Q1 2023 Aytu Biopharma Inc Earnings Call
At this time all participants are placed on a listen only mode and the floor will be opened for questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host Roger Wise, Sir the floor is yours.
Thank you very much.
Good afternoon, everyone and thank you for joining us for <unk> Biopharma is first quarter of fiscal year 2023 financial results Conference call.
Joining us on today's call is <unk> CEO , Josh Disbrow and the.
<unk> company's Chief Financial Officer, Mark Okay.
At the conclusion of today's prepared remarks, we'll open the call for a question and answer session.
I would like to remind everyone that today's call is being recorded a replay of today's call will be available by using the telephone numbers and conference I'd provided in the earnings press release issued earlier today.
Finally, I'd also like to call to your attention the customary safe Harbor disclosure regarding future looking information the conference call today will contain certain forward looking statements, including statements regarding the goals strategies beliefs expectations and future potential operating results of <unk>.
<unk> Biopharma.
Although management believes these statements are reasonable based on estimates assumptions and projections as of today.
These statements are not guarantees of future performance.
I'm sensitive information may no longer be accurate at the time of any telephonic.
Webcast replay actual results may differ materially as a result of risks uncertainties and other factors, including but not limited to the factors set forth in the Companys filings with the SEC.
Two undertakes no obligation to update or revise any of these forward looking statements.
With that said I'd now like to turn the event over to Josh <unk>, Chief Executive Officer of <unk> Biopharma.
Josh Please proceed.
Thank you Roger and welcome everyone I'm extremely excited to share with you the first quarter of fiscal 'twenty three financial results today, which include the company's first ever quarter of positive adjusted EBITDA and record quarterly revenue.
Clearly achieving positive adjusted EBITDA is transformational for us and positively changes to direct trajectory of <unk> in the years to come as.
As outlined in today's press release, the record quarterly net revenues of $27 7 million, which was an increase of 26% compared to the year ago quarter was driven by strong performances in both our Rx and consumer health segments. The Rx segment experienced 34% revenue growth due to the continuing execution of our sales force and the leverage we're continuing to gain.
Through <unk> connect our novel proprietary patient access program.
<unk> connect enables affordable predictable hassle free patient access to <unk> prescription products and along with our sales force and products is a cornerstone of our Rx business further our Rx segment had positive adjusted EBITDA of $2 7 million understanding that virtually all corporate overhead and G&A is burden to this segment. This is.
Now the second consecutive quarter, which the Rx segment has had positive adjusted EBITDA. Please note that you can see the adjusted EBITDA reconciliation to GAAP net income in the press release, we issued earlier this afternoon.
As I mentioned back in September our sales force is making significant strides with our physician and patient centric messaging and we witnessed that momentum once again in the first quarter. Additionally, we are experiencing tailwind from the growth of the markets. We serve both in ADHD and in pediatrics I'll dive into additional drivers within our Rx segment in a moment.
On the consumer health side, we posted strong 12% revenue growth compared to last year's first quarter and reduced our adjusted EBITDA loss. In this segment to just 493000 and importantly, we saw solid growth drivers coming up this fiscal year within consumer health, including the launch of additional OTC medicines, and the circle brand family, which I will talk more about here at <unk>.
Moment.
All told adjusted EBITDA for the company was positive $1 4 million during the first quarter compared to a negative $4 2 million in last year's first quarter, a dramatic improvement to be sure.
On October 13th we announced an important shift of the company's strategy aimed at accelerating the growth of our commercial business and achieving profitability. As a result, we noted the indefinite suspension of our clinical development programs, including <unk> hundred one storm for the treatment of vascular dealers Danlos syndrome, where beds. The suspension is expected to save the company over 'twenty.
And projected future study costs and allow us to continue the positive trajectory, we have with positive adjusted EBITDA as we center our efforts on growing revenue maximizing synergies and driving down expenses, all of which will serve to accelerate our path to profitability.
With our first adjusted EBITDA quarter now in hand that path has become markedly clearer.
We understand that the suspension of our <unk> hundred one clinical development program is a disappointment to the beds community and we do not take that lately, we intend to revisit the program at the appropriate time with the expectation of funding all future clinical development with internally generated cash flow or through partners.
