biote Corp. Q1 2023 Earnings Call
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Good day and welcome to the bio T first quarter.
Corrugate, when you're twenty-three earnings conference call.
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I would now like to turn the conference over just Simon serve yet ski IR representative from Advisory partners.
Please go ahead.
Good morning, and thank you for joining us today yesterday biopsy publish venture results for the quarter ended March 31 2023.
This release is available on the Investor Relations section of the company's website.
Terry Webber, Chief Executive Officer, and Summer Comdata, Chief Financial Officer will host this morning's call.
How we get started I'd like to remind everyone that management will make the sandwich.
All forward looking statements regarding the company's debenture adults.
This outlook strategies goals research and development manufacturing and commercialization activities.
Regulatory process operations, the impact of macroeconomic conditions on its business.
With operations financial conditions and other matters.
These statements are not guarantees of future performance. They are subject to a variety of risks and uncertainties some of which are beyond our control.
Our actual results could differ materially from expectations reflected in any forward looking statements.
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These statements are subject to risks uncertainties and assumptions that are based on management's current expectations as of today.
<unk> undertakes no obligation to update them in the future there.
Therefore, these statements should not be relied upon as representing the company's views as any subsequent date.
For a discussion of risks and other important factors that could affect our actual results. Please refer to our SEC filings available on the SEC's website, and our Investor Relations website as well as risks and other important factors discussed in the earnings release.
We will also refer to adjusted EBITDA, which is a non-GAAP financial measure to provide additional information to investors.
Installation of the non-GAAP to GAAP measure is provided with the press release with the primary differences being stock based compensation.
Fair value adjustments of certain liabilities transaction related expenses and other non operating expenses.
Our directly to our first quarter 'twenty earnings press release, which is available on the Investor Relations section of our website.
Sure that buyout your dot com for reconciliation of adjusted EBITDA to the closest comparable GAAP measure.
I would now like to turn the call over to Terry Webber.
Thank you Simon and thank you all for joining us on the call with me today is summer, Canada, Our Chief Financial Officer, who will review, our financial results and discuss our outlook for 2023.
Mark beer, our executive Chairman and Dr. Ross liquidity, our Chief Medical Officer are also on today's call to answer your questions. During the Q&A session, which will follow our remarks.
Building on our accomplishments from last year, <unk> achieved financial and strategic progress in the first quarter of 2023, not only did we achieve solid financial performance will be launched a major new initiative focused on the large and underserved men's health market. We also continue to make necessary investments.
And our infrastructure to support our long term profitable growth.
Before discussing our first quarter results I'd like to emphasize that we remain dedicated to building long term shareholder value not only through the execution of our growth strategy, but also through improvements to our capital structure.
As you recall earlier this year, we completed a secondary offering.
Creasing the liquidity of our common stock without diluting current shareholders and yesterday, we launched a warrant exchange offer and consent solicitation to simplify our capital structure and reduce the potential dilutive impact of the warrants.
For additional information about the warrant exchange offer and consent solicitation. Please refer to our registration statement.
S. Four filed with the SEC yesterday may now.
And we will continue to pursue other opportunities that enhance our capital structure.
Now, let's turn to our first quarter performance.
First quarter revenue increased approximately 21% from the comparable period last year.
Driven by growth in procedures and dietary supplement sales.
Procedures grew approximately 14% as consumers continue to seek affordable and effective treatments for a range of age related conditions.
Procedure growth was broad based reflecting our geographic reach and our expanded practitioner network.
Dietary supplement sales were strong in the first quarter that study from the introduction of a new direct to patient distribution channel.
New sales channel enables patients to first <unk> branded supplement convenient re.
From a practitioner website.
From Iot directly.
Practitioners as sales channel provides an additional source of revenue.
Regardless of whether the patients purchased supplements from that practitioner more from biopsy.
Our financial performance in the first quarter again, demonstrating the advantages of our capital light business model.
Profit margins improved from the first quarter of 2022.
I think our successful efforts to generate cost efficiencies.
In addition, adjusted EBITDA margins were strong even ask that you continue to invest in our people and expand our infrastructure.
As consumers continue to take a more proactive role in their health care. The acceptance of the biotech method will continue to fuel demand for our protocols.
Even today with more than 6400 practitioners, serving more than 400000 active patients.
We believe we're just beginning to tap into the considerable demand for personalised hormone replacement therapy.
To better capitalize on what we expect to be a promising long term growth opportunity. We recently launched a new initiative, specifically centered around women's health.
Generally speaking men are reluctant to seek health care treatment when they do seek care for concerns such as low testosterone. We believe the treatment plan that includes four month therapy can enhance patient health outcomes.
Our conversations with urologists and other practitioners.
Fear as millions of men over the age of 45 suffer symptoms of low testosterone you often do not see or receive treatment.
To me our expansion and Michelle we're pleased to have recruited John Danny healthcare industry veteran.
We believe John's extensive relationships with practitioners and the medisoft industry in urology feel will be instrumental in accelerating our long term growth and the precedent in this underserved market.
Concurrent with our efforts to promote Bento <unk> recently hosted an advisory panel with world renowned academic urologist. These independent medical research has confirmed that they considered pellets as the preferred delivery method for testosterone therapy.
Following this panel, we're continuing our dialogue with leading researchers and providing access to our practitioners clinical data to help guide future research efforts.
While we address the substantial growth opportunity as Michelle we remain committed to advancing the body of science supporting hormone therapy for women.
Dr. Ross <unk>, our Chief Medical Officer, Brian recently commenced.
Study, comparing subcutaneous teletherapy versus transdermal hormone therapy, and symptomatic post menopausal women.
This first of its kind study has generated interest within the medical community.
