Q4 2023 Aytu BioPharma Inc Earnings Call

Okay.

Speaker 1: Greetings. Welcome to the A2 BioPharma Fiscal 2023 Q4 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.

Greetings and welcome to the <unk> Biopharma fiscal 2023 Q4 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

Note. This conference is being recorded.

Speaker 1: I will now turn the conference over to your host, Robert Blum, Investor Relations. Robert, you may begin.

I will now turn the conference over to your host Robert Blum Investor Relations. Robert You May begin.

Speaker 2: Thank you so much. Good afternoon everyone. And as the operator indicated, thank you for joining us for A2 Biopharma's Fiscal 2023 4th Quarter and Full Year Financial Results Conference Call for the period ended June 30th, 2023.

Thank you so much good afternoon, everyone and as the operator indicated thank you for joining us for a two biopharma.

Fiscal 2023 fourth quarter and full year financial results conference call for the period ended June 30th 2023.

Speaker 2: Joining us on today's call is A2's CEO , Josh Disbro, and the company's Chief Financial Officer, Mark Oakey. At the conclusion of today's prepared remarks, we will open the call for a question and answer session.

Joining us on today's call is <unk> CEO , Josh Disbrow, and the Companys Chief Financial Officer, Mark Oki.

At the conclusion of today's prepared remarks, we will open the call for a question and answer session I'd 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 D provided in the earnings press release issued earlier today <unk>.

Speaker 2: I'd 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 ID provided in the earnings press release issued earlier today.

Speaker 2: Finally, I'd also like to call to your attention the customary safe harbor disclosure regarding forward-looking information.

Finally, I'd also like to call to your attention the customary safe Harbor disclosure regarding forward 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> Biopharma, Although management Bill.

Speaker 2: conference call today will contain certain forward-looking statements including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of A2 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.

These statements are reasonable based on estimates assumptions and projections as of today. These statements are not guarantees of future performance.

Speaker 2: Time-sensitive information may no longer be accurate at the time of any telephonic or 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 company's filings with the SEC. ATO undertakes no obligation to update or revise any of these forward-looking statements.

Time sensitive information may no longer be accurate at the time of any telephonic or 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 company's filings with the SEC H you undertakes no obligation to update or revise any of these forward looking statements with that said like turn the event over to Josh.

Speaker 2: With that said, I'd like to turn the event over to Josh Disbro, Chief Executive Officer of A2 Biopharma. Josh, please proceed.

<unk> Chief Executive Officer of <unk> Biopharma, Josh. Please proceed.

Speaker 3: Thank you, Robert, and welcome everyone. We're excited to be speaking with you today following an exceptional year and the strongest quarter in A2 biopharmaceutical history.

Thank you Robert and welcome everyone. We're excited to be speaking with you today, following an exceptional year and the strongest quarter in <unk> Biopharma history is.

Speaker 3: As you all can see from the financial results in the press release we issued after the market closed, we finished fiscal 2023 on a strong note, having achieved record revenues of $107.4 million. All-time high total prescriptions for our core RX segment with over 560,000 prescriptions written for our promoted products last year.

You all can see from our financial results in the press release, we issued after the market closed we finished fiscal 2023 on a strong note having achieved record revenues of $107 $4 million all time high total prescriptions for our current core Rx segment with over 560000 prescriptions written for our promoted products last year gross.

Speaker 3: Gross margins that increased to 62% for the year compared to 54% last year.

Margins that increased to 62% for the year compared to 54% last year positive adjusted EBITDA of $7 $7 million during the fourth quarter, an improvement of $11 $6 million from the year ago fourth quarter, which also translated into positive company wide adjusted EBITDA for the full fiscal year 'twenty three of $3 $2 million.

Speaker 3: Positive adjusted EBITDA of $7.7 million during the fourth quarter, an improvement of $11.6 million from the year ago fourth quarter, which also translated into positive company-wide adjusted EBITDA for the full fiscal year 23 of $3.2 million.

Speaker 3: And while our quarterly net income was slightly negative due to several impairments taken as part of the wind down of our consumer health segment, we set the stage for significant improvement in fiscal 2024. And by the way, without those impairments, net income for Q4 would have been point six million dollars.

And while our quarterly net income was slightly negative due to several impairments taken as part of the wind down of our consumer health segment, we set the stage for significant improvement in fiscal 2024 and by the way without those impairments net income for Q4 would have been $6 million.

Speaker 3: This dramatic transformation of our operating results is due to the strength of our RX segment, which is comprised of our RX product lines, Dennis XRODT and Cotempla XRODT, and our pediatric multivitamins, along with our antihistamine, Carbinol ER. Our ADHD products continue to experience tailwinds from the ongoing stimulant shortages, while all of our prescription products are benefiting from strong field execution in internal operating and margin of production.

This dramatic transformation of our operating results is due to the strength of our Rx segment, which is comprised of our Rx product lines of Dennis XR, ODT, and <unk>, XR ODT and our pediatric multivitamins along with our antihistamine carbon <unk>, our ADHD products continued to experience tailwind from the ongoing stimulant shortages, while all of our prescription.