In today's economic environment, we strongly believe it is in the best interest of all stakeholders for us to focus our efforts on accelerating the growth of the commercial businesses and generating positive cash flow to minimize our reliance on the capital markets. The bottom line is that we want to avoid a large and highly dilutive financings and given the steps we've taken and the trajectory of our commercial operations.
Coupled with our cash position, we believe we are positioned to avoid just that.
Let's dive into the commercial business a bit more beginning with the Rx segment as a reminder, within the Rx segment, we operate primarily in two therapeutic areas ADHD in pediatrics we.
We acquired our ADHD product portfolio in March of last year with the acquisition of New Therapeutics. The portfolio includes extended release stimulant medications formulated and patient friendly orally disintegrating tablets that utilize the proprietary micro particle modified release drug delivery technology platform developed by news at <unk>, XR ODT and <unk>.
<unk> ODT, the first and only FDA approved and Feta mean in methylphenidate extended release ODT, respectively for the treatment of ADHD and Theyre, finding a well earned position within this large and growing ADHD stimulant category, a category generating nearly 85 million prescriptions annually in the United States.
Mark will hit more on the numbers, but across the board, we're seeing strong growth in the ADHD products, which contributed to $11 6 million.
In 2023 first quarter revenues, an increase of 24% compared to a year ago. The key drivers to growth can largely be attributable to three things first the overall growth in the ADHD market as we continue to come out of the pandemic and see an increase in diagnoses. Further there are numerous adderall XR generic manufacturers reporting on.
Boeing manufacturing delays contributing to supply shortages of embedding the most prescribed molecule in this category.
While the supply disruptions associated with the Adderall XR generic has caused confusion and concern among the ADHD patients taking these medications we've made it clear to our prescribers and clinician partners at Dennys XR ODT supply remains robust and uninterrupted.
Keep in mind that incentives is approved is bio equivalent to adderall XR. So the supply disruption could enable incentives to gain meaningful market and mind share.
Expect that we will see some continued tailwind for <unk> XR in the coming quarters as the supply disruptions are expected to continue intermittently for the foreseeable future.
The second key driver to the ADHD growth has been our young energized and highly motivated sales force that is getting better and making more consistent strides with overall targeting an improvement in sales execution and messaging.
We have a great team in the field one that is populated with mostly new to industry sales professionals, who are motivated and hungry. They are getting their legs under them. Following the turnover of much of the sales force in favor of this lower cost high upside profile and we're excited about the traction we're getting with health care providers and.
And finally, the leverage we are gaining through <unk> Rx connect as we continue to cultivate our roughly 1000 network pharmacies in key markets across the country are improved distribution channel drives growth for all our prescription products.
Based on some recent data points, we've shown that compared to prescriptions filled by non network pharmacies <unk> Rx connect resulted in a nearly 50% reduction in patient out of pocket co payments of roughly two <unk> improvement in <unk> net margin per Rx and more than a 40% increase in prescription refills.
The platform truly does drive value for patients for health care providers and for <unk>, which has been the purpose since the inception of the program.
Further <unk> connect can be leveraged more in the future with our current products and new products. We may bring into the portfolio. We've already demonstrated significant growth of our legacy products Poly VI Flor try buy flooring carbinol since we included them in the <unk> connect platform.
One of the keys to continued improvement on the bottom line to further accelerate the path to profitability is that planned tech transfers of both incentives and co template.
As we reported back in September the process is well underway with the contract manufacturer, including the conduct of bio equivalent studies and other FDA mandated work. It is our goal of having everything finalized and the CMO producing our ADHD products in calendar 2023.
This outsourcing stands to improve the gross profit margin of the ADHD products by 15% or more a meaningful step change that if achieved will further improve our already improved P&L.
On the pediatric side, our portfolio includes poly VI Flor and Tri bipolar two complementary prescription fluoride based multi vitamin product lines containing combinations of fluoride and vitamins and various formulations for infants and children with fluoride deficiency.
Also market carbon LDR and extended release carbon Oxiclean based antihistamine suspension indicated to treat numerous allergic conditions for patients two years and older. These products serve large established pediatric markets and offer distinct clinical features and patient benefits over the branded and generic competitive products during the quarter, we achieved 73% growth in revenues from.
