First Lien Revolving Facility, full repayment of our $25 million Second Lien Term Loan ~~Facility.~~Facility, and $62 million repayment of our First Lien Term Loan Facility; and purchasing 1,395,432 of our common shares from Steiner Leisure Limited pursuant to a share repurchase agreement, among other uses of our liquidity.

Our results continued to experience significant recovery from the adverse impact of the recent pandemic during the three months ended March 31, ~~2023~~2024 when compared to the prior year period, building upon the increasing magnitude of our positive net operating cash flows. Taking into account the ~~actions described above~~magnitude and positive trend of our results of operations, and our current financial condition and resources, we have concluded that we will have sufficient liquidity to satisfy our ~~obligations~~existing and planned capital requirements over the next twelve months and thereafter and comply with all debt covenants as required by our debt agreements.

The following table shows summary cash flow information for the three months ended March 31, ~~2023~~2024 and ~~2022.~~2023.



(in thousands)	Three Months Ended March 31, 2023			Three Months Ended March 31, 2022			Three Months Ended March 31, 2024			Three Months Ended March 31, 2023

Net loss	$	(15,904	)	$	(6,316	)
Net income (loss)							$	21,166		$	(15,904	)
Depreciation and amortization		5,509			5,477			6,209			5,509
Amortization of deferred financing costs		324			257			346			324
Change in fair value of warrant liabilities		21,900			(3,400	)		(7,723	)		21,900
Stock-based compensation		2,591			3,286			2,094			2,591
Provision for doubtful accounts		5			—			4			5
Loss from write-offs of property and equipment		—			10
Noncash lease expense		51			20			11			51
Deferred income taxes		227			—			—			227
Change in working capital		(12,511	)		105			(7,153	)		(12,511	)
Net cash provided by (used in) operating activities		2,192			(561	)
Net cash provided by operating activities								14,954			2,192
Capital expenditures		(1,319	)		(919	)		(1,206	)		(1,319	)
Net cash used in investing activities		(1,319	)		(919	)		(1,206	)		(1,319	)
Proceeds from exercise of warrants		215			55			51,698			215
Repurchase of common shares								(7,736	)		—
Repayment on term loan facilities		(10,521	)		(212	)		(20,000	)		(10,521	)
Net cash used in financing activities		(10,306	)		(157	)
Net cash provided by (used in) financing activities								23,962			(10,306	)
Effect of exchange rate changes on cash		168			(246	)		(24	)		168
Net decrease in cash and cash equivalents and restricted cash	$	(9,265	)	$	(1,883	)
Net increase (decrease) in cash and cash equivalents and restricted cash							$	37,686		$	(9,265	)

Comparison of Results for the Three Months Ended March 31, ~~2023~~2024 and ~~2022~~2023

Operating activities. Our net cash provided by ~~(used in)~~ operating activities for the three months ended March 31, 2024 and 2023 ~~and 2022~~ were ~~$2.2~~$15.0 million and ~~$(0.6)~~$2.2 million, respectively. In the three months ended March 31, ~~2023,~~2024, net operating cash flows continue to accelerate from ~~2022,~~2023, as the Company has substantially returned to normal operations. In the three months ended March 31, 2022, the Company incurred a deficit in net cash provided by (used in) operating activities, as the Company had substantially reduced revenuesgrew total revenue 16%, income from operations ~~onboard cruise ships due to the COVID-19 pandemic, while still incurring operating expenses.~~by 52% and enhanced our balance sheet.

Investing activities. Our net cash used in investing activities for the three months ended March 31, 2024 and 2023 were $1.2 million and ~~2022 were~~ $1.3 million, ~~and $0.9 million,~~ respectively. In the three months ended March 31, 2023, the Company incurred more capital expenditures than in the three months ended March 31, 2022, as the Company has substantially returned to normal operations since the advent of the COVID-19 pandemic.

Financing activities. Our net cash ~~used in~~provided by (used in) financing activities for the three months ended March 31, 2024 and 2023 ~~and 2022~~ were ~~$10.3~~$24.0 million and ~~$0.2~~($10.3) million, respectively. 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 the First Lien Term Loan Facility and utilized $7.7 million to repurchase 606,386 of our common shares. For the three months ended March 31, 2023, the Company repaid $0.5 million on the First Lien Term Loan Facility and $10.0 million on the Second Lien Term Loan Facility and received proceeds from the exercise of public warrants of $0.2 million. ~~For the three months ended March 31, 2022, the Company repaid $0.2 million on the First Lien Term Loan Facility and received proceeds from the exercise of public warrants of $0.1 million.~~

A significant portion of our revenues are generated onboard cruise ships and are subject to specific individual cruise itineraries, ~~as to~~dependent on time of year and geographic location, among other factors. As a result, we experience varying degrees of seasonality as the demand for cruises is stronger in the Northern Hemisphere during the summer months and during holidays. Accordingly, the third quarter and holiday periods generally result in ~~the~~our highest revenue ~~yields for us.~~yields. Further, cruises and destination resorts have been negatively affected by the frequency and intensity of hurricanes, particularly during the August through October period, which may be increasing in frequency and intensity due to climate change.