Alex are benefiting from strong field execution and internal operating and margin improvements. This is all setting the stage for continued growth and improvement in fiscal 2024 I'll touch on this more in a moment the transformation of our results did not happen overnight and I am pleased to see our operating plan coming to fruition. It was.

Speaker 3: This is all setting the stage for continued growth and improvement in fiscal 2024. I'll touch on this more in a moment. The transformation of our results did not happen overnight, and I'm pleased to see our operating plan coming to fruition. It was a deliberate strategic plan undertaken to indefinitely pivot away from clinical development and place the company on a financial pathway to sustainability, particularly in light of the current market environment.

Deliberate strategic plan undertaken to indefinitely pivot away from clinical development and placed the company on a financial pathway to sustainability, particularly in light of the current market environment step one in that plan was announced last October when we indefinitely suspended our pipeline programs to minimize the research and development expenses until such time that we can fund those efforts.

Speaker 3: Step one in that plan was announced last October when we indefinitely suspended our pipeline programs to minimize the research and development expenses until such time that we can fund those efforts with internally generated cash flow or through a strategic partnership. This was a difficult decision, but one we knew was in the best long-term interest

Internally generated cash flow or through a strategic partnership.

This was a difficult decision, but one we knew was in the best long term interest of the companies and its shareholders.

Speaker 3: The second component of that plan was implemented in June of this year when we announced that we would focus our commercial efforts on our growing and profitable Rx segment while de-emphasizing our consumer health segment for either monetizing or discontinuing.

The second component of that plan was implemented in June of this year, when we announced that we would focus our commercial efforts on our growing and profitable Rx segment, while deemphasizing, our consumer health segment through either monetizing or discontinuing it.

Speaker 3: But some perspective on this strategy, our consumer health segment had negative adjusted EBITDA during fiscal 23 of $3.6 million. Our clinical development program, which was really only operational for a quarter of this year, had negative adjusted EBITDA of $2.6 million.

To put some perspective on this strategy our consumer health segment had negative adjusted EBITDA during fiscal 'twenty three of $3 $6 million, our clinical development program, which was really only operational for a quarter. This year had negative adjusted EBITDA of $2 $6 million. So we're looking at a negative adjusted EBITDA of $6 2 million.

Speaker 3: So we're looking at a negative adjusted EBITDA of $6.2 million across these two segments. In contrast, our RX segment, which I'll note supports all of our corporate overhead, had positive adjusted EBITDA of $9.4 million for the year.

Across these two segments in contrast, our Rx segment, which I'll note supports all of our corporate overhead had had posted a positive adjusted EBITDA of $9 4 million for the year.

Going forward by exclusively focusing our business on the Rx segment. We've highlighted an operating company that is growing has positive EBITDA and is poised to achieve ongoing and consistent profitability.

Speaker 3: going forward by exclusively focusing our business on the RX segment. We've highlighted an operating company that's growing, has positive EBITDA and is poised to achieve ongoing and consistent profitability.

Speaker 3: As we look to fiscal 2024, as our Rx segment becomes the Go Forward Company, we will look to carefully wind down our consumer house segment by selling off a remaining inventory and minimizing its expense.

As we look to fiscal 2024 as our Rx segment becomes the go forward company, we will look to carefully wind down our consumer health segment by selling off its remaining inventory and minimizing its expenses, we expect there to be neutral to minimal impact to our adjusted EBITDA from this segment in fiscal 2020 for.

Speaker 3: We expect there to be neutral to minimal impact to our adjusted EBITDA from this segment in fiscal 2020.

Speaker 3: The strategic focus on prescription products and the de-emphasis on the consumer house segment should result in fiscal year 2024 company-wide adjusted EBITDA improvement and, barring any unforeseen impacts, closing in on company-wide profitability.

This strategic focus on prescription products and the de emphasis on the consumer health segment should result in fiscal year 2020 for companywide adjusted EBITDA improvement and barring any unforeseen impacts closing in on a company wide profitability.

Speaker 3: We do anticipate some residual fiscal 2024 write downs associated with the exits of our Texas manufacturing facility and the consumer health segment, but these are non-cash gap actions that will not impact our adjusted even.

We do anticipate some residual fiscal 2020 for write downs associated with the exits of our Texas manufacturing facility and the consumer health segment, but these are noncash GAAP actions that will not impact our adjusted EBITDA.

Let's take a moment to dive further into what is our core business going forward, our Rx segment.

Speaker 3: Let's take a moment to dive further into what is our core business going forward, our RX segment. As mentioned at the beginning, we operate in the ADHD category with the Dennys XR-ODT and Cotempla XR-ODT, the first and only FDA-approved amphetamine and methylphenidate extended release orally disintegrating tablets for the treatment of ADHD, respectively.

As mentioned at the beginning we operate in the ADHD category with the Dennys XR ODT and <unk> XR ODT, the first and only FDA approved and fed amine and methylphenidate extended release orally disintegrating tablets for the treatment of ADHD, respectively.