Our prescription pediatric lines with with revenues growing to $6 6 million in putting that portfolio on a $25 million revenue annualized run rate again. The key drivers here are first salesforce execution second leveraging of <unk> connect and third a solid payer environment, particularly for the multi vitamins in various geographies, which is.
Provided some tailwind for the products since we added PBF and TV. After Rx connect we have grown prescription significantly and continued to demonstrate truly remarkable growth with those brands.
The American Dental Association has stated that fluoride supplements should be prescribed for children six months of 16 years of age who are at high risk for tooth decay, and whose primary drinking water contains low or no fluoride, while the majority of U S. Drinking water is in fact, fluoridated some major geographic areas, including much of New Jersey, and New York's long Island market.
<unk>, 1% and for American children living municipalities that do not Florida at the water supply or are in rural areas that rely on wellwater do not receive recommended levels of fluoride through fluoridation.
We think that with the increased understanding of the risks coupled with the well documented support from the Ada We will see continued growth in this business, we're continually evaluating expansion opportunities for the fluoride multi vitamin line as we look to additional areas in need of fluoride supplementation and growth across both new and existing geographies will serve as the basis from which we expect to grow.
Poly VI, Flor and Tri VI Flor sales.
Overall, we feel confident about the traction we are achieving in our Rx segment as mentioned, which experienced 34% revenue growth in the first quarter and generated a positive $2 7 million and adjusted EBITDA with continued growth cost reductions and gross margin improvement measures in place, we expect positive EBITDA quarters going forward.
Let's transition now to our consumer health segment.
During the first quarter of 2023 net sales were $9 million for this consumer health segment, an increase of 12% over Q1, a year ago for those listeners not familiar with our consumer health segment. Our core product focus is on branded value based products competing in large categories, such as hair loss digestive health diabetes management analogy all <unk>.
Beating with higher priced national brands at a time when consumers are looking for opportunities to save anywhere. They can we believe these value and have a great opportunity for continued growth.
All products address chronic or recurring conditions are largely intended to be used by consumers on a regular basis as such we offer a monthly subscription program, which allows for ongoing use an easy product reordering and used by customers building strong annuity value for these brands and for the company.
We sell directly to consumers through e-commerce platforms, including branded websites in the Amazon platform. Additionally, the consumer segment's sells products through our proprietary sales and marketing platform, which focuses primarily on direct mail, allowing consumers to purchase directly through business reply or through call centers with shipment directly to their homes.
The solid double digit growth for the quarter within consumer health was primarily due to the growth in the Amazon channel coupled with new product launches recall that we made a strategic decision in fiscal 'twenty to pivot our efforts to more efficient higher margin online channel with a primary focus on improving our visibility on and sales of our value OTC medicines through Amazon and our web site.
While we could have driven revenue by simply continuing to focus on the direct mail business.
It was clear to us that the opportunity to scale this business and generate consistent profit late with driving growth of the online OTC medicines business.
The shift to more e-commerce and these OTC brands has borne fruit in this channel will be our primary focus going forward on the consumer side.
Importantly, we are planning to further build out the OTC medicines line, while establishing a value brand family, we branded circle Health Circle, which we are planning to rollout in calendar 'twenty three will represent a brand family of value based over the counter medicines addressing a range of common conditions, we believe showcasing and OTC products through a single rep.
Ignite is family brand will build collective brand equity create a common one stop shop for families seeking value brands addressing common everyday conditions, and ultimately drive more repeat customer usage ordering all yielding higher annuity value and higher overall margins as part of the build out and launch of circle, we are and we expect to launch new.
As well as rebrand existing products that integrate these all into the circle brand family more to follow as we approach the circle launch.
During the quarter, we posted a consumer health segment, adjusted EBITDA of negative $493000 compared to negative $934000 a year ago, marking a significant improvement in this segment that is now getting very close to generating cash.
In connection with the strategic decision to focus on our commercial business and the indefinite suspension of our clinical development programs, We announced a series of executive leadership changes aimed at aligning the skills of our leadership team members to the goals of driving revenue growth further consolidating expenses, improving gross margins and driving long term profitability.
