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SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]  
SEGMENT REPORTING SEGMENT REPORTING
The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of our reportable segments. The Company determined that it has two operating and reportable segments: Obagi Medical and Milk Makeup. Each segment represents a business unit that focuses on distinct products, markets, and customers.
Obagi Medical - this segment consists of the business of Obagi. Obagi’s business activities include developing, marketing, and selling skin health products. These assets and activities are conducted by Obagi Global Holdings Limited and its wholly-owned subsidiaries.
Milk Makeup - this segment consists of the business of Milk. Milk’s business activities include developing, marketing, and selling cosmetics, skincare, and other beauty products. Milk generates revenue from the sale of cosmetics to retailers, including off-price retailers, and sales DTC via its website.
The accounting policies of the segments are the same as those described in “Note 2. Summary of Significant Accounting Policies.”
The Company's chief operating decision maker (“CODM”) is its Chief Executive Officer, who utilizes adjusted gross profit as the financial measure for assessing the performance of each segment. The CODM evaluates each segment's performance by comparing the current period's adjusted gross margin to those of prior periods and allocates resources based on the adjusted gross margin.
The following table includes segment revenue and significant segments expenses:
Year ended December 31, 2025Year ended December 31, 2024
(In thousands)Obagi MedicalMilk MakeupTotalObagi MedicalMilk MakeupTotal
Net revenue
$161,627 $110,444 $272,071 $149,266 $124,602 $273,868 
Adjusted cost of goods sold(1)
(38,403)(38,951)$(77,354)(30,697)(39,618)$(70,315)
Adjusted gross profit
$123,224 $71,493 $194,717 $118,569 $84,984 $203,553 
(1) Adjusted gross cost of goods sold excludes the fair value of the related party liability for the unfavorable discount to Obagi China Business as part of the Business Combination, the advanced purchase of specific products for the market in Vietnam sold through the SA Distributor that became obsolete when the contract was terminated, and the Supply Agreement and Formulations intangible assets amortized to cost of goods sold.
Year ended December 31, 2023
(In thousands)Obagi MedicalMilk MakeupTotal
Net revenue
$117,651 $100,487 $218,138 
Adjusted cost of goods sold(1)
(33,922)(33,801)$(67,723)
Adjusted gross profit
$83,729 $66,686 $150,415 
(1) Adjusted gross cost of goods sold excludes the fair value of the related party liability for the unfavorable discount to Obagi China Business as part of the Business Combination, the amortization of the inventory fair value step-up as a result of the Business Combination, and the Supply Agreement and Formulations intangible assets amortized to cost of goods sold.
The following table reconciles total consolidated adjusted gross profit to consolidated net loss before and after income taxes:
(In thousands)Year ended December 31, 2025Year ended December 31, 2024Year ended December 31, 2023
Adjusted gross profit$194,717 $203,553 $150,415 
Amortization of the fair value of the related party liability(1)
— (2,260)(4,058)
Discontinued product write-off(2)
494 2,864 — 
Amortization of the inventory fair value adjustment(3)
— — 1,691 
Amortization impact of intangible assets(4)
11,205 11,205 11,205 
Selling, general and administrative247,984 245,297 223,508 
Loss on impairment of goodwill152,018 5,031 — 
Interest expense, net25,094 17,155 18,906 
Loss on extinguishment of debt
24,398 — — 
Gain on sale of trademark
(5,679)— — 
Loss on acquisition
6,233 — — 
Change in fair value of derivative liabilities
(3,695)(23,627)10,337 
Change in contingent consideration liabilities
(861)— — 
Other expenses (income), net(229)(3,574)1,769 
Loss before income taxes$(262,245)$(48,538)$(112,943)
(1) Relates to the fair value of the related party liability for the unfavorable discount to Obagi China Business as part of the Business Combination.
(2) Relates to the advance purchase of specific products for the market in Vietnam sold through the SA Distributor that became obsolete when the contract was terminated.
(3) Relates to the amortization of the inventory fair value step-up as a result of the Business Combination.
(4) The Supply Agreement and Formulations intangible assets are amortized to cost of goods sold.
The Company does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not presented. All of the Company’s long-lived assets are located in the U.S.