Speaker 3: These novel branded medications utilize our proprietary, micro particle, modified release, drug delivery technology platform, and each hold multiple orange book listed paths.

These novel branded medications utilize our proprietary micro particle modified release drug delivery technology platform and each hold multiple Orange book listed patents on the pediatric side. Our portfolio includes our Florida based multivitamins available in various formulations for infants and children are fluoride deficiency, we also market carbinol E R and extend.

Speaker 3: On the pediatric side, our portfolio includes our fluoride-based multivitamins available in various formulations for infants and children with fluoride.

Speaker 3: We also market carbonyl ER, an extended release carbon-oxamine-based anti-histamine suspension, indicated to treat numerous allergic conditions for patients two years and older. These products serve well-established pediatric markets and offer distinct clinical features and patient benefits over the branded and generic competitive products and have strong intellectual property protection.

Released carbon Oxiclean based antihistamine suspension indicated to treat numerous allergic conditions for patients two years and older. These products are well established pediatric markets and offer distinct clinical features and patient benefits over the branded and generic competitive products and have strong intellectual property protection.

Let's go into ADHD.

Speaker 3: Net revenue for ADHD products was up 30% for the quarter and up 9% for the fiscal year. The long-term trends we've talked about in the last few quarters persist, including overall growth in the ADHD market. We continue to see an increase in new diagnoses of children and adults as well as the ongoing impacts from the supply disruptions for generic Adderall XR and various methylphenidate products.

Net revenue for ADHD products was up 30% for the quarter and up 9% for the fiscal year. The long term trends, we've talked about in the last few quarters persist, including overall growth in the ADHD market. We continue to see an increase in new diagnosis of children and adults as well as the ongoing impact from the supply disruptions for generic Adderall XR.

And various methylphenidate products.

Speaker 3: These disruptions and shortages are continuing with several stimulant products being discontinued altogether as of late. The news around these widespread stimulant shortages abounds with articles and editorials being published almost daily at...

These disruptions and shortages are continuing with several stimulant products being discontinued altogether as of late the news around these widespread stimulant shortages of bounds with articles and editorials being published almost daily at this point.

Speaker 3: We've done an exceptional job maximizing the growth opportunity presented by the ongoing ADHD market supply disruptions while having no negative impact on our operations. IE, we have maintained supply to meet our growing demand for out these market events and expect to continue to meet this ever increasing demand.

We've done an exceptional job maximizing the growth opportunity presented by the ongoing ADHD market supply disruptions, while having no negative impact on our operations I E. We have maintained supply to meet our growing demand throughout these market events and expect to continue to meet this ever increasing demand.

Speaker 3: We believe the competitive supply disruptions over the past number of quarters have enabled incentives to gain both market and mindshare, propelling new prescribers and patients to find their way to its end.

We believe the competitive supply disruptions over the past number of quarters of enabled incentives to gain both market and mind share propelling new prescribers and patients to find their way towards Dennis to.

Speaker 3: to illustrate this, consider that from our fiscal 22 to our fiscal 23, new Adzenis riders for the year grew by 28%. When looking at new rider growth over two years, we have more than doubled Adzenis riders with new riders representing 48% of our total riders. We have increased Cotemplar riders by almost 70% over that same timeframe, with new riders representing almost 40% of total Cotemplar riders.

To illustrate this consider that from our fiscal 'twenty two to our fiscal 'twenty three new Adventists writers for the year grew by 28% when looking at new rider growth over two years, we have more than doubled at Dennys riders with new writers, representing 48% of our total writers we've increased co tempo writers by almost 70% over that same time.

Frame with new writers, representing almost 40% of total could temper writers.

Speaker 3: As a reminder, Advenous is approved as bioquivalent to add or all XR, so our brand is well positioned to continue to capture additional share as the extended release and fetamine shortage remains ongoing. Also, we expect to hold onto this new share as ADHD prescriptions are sticky as both clinicians and patients generally continue with drugs that work.

As a reminder, at Dennis is approved is bio equivalent to Adderall XR. So our brand is well positioned to continue to capture additional share as the extended release amphetamine shortage remains ongoing also we expect to hold onto this new share as ADHD prescriptions are sticky as both clinicians and patients generally continue with drugs that work for them.

Speaker 3: The impact from the supply disruptions coupled with the continued strong execution of our commercial team and the leverage we are driving with our A2RX Connect platform drove prescriptions to record levels during the fourth fiscal quarter. All told, at Zennis and Kotemplos scripts were up 15.3% for the fiscal year and up 37.5% for the fourth quarter compared to the same period a year ago.

The impact from the supply disruptions coupled with the continued strong execution of our commercial team and the leverage we are driving with our <unk> connect platform drove prescriptions to record levels. During the fourth fiscal quarter, all told at Zenith and co temporal scripts were up 15, 3% for the fiscal year and up 37, 5% for the fourth quarter.

Compared to the same periods a year ago, and if we look at factory sale unit factory sales units year to date here so far in our fiscal 'twenty four it zenna shipments are up 42% over the same period last year. The momentum continues we.