First we appointed co founder Jarrett does grow to the newly created role of Chief business Officer, and President consumer health.
Having co founded <unk> in leading the company with me since inception, Jared is poised to take his experience across both Rx and consumer brands to build our consumer health segment into a dynamic high growth consumer centric enterprise Jared has an exciting vision for this growing business segment has begun implementing plans for continued expansion new product launches and the rebranding of the consumer.
Our health business, specifically, the OTC medicines as part of the Circle health rollout I just discussed we think that should bode well for continued growth and transition to segment profitability and cash flow in the coming quarters.
Additionally, we announced the promotion of Topher broke to Chief operating Officer, Toby Executive leadership at both large global pharma companies and smaller biotech business units coupled with his entrepreneurial orientation is the co founder of pediatric centric biotech rumpus therapeutics makes them, especially well suited to step into the newly reestablished role of Chief operating officer at <unk>.
COO total will be responsible for the Grand Prairie manufacturing transition as we move to significantly increase prescription margins by outsourcing the production of <unk> and <unk>.
To a global contract manufacturer.
He will also lead regulatory and quality affairs scientific and medical affairs in key aspects of strategy and corporate and business development going forward.
Donnelley, we promoted Brian Selborne to the newly created role of Executive Vice President Finance and business optimization. Ryan was previously senior Vice President Finance and operations for the consumer Health segment Ryan's prior experience in public accounting and as a public company CFO in both pharma and consumer health coupled with his expertise in organizational improvement.
Dovetails perfectly into our revised strategic plans he will oversee the finance and accounting functions. While also leading the ongoing consolidation and streamlining of internal processes and spearheading numerous financial projects expected to drive efficiencies and significant cost savings throughout the organization.
Greg <unk> will remain in his role as chief commercial officer, overseeing all aspects of the Rx commercial business, which I'll repeat has grown 34% year over year.
We've experienced strong growth a significant upgrading talent and a streamlining of our commercial operations under Greg's leadership and look forward to Greg and his team continuing our growth trajectory across the Rx portfolio.
Thankful for these leaders and their leadership and enthusiasm in support of this next phase of the company's growth and this renewed focus.
Before I turn it over to Mark Let me just say how incredibly proud I am in the entire organization.
The team has rallied around the opportunity to build a truly great operating company, which has led to record quarterly revenue in our first ever quarter with positive adjusted EBITDA.
Importantly, there are future drivers that have the ability to enhance this performance even further including continued sales growth in both segments driving additional post <unk> merger synergies and the implementation of cost cutting activities, such as the outsource manufacturing and elimination of the expenses and cash flows tied to R&D pipeline.
We know there can be variations in any single quarter for any multitude of reasons, but it's clear to us that the trends are heading in the right direction as we execute on our goal of being self sustaining in the near term it goes without saying that becoming self sustaining stands to dramatically change the way, we think about funding on a go forward basis with that overview, let me turn it over to our CFO Mark Oki to add some additional.
Color to the numbers Mark.
Thank you, Josh and welcome to everyone to everyone. Joining us on this call. Let me build upon the comments Josh has already provided starting with revenue.
Net revenue for fiscal 2023 first quarter was $27 7 million compared to $21 9 million for.
For the first for us.
The fiscal 2022 first quarter, 26% increase.
Breaking down the quarter net revenue from RF product sales in the 2023 first quarter was $18 7 million compared to $13 9 million.
In the same quarter of last year.
An increase of 34% as Josh noted ADHD experienced 20, 24% growth in net revenue to $11 6 million.
In the 2023 first quarter compared to $9 3 million during.
During the 2020 to first quarter.
The prescription pediatric portfolio experienced 73% growth in net revenue to $6 6 million.
123, first quarter compared to $3 8 million in 2020.
For the first quarter of 2023 net revenue from the consumer health franchise was $9 million.
Compared to $8 million in the same quarter last year.
An increase of 12%.
We have a small amount of other revenue.
Sure and last this other revenue pertains to Covid related test kits and discontinued or D. D.
<unk> prioritized products.
During this year's first quarter. It was $509000 in last years first quarter had 715000.
In general we expect other revenue to decrease going forward.