As of March 31, ~~2023,~~2024, our net future contractual obligations have not changed significantly from the amounts disclosed in our ~~2022~~2023 Form 10-K.

Management’s discussion and analysis of financial condition and results of operations is based upon our condensed consolidated unaudited financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated unaudited financial statements and the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions or conditions. At least quarterly, management reevaluates its judgments and estimates, which are based on historical experience, current trends and various other assumptions that are believed to be reasonable under the circumstances.

Our critical accounting policies are included in our ~~2022~~2023 Form 10-K. We believe that there have been no significant changes during the three months ended March 31, ~~2023~~2024 to the critical accounting policies disclosed in our ~~2022~~2023 Form 10-K.

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, income or expenses, results of operations, liquidity, capital expenditures or capital resources.

We do not believe that inflation has had a material adverse effect on our revenues or results of operations. However, public demand for activities, including cruises, is influenced by general economic conditions, including inflation, global health epidemics/pandemics and customer preferences. Periods of economic softness could have a material adverse effect on the cruise industry and hospitality industry upon which we are dependent. Such a slowdown could adversely affect our results of operations and financial condition. The COVID-19 pandemic substantially negatively impacted our business, operations, results of operations and financial condition in 2022 and 2021. Recurrence of the more severe aspects of the recent adverse economic conditions, ~~including a reescalation of the COVID-19 outbreak,~~ increases in inflation rates and interest rates, as well as periods of fuel price increases, could have a material adverse effect on our business, results of operations and financial condition during the period of such recurrence. ~~Weakness in the U.S. Dollar compared to the U.K. Pound Sterling and the Euro also could have a material adverse effect on our results of operations and financial condition.~~

From time to time, including in this report and other disclosures, we may issue “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views about future events and are subject to known and unknown risks, uncertainties and other factors which may cause our actual results to differ materially from those expressed or implied by such forward-looking statements. We attempt, whenever possible, to identify these statements by using words like “will,” “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “forecast,” “future,” “intend,” “plan,” “estimate” and similar expressions of future intent or the negative of such terms.

Such forward-looking statements include, but are not limited to, statements regarding:

These forward-looking statements are based on information available as of the date of this report and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

For a discussion of our market risks, refer to Part II, Item 7A. - Quantitative and Qualitative Disclosures about Market Risk in our ~~2022~~2023 Form 10-K. There have been no material changes to our exposure to market risks since the date of our 2023 Form 10-K.

We carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as that term is defined in ~~Rules~~Rule 13a-15(e) ~~and 15(d)-15(e)~~ of the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, ~~2023.~~2024 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in U.S. Securities and Exchange Commission rules and forms, and includes controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting (as that term is is defined in ~~Rules~~Rule 13a-15(f) ~~and 15(d)-15(f)~~ under the Exchange Act) that occurred during the three months ended March 31, ~~2023~~2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes in the risk factors previously disclosed in the Company’s ~~2022~~2023 Form 10-K, Part II, Item 1A. “Risk Factors.” However, the risks and uncertainties that we face are not limited to those set forth in the ~~2022~~2023 Form 10-K. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also materially and adversely affect our business and the trading price of our securities.

* ~~To be furnished by amendment within the 30-day grace period provided by Rule 405(a)(2) of Regulation S-T.~~Filed herewith.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


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~~P.O. Box N-624 Nassau, Island of New Providence, Commonwealth of The Bahamas		Not Applicable
(Address of principal executive offices)		(Zip Code)


Large ~~Accelerated filer~~	☐	Accelerated filer	☒	Accelerated filer	☐

Non-Accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☒☐


		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


Exhibit No.

~~31.1~~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~~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~~32.1**		Section 1350 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~32.2~~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

101.CAL*		~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~

101.DEF*		~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~

101.LAB*		~~Inline XBRL Taxonomy Extension Label Linkbase Document~~

101.PRE*		~~Inline XBRL Taxonomy Extension Presentation Linkbase 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, President, Chief Executive Officer and Director
		Principal Executive Officer

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


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


	Balance as of March 31,				Balance as of March 31,
	2023		2022		2024		2023
Cash and cash equivalents	$	22,799	$	29,054	$	65,390	$	22,799
Restricted cash		1,198		1,896		1,198		1,198
Total cash and restricted cash in the condensed consolidated statement of cash flows	$	23,997	$	30,950	$	66,588	$	23,997