Speaker 3: And if we look at factory sales units, year to date here so far in our fiscal 24, adventish shipments are up 42% over the same period last year. The momentum continues.

Speaker 3: We discussed this last quarter, but it bears reminding that in order for us to be responsive to market dynamics and to keep up with rising costs, we implemented a customary price increase for ADHD products effectively.

We discussed this last quarter, but it bears reminding that in order to for us to be responsive to market dynamics and to keep up with rising costs, we implemented a customary price increase for ADHD products effective April one.

Speaker 3: This resulted in a one-time channel adjustment last quarter, which we indicated would even itself out this quarter with script growth and that revenues being more closely aligned. And it did.

This resulted in a onetime channel adjustment last quarter, which we indicated would even itself out this quarter with script growth and net revenues being more closely aligned.

It did.

It's worth reminding everyone that we do see impact from the payer changes and the resetting of the underlying patient insurance deductibles at the beginning of the calendar year and these impact our patient savings offer offers and our overall gross to nets, we've seen improved margins since the March quarter and expect to see that improvement continue through the calendar year as deductibles are met and the numerous initiatives.

Speaker 3: It's worth reminding everyone that we do see impact from the payer changes and the resetting of the underlying patient insurance deductibles at the beginning of the calendar year, and these impact our patient savings offers and our overall growth in that. We've seen improved margins since the March quarter and expect to see that improvement continue through the calendar year as deductibles are met and the numerous initiatives we've undertaken continue to gain traction, which they are indeed.

<unk>, we've undertaken continued to gain traction, which they are indeed doing.

Speaker 3: Beyond the success we're seeing from the sales side, we're also implementing initiatives to improve profitability through the outsource manufacturing of both the Zennis and Kotemplum. As we've discussed, this change is expected to further improve gross margins of our ADHD products. So let me-

Beyond the success, we're seeing from the sales side, we're also implementing initiatives to improve profitability to the outsource manufacturing of both the dentists and code Templer as we've discussed this change is expected to further improve gross margins of our ADHD products.

So let me update you on this process in July we submitted the <unk> template prior approval supplement or PFS to the FDA, which once approved enables us to transfer the production of <unk> to our third party manufacturer. We expect a six month review of the submission, which should enable FDA approval by late calendar 'twenty three or early calendar 'twenty.

Speaker 3: In July , we submitted the Cotempla prior approval supplement, or PAS, to the FDA, which once approved enables us to transfer the production of a Cotempla to our third-party manufacturer. We expect a six-month review of the PAS submission, which should enable FDA approval by late calendar 23, or early calendar 24.

Sure.

As you May recall, we previously received FDA approval of the incentive site transfer Pis and have already begun shifting a dentist production to the companys contract manufacturer.

Speaker 3: As you may recall, we previously received FDA approval of the Adzenis site transfer PAS, and have already begun shifting Adzenis production to the company's contract manufacturing.

Speaker 3: So, assuming we get the Cotumpla approval, we expect to start realizing the margin improvements for the ADHD brands in calendar.

So assuming we get the <unk> approval, we expect to start realizing the margin improvements for the ADHD brands in calendar 'twenty for.

Speaker 3: This has been a tremendous team effort to advance us to this point and I applaud the entire team's hard work in advancing the site transfer these important ADHD.

This has been a tremendous team effort to advance us to this point and I applaud the entire team's hard work in advancing the site transfer these important ADHD brands.

Speaker 3: Let's transition to our pediatric portfolio now. Net revenue in our pediatric portfolio was of 18% for the quarter and up 58% for the fiscal year. Remarkable growth that were very...

Let's transition to our pediatric portfolio now net revenue on our pediatric portfolio was up 18% for the quarter and up 58% for the fiscal year remarkable growth that we're very pleased with the key drivers here are the ongoing commercial execution and increasing product awareness as well as our continued <unk> Rx connect platform leverage these improvements are providing <unk>.

Speaker 3: key drivers here are the ongoing commercial execution and increasing product awareness, as well as our continued A2Rx Connect platform leverage. These improvements are providing tailwinds for the product's prescription growth trajectory.

For the products prescription growth trajectory.

Speaker 3: Since we added the multivitamins to the RX-Kinect platform, we have increased prescription significant...

Since we added the multi vitamins to the Rx connect platform, we've increased prescriptions significantly scripts for our pediatric products grew almost 80% over two years further the number of multi vitamin prescribers have grown over 250% from two years ago, which was prior to these products being added to the Rx connect platform previously developed at <unk>.

Speaker 3: Scripts for our pediatric product screw almost 80% over two years. Further, the number of multivitamin prescribers have grown over 250% from two years ago, which was prior to these products being added to the RXKinect platform previously developed at ME.

Speaker 3: The number of carbon all-ER prescribers grow over 120% over that same time.

The number of carbon all ER prescribers grew over 120% over that same timeframe.