Gross margins improved nicely to 65% in the 2021st quarter compared to 50% of net revenue in the year ago first quarter.
This improvement in gross margin percentage was primarily driven by improvements in the ADHD.
Product lines.
<unk> of cost reduction efforts and greater volume.
Gross margin percentages can vary from period to period for various reasons.
This improvement does not yet account for any improvements we expect from the tech transfer we've discussed.
So we are optimistic that the margins will improve further upon the completion of the ADHD brands transfer.
On the Opex side for the first quarter of 2023.
Excluding impairment expenses and amortization of intangible assets.
Operating expenses were $18 5 million compared to $19 2 million the same period a year ago.
A decrease of about $700000.
Research and development expenses were $1 1 million in the first quarter of 2023 compared to $1 7 million in the 2020 to first quarter.
This $1 1 million.
875000 was related to the pipeline R&D, which we recently suspended.
Net loss for the first quarter of fiscal 2023 was $2 9 million or <unk> <unk> per share compared to $27 9 million.
$1 nine per share for the same quarter last year.
Net loss from operations for the first quarter of fiscal 2023 was $1 7 million.
For the quarter adjusted EBITDA was a positive $1 4 million compared to a negative $4 2 million.
An improvement of $5 6 million.
When you look at the breakdown by segment adjusted EBITDA for our <unk> segment. During the first quarter of fiscal 2023 was a positive $2 $7 million.
Third to a negative $2 2 million a year ago.
In the consumer health segment.
Adjusted EBITDA was a negative.
$493000 compared to a negative $934000 in the year ago period.
47% improvement year over year.
Finally adjusted EBITDA.
Tied to our now suspended R&D pipeline was a negative 866000 during the first quarter of fiscal 2023 compared to a negative $1 1 million in the first quarter of fiscal 2022.
Going forward there'll be some costs related to the wind down of the <unk> 101 efforts and as we complete the heel.
<unk> study.
Generally we expect pipeline R&D spend to be minimal until such time that we can fund R&D from operations will engage a partner.
Full reconciliations from net income to adjusted EBITDA are provided in the tables included in today's press release.
Finally on the balance sheet.
Cash and cash equivalents at September 32022, or $23 8 million.
One final item I want to point out that subsequent to the end of the quarter, We announced an agreement with Avenue venture opportunities Fund LP.
To extend the interest only period of our existing senior secured loan facility with them.
Amendment to the original secured loan agreement, which was executed in January 2022.
This is our first principal payment in January of 2024.
Turning to the date of the Avenue secured loans is January 2025, and remains subject to additional interest only period extension upon the achievement of certain milestones by the company.
The extension of the interest only period will conserve cash saved the company over $3 million in calendar 2023 principal payments by.
By deferring those payments into calendar 2024 and 2025.
In exchange for this extension the company an Avenue agreed to reset the exercise price of the warrants issued in conjunction with the original loan agreement to <unk> 43.
Corresponding to the warrant exercise price associated with the company's latest equity financing.
We appreciate the ongoing support of Avenue and extending the interest only period to help us preserve near term cash.
And execute on our operational plan.
They have been an exceptional partner and have been supportive of the company as we focus on growing our commercial business.
Advancing our objective.
With that let me turn it back over to Josh.
Thanks, Mark Let me just conclude with where I started this was truly a transformational quarter for <unk> as we reported record quarterly net revenue in our first ever company wide positive adjusted EBITDA quarter with strategic initiatives, we've put in place to drive growth and efficiency across our entire organization coupled with the positive market drivers and the leverage we are achieving through our proprietary RF.
<unk> connect platform positions us to positively change the trajectory of <unk> in the years to come I'm incredibly proud of the hard work by the entire organization to achieve the important milestones this quarter and I look forward to a tremendous fiscal 'twenty three I appreciate everyone's participation on today's call. It will now be happy to answer any questions operator.
Thank you ladies and gentlemen, the floor is now open for questions.
You have any questions or comments. Please press star one on your phone at this time.
We ask that while posing your question you. Please pick up your handset if listing on speaker phone to provide optimum Sam policy.
Please hold while we poll for questions.