	Borrowing Capacity		Amount Borrowed
First Lien Revolving Facility	$	20,000	$	-


RSUs Activity	Number of Awards			Weighted-Average Grant Date Fair Value
Non-vested share units as of December 31, 2022		1,284,570		$	9.28
Vested		(105,072	)		11.85
Non-vested share units as of March 31, 2023		1,179,498		$	9.05


	March 31, 2023				December 31, 2022				March 31, 2024				December 31, 2023
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Cash	$	22,799	$	22,799	$	32,064	$	32,064	$	65,390	$	65,390	$	27,704	$	27,704
Restricted cash		1,198		1,198		1,198		1,198		1,198		1,198		1,198		1,198
Total cash	$	23,997	$	23,997	$	33,262	$	33,262	$	66,588	$	66,588	$	28,902	$	28,902
First lien term loan facility	$	200,160	$	191,500	$	200,681	$	192,770
Second lien term loan facility		5,000		4,630		15,000		14,500
Total debt (a)	$	205,160	$	196,130	$	215,681	$	207,270
First lien term loan facility (a)									$	139,639	$	145,110	$	159,639	$	162,560


		Fair Value Measurements at March 31, 2023								Fair Value Measurements at December 31, 2022
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	$	2,974	$	-	$	2,974	$	-	$	3,117	$	-	$	3,117	$	-
Derivative financial instruments (1)	Other non-current assets	$	1,082		-		1,082		-		1,909		-		1,909		-
Total assets		$	4,056	$	-	$	4,056	$	-	$	5,026	$	-	$	5,026	$	-
Liabilities:
Warrants	Warrant liabilities		74,800		-		74,800		-		52,900		-		52,900		-
Total liabilities		$	74,800	$	-	$	74,800	$	-	$	52,900	$	-	$	52,900	$	-


	March 31, 2023									December 31, 2022
	Public Warrants to Be Exchanged			Public Warrants			2020 PIPE Warrants			Public Warrants			2020 PIPE Warrants

Stock price	$	11.99		$	11.99		$	11.99		$	9.33		$	9.33
Strike price	$	-		$	11.50		$	5.75		$	11.50		$	5.75
Remaining life (in years)		0.06			0.97			2.20			1.22			2.45
Volatility		19	%		40	%		45	%		44	%		44	%
Interest rate		4.68	%		4.60	%		3.97	%		4.61	%		4.28	%
Redemption price	$	-		$	18.00		$	14.50		$	18.00		$	14.50


	March 31, 2023					December 31, 2022
	Sponsor Warrants to Be Exchanged		Sponsor Warrants			Sponsor Warrants
Stock price	$	11.99	$	11.99		$	9.33
Strike price	$	-	$	11.50		$	11.50
Remaining life (in years)	0.06			0.97			1.22
Volatility	18.80%			40	%		44	%
Interest rate	4.68%			4.60	%		4.61	%
Dividend yield	0.0%			0.0	%		0.0	%


	Three Months Ended March 31
	2023		2022
Average Ship Count		173		104
Period End Ship Count		179		170
Average Weekly Revenue Per Ship	$	77,076	$	58,775
Average Revenue Per Shipboard Staff Per Day	$	542	$	449
Average Resort Count		48		47
Period End Resort Count		51		51
Average Weekly Revenue Per Resort	$	16,973	$	13,992


	Three Months Ended March 31, 2023			% of Total Revenue			Three Months Ended March 31, 2022			% of Total Revenue
(dollars in thousands, except per share amounts)
REVENUES:
Service revenues	$	150,121			82	%	$	71,162			81	%
Product revenues		32,334			18	%		16,501			19	%
Total revenues		182,455			100	%		87,663			100	%
COST OF REVENUES AND OPERATING EXPENSES:
Cost of services		126,328			69	%		62,667			71	%
Cost of products		28,265			15	%		14,652			17	%
Administrative		3,570			2	%		3,833			4	%
Salaries, benefits and payroll taxes		8,921			5	%		8,727			10	%
Amortization of intangible assets		4,206			2	%		4,206			5	%
Total cost of revenues and operating expenses		171,290			94	%		94,085			107	%
Income (loss) from operations		11,165			6	%		(6,422	)		-7	%
OTHER (EXPENSE) INCOME
Interest expense, net		(4,610	)		-3	%		(3,407	)		-4	%
Change in fair value of warrant liabilities		(21,900	)		-12	%		3,400			4	%
Total other expense		(26,510	)		-15	%		(7	)		-0	%
Loss before income tax expense (benefit)		(15,345	)		-8	%		(6,429	)		-7	%
INCOME TAX EXPENSE (BENEFIT)		559			0	%		(113	)		0	%
NET LOSS	$	(15,904	)		-9	%	$	(6,316	)		-7	%
NET LOSS PER VOTING AND NON-VOTING SHARE
Basic and diluted	$	(0.17	)				$	(0.07	)
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic and diluted		93,418						92,204