Speaker 3: BARX Connect affords us leverage, and these numbers surely bear that out. We discussed this a bit last quarter, that we are also launching a multivitamin line extension with the novel folic acid ingredient, arcafolin. Arcafolin offers an improved profile of her metapholyn as a body ready, l-metapholy. Arcafolin's low water content and low molecular weight of the counter ion yield higher levels of assayed folate than other forms of l-metapholy currently available on the mark.

<unk> connect affords us leverage and these numbers shortly bear that out we discussed this a bit last quarter that we are also launching a multi vitamin line extension with a novel folic acid ingredient barca fallen Arca fallen offers an improved profile over metaphor is a body ready L metal falling Arca forward is low water content and low molecular weight of the counter ion.

Yield higher levels of assayed folate than other forms of al metal folate currently available on the market.

Speaker 3: It also has an improved purity profile, enhanced water solubility and an excellent overall stability profile.

It also has an improved purity profile enhanced water solubility and an excellent overall stability profile.

Speaker 3: The transition to archipelago also extends the brand's IP protection and provides further differentiator differentiation from other products. We believe the addition of archipelago to the multivitamin product lines will enhance those products profile and we look forward to continued growth and adoption of our unique pediatric port.

Transition to Arca fallen also extends the brand's IP protection and provides further differentiator differentiation from other products. We believe the addition of Arca fallen to the multi vitamin product lines will enhance those products profile and we look forward to continued growth and adoption of our unique pediatric portfolio.

Speaker 3: We've seen some payer changes in the multivitamin category, specifically with a big payer, a single payer, rather. But we believe we can and already have begun to offset this reimbursement down draft through growth outside of this payer and through several novel approaches we're taking to both deep and prescribing from current writers and broaden our prescriber base. These efforts are well underway and we're starting.

We've seen some payer changes in the multi vitamin category, specifically with a big payer a single payer rather, but we believe we can and already have begun to offset this reimbursement downdraft through growth outside of this payer and through several novel approaches we're taking to both deepen prescribing from current writers and broaden our prescriber base. These efforts are well underway and we're start.

To get real traction.

Speaker 3: And I'll remind you again that the ADHD portfolio continues its tremendous growth. So we're excited about how the portfolio was performing when put all to.

And I'll remind you again that the ADHD portfolio continues its tremendous growth. We're excited about how the portfolio is performing when put altogether overall.

Speaker 3: Overall, I'm pleased with the traction we're achieving across our RX segment. This elevated performance has been driven by strong execution from our sales organization. The leverage we continue to achieve through our RX Connect platform and enhanced category tailwinds with both ADHD.

Overall I'm pleased with the traction we are achieving across our Rx segment. This elevated performance has been driven by strong execution from our sales organization. The leverage we continue to achieve through our Rx connect platform and enhanced category tailwind with both ADHD brands with.

Speaker 3: With the wind out of our consumer health segment, our Rx segment is the core business going forward. And it's what I would draw your attention to as you think about A2's financial profile as we move into fiscal 24 and beyond.

With the wind down of our consumer Health segment. Our Rx segment is the core business going forward and it's what I would draw your attention to as you think about <unk> financial profile as we move into fiscal 'twenty four and beyond.

Speaker 3: One that is growing net revenues at double digit rates with strong prescription growth, expanding gross margins, achieving positive adjusted EBITDA and closing in on net income. In fact, income from operations for the fourth quarter for the RX segment was $6.3 million. And adjusted EBITDA was $8.3 million.

One that is growing net revenues at double digit rates with strong prescription growth expanding gross margins achieving positive adjusted EBITDA and closing in on net income in fact income from operations for the fourth quarter for the Rx segment was $6 3 million and adjusted EBITDA was $8 3 million, representing a 35% adjusted.

Speaker 3: Representing a 35% adjustment EBITDA margins for the

<unk> margin for the quarter.

Speaker 3: And while we don't necessarily expect that level of even dot every quarter going forward in the near term, we have great confidence in this growing segment and its prospects for consistent bottom line strength.

While we don't necessarily expect that level of EBITDA every quarter going forward in the near term we have great confidence in this growing segment and its prospects for consistent bottom line strength.

Speaker 3: You'll also need to keep in mind that as we wind down the consumer health segment, that may create some small drag on our quarterly EBITDA numbers. But once we've closed that business, the full strength of the RX segment will be reflected in the company wipe.

You'll also need to keep in mind that as we wind down the consumer health segment that may create some small drag on our quarterly EBITDA numbers, but once we close that business. The full strength of the Rx segment will be reflected in the company wide P&L.

Speaker 3: We believe the prescription business is very attractive. And with the emphasis we're applying exclusively to this segment going forward, we believe it should enhance shareholder value. With that overview, let me turn it over to our CFO , Mark Oki, to add some additional color to the numbers. Mark.

We believe the prescription business is very attractive and.

And with the emphasis we are applying exclusively to this segment going forward. We believe it should enhance shareholder value with that overview, let me turn it over to our CFO Mark Oki to add some additional color to the numbers Mark.

Speaker 4: Thank you Josh and welcome to everyone joining us on this call. I'd like to expand upon Josh's comments starting with revenue.