Thank you. Our first question is coming from Jennifer Kim with Cantor Fitzgerald. Please go ahead.
Hey, Thanks for taking my questions and congrats on a very impressive quarter I have a few questions here on the commercial business.
The first one is ADHD you gave.
Color around those tailwind to have been going on and I've seen online.
Various generic players. Thanks for question mortgage is lapsing into early 2023, and I'm wondering is that how youre seeing the market play out and once those shortages are addressed.
Given the increased mind share that the patients who switch to your product will stay on those products.
We can start there.
Yeah, that's great. Thank you Jennifer I appreciate the questions.
We are beginning to see we believe some early signs of this issue related to the the adderall and it's mostly almost entirely with the generics which of course dominates the market.
And so we're seeing it.
I think it's gone from sort of sporadic anecdotal too a little bit more of a consistent member in the field.
So we are starting to see some movement, we have posted near or at all time highest for ads NSX or ODT on a weekly prescription basis and the momentum kind of continues through the end of the year and we do exactly as you said, we expect these to continue into the early part of the year and what that means exactly I guess it remains to be seen but certainly calendar.
Q1 is what we're thinking and we will expect certainly once a patient gets switched if they do in fact get switched from Adderall XR to Adventists XR ODT that they would stay on it we of course believe it has a bit more patient friendly presentation.
Got the ODT format of course, which makes it easy to takes very convenient it is bio equivalent to.
To Adderall of course, so it is going to have potentially a similar experience. Although I think some patients may get an improved experience on the basis of its easier to use.
Format, so very.
<unk>.
I'm very very confident that we're going to see some nice uptake from this market disruption going forward.
Okay, great and for your pediatric products I think one thing you talked about how it payer environment.
Is that expected to remain favorable as we head into the new calendar.
Calendar year.
Yes, I think so so the multi vitamin market is one that's largely unmanaged by payers. So that's really favorable for us and we've picked up some state Medicaid plans.
That that enable some broadened utilization outside of the commercial environment.
So that stands to I think give us further tailwind in favor of poly VI Flor and in the case of.
Some of the state payers to try buy floor, which which is undergoing a bit of a renaissance a little bit of a relaunch for us. So I would expect the payer environment, particularly as it relates to the multi vitamins to continue to be solid and look we've taken an approach on the commercial side of the business with respect to the ADHD.
Not actively contract we will be opportunistic and we certainly will evaluate opportunities in the future to consider commercial contracting, but because they have the leverage that we have with Rx connect we can really in many ways served as the underwriter and so some of the year to year fluctuations with formulary changes were largely exempt from because we really haven't been playing actively with the mindset that we're going to do deep.
Discounting through the payers, we'd rather underwrite those prescriptions ourselves and control our own destiny so to speak.
Okay, Great and my last question this might be more for Mark Mark you said that there might be some costs related to the wind down efforts.
R&D.
But I think you said that like.
900, K of the $1 1 million. This quarter is from the suspended pipeline programs. So I'm just wondering is that remaining two mill.
Related to the post marketing studies required for ADHD products and is that a reasonable run rate as we think about future quarters.
Yes, as we move forward it should stay in that range theyre not related to the <unk> the related to the ongoing support of the product.
We have not kicked off the <unk> at this point in time.
Okay.
<unk>.
You would anticipate.
We're still evaluating that we're still working with the FDA on getting final protocol approval. So I don't have a <unk>.
Good time for you.
Okay. We don't have anything modeled in the near term for that Jennifer and if we do kick off if and when we do kick off the Pms, we'll do them.
In house really kind of do it on on a shoestring budget and obviously seek to stretch those out as far as we can obviously nios never kicked those off and we'll continue to work with the FDA and ways to reduce the size and reduce any potential financial burden as it relates to those pms, but nothing modeled in the near term.
Okay. That's helpful.
Thanks for taking my questions guys and congrats again on a great quarter.
Thank you Jennifer Thanks, Jennifer.
Thank you once again, if there are any remaining questions or comments. Please press star one on your phone at this time.
Hey, Josh while we're waiting for any other further questions.
I'll ask one real quick when you think about Rx connect and the ability to leverage that program.
More fully describe how you think about truly gaining that leverage.