In addition to conducting clinical research, we continue to educate and train providers and make resources available to further build awareness of the benefits of hormone therapy.
I'm pleased with the progress, we're making both within the medical community and the broader public.
Thanks to the dedication of the entire biotech team, we are helping to enhance patient health and the quality of life.
And we're building long term value for stakeholders, as we differentiate and strengthen the biotech brand.
I will now turn the call over to summer, Canada, Our Chief Financial Officer to review our financial results in detail.
Thank you Terry revenue for the fourth quarter was $44 8 million, a 27% increase year over year, reflecting 13, 8% growth in procedure revenue and 46% growth in dietary supplement revenue.
As Terry noted in the first quarter, we increased efficiency in our distribution channel for supplements, which benefited supplement sales.
Historically supplements that represented approximately 20% of our total sales annually and we believe this percentage will remain consistent.
Gross profit margin was 69, 1% up 220 basis points from the first quarter of 2022.
The increase in gross profit margin was primarily due to improved contract pricing with suppliers and effective product cost management.
Although gross profit margin will vary slightly from quarter to quarter, depending on the product mix and other factors. We continue to expect gross margin to be in the mid sixties range going forward.
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Selling general and administrative expenses were $23 1 million, an increase of 52, 9% from the fourth quarter of 2022.
I'll now provide some additional detail on the quarterly expense increase on a year over year basis.
$1 $5 million of this increase was related to the expansion of our sales team representing a 33, 9% increase from the first quarter of 2022.
As we have stated we expect this continued investment in our sales efforts to begin to produce returns starting in the back half of 2023 and all of 2024.
Also included in the growth of SG&A expense, we had three categories of other expenses.
First public company related costs of $1 million that did not exist in Q1 of 2022.
Second noncash stock compensation expense of $2 2 million and third nonrecurring expenses totaling $2 5 million.
Operating income was $7 9 million down from $9 8 million in the first quarter of 2022.
The decrease in operating income was due to increased SG&A expense, partially offset by improved gross profit on higher sales.
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Compared to net income of $9 4 million in the first quarter of 2022.
The net loss in the first quarter of 2023 was primarily the result of lowering operating income increased interest expense and the net change in the fair value adjustments to warrant and earn out liabilities of $27 million.
Adjusted EBITDA was $13 1 million in the first quarter of 2023 with an adjusted EBITDA margin of 29, 2%.
This compares to adjusted EBITDA of $11 $7 million with an adjusted EBITDA margin of 31, 4% in the first quarter of 2022.
Adjusted EBITDA in the first quarter of 2023 increased primarily due to higher sales and improved gross profit while adjusted EBITDA margin decreased due to increased operating expenses.
We generated $13 million in first quarter operating cash flow, we expect the current strength of our balance sheet, coupled with positive cash flow generation to support our strategic growth initiatives.
Turning to our financial guidance, we reaffirm our outlook for continued revenue and adjusted EBITDA growth in 2023 with revenue of $190 million to $200 million and adjusted EBITDA of 56 to 69.
As we stated when we originally provided in 2023 guidance, we anticipate results will be somewhat stronger in the second half of 2023 as compared to the first half given the nine months productivity lead time required for sales team members added in late 2022.
Now I'll turn the call back office areas closing Qualcomm.
Yeah.
Thank you summer.
I am pleased with <unk> first quarter performance and excited about our long term opportunity to promote health and wellness for both men and women.
While we continue to invest to strengthen our capabilities and support our strategic expansion, we remain well positioned to generate continued profitable growth.
Now I'd like to open a follow up for questions.
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And we are going to get started with the Q&A session to ask a question you May Press Star then one on your Touchtone phone and if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed.
I'd like to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Yes.
And again, if you would like to ask a question.
Please press star one.
Our first question comes from Greg Fraser from Truest Securities. Greg. Please go ahead.
Thank you and good morning folks.
I had a question on the geographic expansion for.
For the for the core 10 state do you have a sense for how penetrated you are with respect to the target prescribers that you are calling on what are the key states that youre focused on this year and how should folks think about that.
In terms of timeline for growing prescriber penetration in say, California to the level that you reached in Texas.
That was a series of questions good morning, Greg So.
As we've talked about over the last three years, we've reduced our concentration in those top 10 States, where we had first reported at 70%. We're now at 64% of our market is in those 10 core states and as we talked about we.
We've expanded into that west northwest, you're referring to the Midwest mid Atlantic northeast that progress is going well, we'll continue to look to add providers thats. The key piece here is getting those providers educated so we can.
Connect those patients with those providers. So we'll continue to look at that new expansion territories, which you'll be those new states as well those west coast States that we've added in Idaho, Utah et cetera. So we will continue that expansion throughout the U S and we're excited about it.
Got it.
In terms of competition, you, obviously had a lot of success growing the business.
You would enjoy greater visibility since going public I am curious if you've seen our debtor.
Any signs of the number two player getting more aggressive in trying to take.
More business. Thank you.
Well I think one of the blessings and curses of going public as everybody sees your every detail about the company and we become a clear target for all competitors is just a great story that we have here, but we got this differentiated model our tech platforms, what we offer in the biotech method continues to be a.
<unk> mode.
And I think we just watch those competitors, there's quite a few telemedicine men's health groups out there too so a lot of noise in the market, but nothing substantial.
Thank you.
And again, if you would like to pose a question. Please press star one.
If no further.
<unk> are here, we're going to conclude the question and answer session.
Ill turn the conference back over to Terry Weber for some final remarks. Thank you.
Yeah.
Thank you so much for joining us today.
We look forward to updating you again soon and have a great week. Thank you.
And the conference has now concluded. Thank you for attending today's presentation you may now disconnect.