Thank you, Josh and welcome to everyone joining us on this call.

I'd like to expand upon Josh his comments starting with revenue.

Speaker 4: Net revenue for the fiscal 2023 fourth quarter was the company record $30.7 million up from 12% compared to the fiscal 2022 fourth quarter of $27.4 million.

Net revenue for the fiscal 2023 fourth quarter was a company record $37 million up from 12% compared to the fiscal 2020 to fourth quarter of $27 4 million.

Speaker 4: Looking at the component parts, net revenue from RX products sales in the fiscal 2023 fourth quarter was 23.3 million dollars compared to 18.7 million dollars in the same quarter last

Looking at the component parts net revenue from <unk> product sales in the fiscal 2023 fourth quarter was $23 3 million compared to $18 $7 million in the same quarter last year.

Speaker 4: The ADHD products generated 30% net revenue growth to $15.9 million in the fiscal 2020-23-4th quarter against $12.2 million in fiscal 2022's fourth quarter.

The ADHD products generated 30% net revenue growth to $15 $9 million in the fiscal 2023 fourth quarter against $12 2 million in fiscal 2022, this fourth quarter.

This ADHD sales bump mirrored our quarterly ADHD, written prescriptions, which were up 38% and driven by our execution and the continuing manufacturing and supply issues at large providers of ADHD products are situations recently highlighted by the publicly by the public letter jointly issued.

Speaker 4: This ADHD sales month mirrored our quarterly ADHD written prescriptions, which were up 38% in driven by our execution and the continuing manufacturing and supply issues at large providers of ADHD products. A situation recently highlighted by the public letter jointly issued by both the FDA and DEA.

By both the FDA and DEA.

Speaker 4: Besides the benefit of market shortages, patients are fulfilling their deductibles, and we're executing on several gross to net improvement initiatives. As a result of all.

Besides the benefit of market shortages patients are fulfilling their deductibles and we are executing on several gross to net improvement initiatives.

As a result of our product.

Speaker 4: As a result, our product grossed in its return to normal from the depressed third quarter level.

As a result, our product gross to nets returned to normal from the depressed third quarter levels.

Speaker 4: We're seeing further improvement in the current September quarter on the ADHD brands based on positive pair changes that have affected growth in edu just.

We're seeing further improvement in the current September quarter on the ADHD brands based on positive payer changes that have affected gross to net adjustments.

Speaker 4: Outside of ADHD, the prescription pediatric portfolio experienced 18% growth in net revenue to $7.2 million in our fiscal 2023 fourth quarter compared to $6.1 million in 2022. Our highest quarter in his

Outside of ADHD prescription pediatric portfolio experienced 18% growth in net revenues to $7 $2 million in our fiscal 2023 fourth quarter compared to $6 1 million in 2022, our highest quarter in history, while the fourth quarter was an excellent quarter for the pediatric Brad.

Speaker 4: Well, the fourth quarter was an excellent quarter for the pediatric brands. Those brands do have some seasonality and calendar fluctuations. So we'd expect the September quarter to come in lighter than the fourth quarter.

And those those brands do.

Do have some seasonality in calendar fluctuations so we'd expect the September quarter to come in lighter than the fourth quarter.

Speaker 4: That said, we're pleased with the performance of our pediatric portfolio.

That said, we're pleased with the performance of our pediatric portfolio.

Speaker 4: For the fourth quarter of 2023, net revenue from the consumer health segment was $7.4 million, compared to $8.7 million in the same quarter last year. A decrease of 15%. As Josh noted, as part of our goal of improving corporate profitability, we are deemphasizing the consumer health segment and are actively winding it down.

For the fourth quarter of 2023 net revenue from the consumer health segment was $7 $4 million compared to $8 7 million in the same quarter last year.

A decrease of 15%.

As just noted as part of our goal of improving corporate profitability. We are deemphasizing, the consumer health segment and.

And are actively wanting to get Dale.

Speaker 4: Through this process of gradually selling through our inventories, we expect to line down operations by the end of fiscal 2024.

Through this process of gradually selling through our inventories, we expect to wind down operations by the end of fiscal 2024.

Speaker 4: If, during the process of winding down that business, a buyer comes forward, will of course consider a sale of the entire business or parts of it. But irrespective of that, we expect to drive...

If during the process of winding down that business a buyer comes forward, we'll of course consider a sale of the entire business or parts of it.

But irrespective of that we expect to drive the cash use.

Speaker 4: From that business down dramatically, and by the end of the fiscal year, drive cashmurne close to zero and close it out. I'll re-emphasize what Josh noted. Consumer health may create some minor drag on eva-dow for the next few quarters, which is why we point you to the Rx segments performance, as outlined in our quarterly earnings release.

For that business down dramatically and by the end of the fiscal year drive cash burn close to zero and close it out.

Reemphasize, what Josh noted consumer health may create some minor drag on EBITDA for the next few quarters, which is why we point you to the Rx segment performance as outlined in our quarterly earnings releases.