Whether that comes with the need for additional head count for example.
You bring on additional assets.
Yeah, Thanks, Roger and the short answer is no we would not anticipate.
The advent of any additional commercial assets to necessitate any material head count.
Really very simply because we have a group of pharmacies around the country that are largely working on our behalf and when you have categories, even in categories like ADHD, where you've got controlled scheduled two products.
They have the ability to influence prescriptions and influence the prescribers in many cases, if they have a product that they view as more favorable for the patient is something that potentially is in an easy to use format or formulations, such as the odt's. They may.
Place a phone call to the physician office and the clinician and get them to switch that prescription actively and Theres economics, there to support the patient in many cases.
To help the pharmacy as well and so we can gain that additional leverage really buy them continuing to work on our behalf. We are a small team what we call regional account managers that interface directly and are responsible for cultivating the relationships with the pharmacies and they do an outstanding job of making sure that we understand the economics at the prescription level each individual pre.
Scripture and how its adjudicated and how it is ultimately paid for making sure that the patient is getting the lowest cost alternative that the co pays are in line with what we expect and so we can continue to work through multiple different products as we identify additional pediatric centric and ADHD product lines. So we've got the ability to scale revenues of our current products, we've got the ability to bring in additional products.
We really have that 1000, or so pharmacy network go to work for us and it's a it's a huge boon for the company.
Theres, a fair amount of secret sauce in there, which.
Which we don't talk a lot about but thats by design. There is a lot that goes on beyond the themes behind the scenes rather to really drive that leverage and it continues to show proof positive that you can when you put products on this platform and drive it through the network they grow in <unk>.
Estimate to that is the poly VI Flor drive outflow align carbon of course, ADHD, which has been on the original <unk> connect platform and all are showing tremendous growth. So it's.
It's great to see that we're getting that leverage.
Very good and real quick you talked about the pharmaceutical side.
On the consumer health side.
Obviously.
We've seen great advances, there, but kind of what changes need to be made to enable it to generate positive adjusted EBITDA.
Yes, great question, and I would say really not a lot of changes. It's just more time continuing to shift the business as we are doing as I mentioned in my prepared comments, we made a strategic shift from the direct mail campaign in the products like the supplement that we sell through direct mail in favor of the OTC medicines that are almost entirely sold through Amazon and <unk>.
Our online platform, while that has a lower gross margin product line that has a much higher net contribution margin product line that is by design you have much more efficient market sales and marketing spend on that segment than you do on the direct mail segment. There is really not as much human touch we don't involve call centers, we don't do any direct mailings that cause high variable.
Spend on the sales and marketing line, we really let the Amazon platform do it do its job and we're continuing to refine how we work through the Amazon platform, while we continue to build out our own websites and of course with the advent of the circle Health line, we will have a concerted very significant effort to rebrand the products under the circle health.
Family name and ultimately drive more and more through that and that will drive significant annuity value as we're able to capture more consumer information capture the consumers direct contact information such we're able to drive higher levels of adherence higher levels of pull through and ultimately a higher annuity value for those OTC medicines and so that's been a tremendous growth engine for the company.
If we can just continue to ship more and more to that side of the house. It will drive the positive EBITDA margin that'll be much more predictable and we think can scale. We think that's a really solid growth engine for the company. We do think that consumer health can become EBITDA positive in the relative near term. It's just we need a little bit more time to continue that shift over time.
Okay. Thank you.
First there appear to be no further questions.
So I'll hand back to Mr. <unk>.
Any closing comments he may have.
Great. Thanks, very much I appreciate the questions and again just wanted to reiterate the fact that I am just so incredibly proud of this team how hard everyone has worked the entire organization has put a lot of thought a lot of diligence that a lot of great effort into achieving this important milestone super proud to be reporting our first positive EBITDA quarter Super proud to be reporting yet.
Again, an all time high in revenue.
Obviously, the Rx business continues to really grow continues to really be healthy solid positive EBITDA margin on that side of the business and consumers not too far behind so thanks to everyone. Appreciate everyone's participation on the call today looking forward to updating you next.
Next quarter on the December quarter, which will be in February until then thanks, very much and have a great afternoon and rest of your day.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation.
Okay.