ONESPAWORLD HOLDINGS Ltd (OSW) stock intrinsic value fair value estimate & owner earnings analysis

OneSpaWorld runs the health and wellness centers on cruise ships and at a few destination resorts. It operated on 206 ships at the end of 2025 under the Mandara and Chavana brands and cruise-line-specific brands. Three cruise groups drive most revenue: Carnival's brands 39.6% of 2025 revenue, Royal Caribbean's brands 28.2% and Norwegian's brands 17.7%. Contracts run three to 8.6 years, with an average of about three years remaining per ship, and most cover a cruise line's whole fleet plus new ships added during the term. The company has never had a contract terminated before its expiration date, though cruise lines can end agreements early in limited cases such as a ship being sold or withdrawn, or missed service standards. How we measure earnings. We start from operating cash flow, remove the swings from receivables, inventory, payables and accruals, subtract stock compensation as a real cost, and subtract the part of capital spending needed just to stay in business. Payments made to cruise lines to win or renew contracts (a $22.1 million outflow in 2024, about $3.7 million in 2025) are left in as a genuine cost of holding the business, so the lumpy 2024 figure and the light 2025 figure are both real. On that basis earnings per share were roughly $0.22 in 2022 (recovery year), $0.53 in 2023, $0.69 in 2024 and $0.81 in 2025. 2020 and 2021 were losses during the COVID-19 disruption, and earlier periods describe a different, pre-merger company, so we measure the current business from 2023, the first full year after the recovery. We use the middle of 2023-2025, about $0.69 per share, rather than the latest and highest year, because the 2025 figure benefited from low contract-renewal payments and that will not repeat every year. Earnings grew about 18% per share in 2025; our base case assumes about 2.4% for the first year, below that trailing rate. Base case (about $12.70 per share). Growth is credited only where it is evidenced: existing cruise partners have 26 new ships scheduled by the end of 2030 (roughly 12% more than the 206 ships served today), and most contracts automatically cover new ships. We credit about 2.4% a year for five years. Beyond 2030 we assume earnings continue flat, on the evidence of a twenty-year relationship record with no contract ever terminated early. We leave out price increases, higher spending per passenger, margin gains and new cruise-line partners because none is contracted or a repeated result we can rely on. Bear case (about $5.70 per share). The business starts from the weaker 2023 earnings level, then shrinks about 3% a year indefinitely. The named risks are heavy concentration (the three largest groups are about 85% of revenue), contracts that can be terminated on limited notice in specified cases, average remaining contract life of only about three years, and large renewal payments (the $22.1 million in 2024). We also note that the COVID-19 disruption in 2020 and 2021 produced negative cash flow for two years, though we do not model a repeat. Bull case (about $16.10 per share). Earnings start from the stronger 2025 level and grow about 4% a year for five years, combining the scheduled 26 ships with the partial continuation of the recent gain in earnings, then hold flat. This needs the new ships delivered on schedule and renewal payments staying light. What would make this wrong. Loss or repricing of a Carnival, Royal Caribbean or Norwegian contract would cut value sharply. Shipbuilding delays could push out growth; the annual report itself flags delays in bringing new ships into service. Capital spending more than doubled to $15.1 million in 2025 and could stay high. Also, the largest operating subsidiary moved to the Cayman Islands and the Bahamas is implementing a minimum tax under the global Pillar Two rules, which could raise the company's tax cost.