Speaker 4: to get good sense for what the company profile will look like going forward company what?

To get good sense for what the company profile will look like going forward companywide.

We continue to have small amount of other prescription revenue both this year and last this other pertains to discontinued RF products.

Speaker 4: We continue to have small amount of other prescription revenue votes this year and last. This other pertains to discontinued our products.

Speaker 4: During this year's fourth quarter, it totaled 210,000 in revenue against last year's fourth quarter of 365,000.

During this year's fourth quarter.

<unk> totaled 210000 in revenue against last year's fourth quarter of $365000.

Speaker 4: Overall, these amounts continue to decrease to zero.

Overall these amounts continue to do to decrease to zero.

Speaker 4: Gross margins drew to 60% in the 2023 fourth quarter compared to 54% of net revenues in the year-of-go quarter.

Gross margins grew to 60% in the 2023 fourth quarter compared to 54% of net revenues in the year ago quarter.

Speaker 4: Fourth quarter gross margins were impacted by a write off of consumer health inventory of $2.1 million that's part of our decision to wind down that business. Without this adjustment, our gross margins would have been 67%.

Fourth quarter gross margins were impacted by a write off of consumer health inventory of $2 1 billion as part of our decision to wind down that business without this adjustment our gross margins would've been 67%.

Speaker 4: This movement in the gross margin percentage was primarily driven by improved manufacturing efficiencies and higher volumes of ADHD product sales. Product mix.

This movement in the gross margin percentage was primarily driven by improved manufacturing efficiencies and higher volumes at ADHD product sales product mix.

Speaker 4: more sales from our higher margin pediatric product line.

More sales from our higher margin pediatric program product lines.

Speaker 4: and reduced lower margin and reduced lower margin consumer health revenue as well as the decision to discontinue low margin arts product in fiscal 2022.

And reduced lower margin and reduced lower margin consumer health revenue as well as the decision to discontinued low margin or its products in fiscal 2022.

Speaker 4: Gross margin percentages can vary due to both seasonal and other factors. As I noted above, the fiscal fourth quarter corresponds to the calendar's second quarter and reflects our moving away from being impacted by the first quarter's high deductible period.

Gross margin percentages can vary.

Due to both seasonal and other factors as I noted above this fiscal fourth quarter corresponds to the calendar second quarter and reflects our moving away from being impacted by the first quarter's high deductible period.

Speaker 4: Additionally, we continue to progress with the manufacturing outsourcing of our ADHD products.

Additionally, we continue to progress with the manufacturing outsourcing of our ADHD products.

Speaker 4: Josh mentioned we've received the FDA approval of the AdZenis PAS, and it began the transfer of AdZenis manufacturing.

As mentioned, we have received the FDA approval of the incentives.

And have begun the transfer of incentives manufacturing.

Speaker 4: We anticipate a constructive FDA response from the Contemplate of PAS, which was submitted in July , and should be reviewed and approved by the FDA by calendar year end or early calendar 2024.

We anticipate a constructive FDA response from the <unk>.

Operator: Greetings. Welcome to the A2 BioFama Cisco 2023 Q4 earnings conference call. At this time, all participants are in a less-known mode.

Which was submitted in July and should be reviewed and approved by the FDA by calendar year end or early calendar 2024.

Speaker 4: When both ADHD drugs have received their respective PAS approvals, we anticipate ramping up production at our contract manufacturer.

When both ADHD drugs have received their respective approvals, we anticipate ramping up production at our contract manufacturer couple.

Operator: A question and answer session will follow the former presentation. If anyone should require operator assistance during the conference, please press the star zero on your telephone keypath. Please note that the conference is being recorded.

Speaker 4: coupled with the ramping down of production at our Texas facility.

Coupled with the ramping down of production at our Texas facility.

Speaker 4: Obviously, during this time of ADHD, medication shortages, our goal is to be cognizant of the ADHD patients who have prescriptions for our products, and to be judicious in balancing this production trans.

Obviously during this time of the ADHD medications shortages. Our goal is to be cognizant of the ADHD patients who have prescriptions for our products and judicious in balancing this production transfer.

Robert Blum: I will now come to conference over to your host, Robert Blum, and Vester relations. Robert, you may begin. Thank you so much.

Robert Blum: Good afternoon, everyone, and as the operator indicated, thank you for joining us for A2 BioFama's fiscal 2023 fourth quarter and full-year financial results conference call for the period ended June 30, 2023. Joining us on today's call is A2 CEO Josh Disbrow and the company's chief financial officer Mark Oki. At the conclusion of today's prepared remarks, we will open the call for a question and answer session. I'd 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 ID provided in the earnings press release issued earlier today.

Speaker 4: Once accomplished, we expect that this outsourcing will improve our ADHD products' gross margin process.

Once accomplished we expect that this outsourcing will improve our ADHD products gross margin profit.

Speaker 4: Moving to operating expenses in this fourth quarter of 2023, excluding the impairment expenses, changes in contingent consideration, and amortization of intangible assets. Operating expenses were $14.6 million compared to $20.6 million in the period.

Moving to operating expenses in the fourth quarter of 2023, excluding the impairment expenses changes in contingent consideration and amortization of intangible assets.

Operating expenses were $14 6 million compared to $20 6 million in the period.

Speaker 4: a year ago and reflect our continuing focus on cost reductions, including the indefinite suspension of our development pipeline.

A year ago and reflect our continuing focus on cost reductions, including the indefinite suspension of our development pipeline.

Speaker 4: Research and development expenses were $465,000 in the fourth quarter of 2023 compared to $3.3 million in the 2022 fourth quarter.

Research and development expenses were $465000 in the fourth quarter of 2023 compared to $3 3 million in the 2020 to fourth quarter.

Robert Blum: Finally, I'd also like to call to your attention the customary safe harbor disclosure regarding forward-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 A2 BioFama. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay.

Robert Blum: Axe results may differ materially as a result of risks, uncertainties, and other factors, including, but not limited to the factors set forth in the company's filings with the SEC. A2 undertakes no obligation to update or revise any of these forward-looking statements.

Net loss for the fourth quarter of 2023 was $2 5 million or <unk> 59 per share compared to $16 $1 million or $8 95 per share for the same quarter last year.

Speaker 4: Net loss for the fourth quarter of 2023 was $2.5 million or $59 per share, compared to $16.1 million or $8.95 per share for the same quarter last year.

Speaker 4: We generated a strong positive adjusted EBEDO for the fourth quarter of $7.7 million compared to a negative adjusted EBEDO of $3.9 million in last year's fourth quarter.

We generated a strong positive adjusted EBITDA for the fourth quarter of $7 $7 million compared to a negative adjusted EBITDA of $3 9 million in last year's fourth quarter.

Speaker 4: Full reconciliation of net income to adjusted EBITDA can be found in the press release issued earlier today.

Full reconciliation of net income to adjusted EBITDA can be found in the press release issued earlier today.

Speaker 4: Without the intangible asset impairment associated with the consumer health wind down, company-wide net income would have been $648,000. Turning.

Without the intangible asset impairment associated with the consumer health wind down <unk>.

Any wide net income would have been $648000.

Turning from the fourth quarter to the full year.

Speaker 4: Net revenue increased 11% to $107.4 million compared to Cisco 2022. Net revenue from the RX segment in Cisco 2023 was $73.8 million compared to $61.1 million for the Cisco 2022. An increase of 21%.

Net revenue increased 11% to $107 4 million compared to fiscal 2022.

Robert Blum: With that said, like turn the event over to Josh Disbro, Chief Executive Officer of A2 BioFama. Josh, please proceed. Thank you, Robert.

Net revenue from the Rx segment in fiscal 2023 was $73 8 million compared to $61 $1 million for the fiscal 2022 and.

Joshua Disbrow: And welcome, everyone. We're excited to be speaking with you today following an exceptional year in the strongest quarter in A2 BioFama's history. As you all can see from the financial results and the press release we issued after the market closed, we finished fiscal 2023 on a strong note, having achieved $177.4 million. All-time high total prescriptions for our core RX segment with over $560,000 prescriptions written for our promoted products last year. Gross margins that increased to 62% for the year compared to 54% last year.

An increase of 21%.

Speaker 4: The ADHD portfolio experienced a 9% increase in revenue to $46.9 million in fiscal 23 in 2023, while the pediatric portfolio net revenue increased 58% to 25.4 million.

The ADHD portfolio experienced a 9% increase in revenue to $46 9 million in fiscal 'twenty three in 2023, while the pediatric portfolio net revenue increased 58% to $25 4 million.

Speaker 4: Net revenue from the Consumer House segment was $33.6 million in fiscal 2023, a decrease of 5% compared to fiscal 2022.

Net revenue from the consumer Health segment was $33 6 million in fiscal 2023, a decrease decrease of 5% compared to fiscal 2022.

Joshua Disbrow: Positive adjusted even does $7.7 million during the fourth quarter, and improvement of $11.6 million from the year ago fourth quarter, which also translated into positive company-wide adjusted EBITDA for the full fiscal year 23 of $3.2 million. And while our quarterly net income was slightly negative due to several impairments taken as part of a wind down of our consumer health segment, we set the stage for significant improvement in fiscal 2024. And by the way, without those impairments net income for Q4 would have been $0.6 million.

Gross profit was $66 6 million or 62% of net revenue in fiscal 2023, compared to $52 3 million or 54% of net revenue in fiscal 2022.

Speaker 4: Gross profit was $66.6 million or 62% of net revenue in fiscal 2023 compared to 52.3 million or 54% of net revenue in fiscal 2022.

In fiscal 'twenty two.

Excuse me this fiscal 'twenty two reflects the strong performance of our.

Speaker 4: Excuse me, the fiscal point to reflects the strong performance of our, our X products.

Rx products.

Operating expenses, excluding impairment expenses changes in contingent consideration and amortization of intangible assets was $74 2 million in fiscal 2023 compared to $82 5 million in fiscal 2022.

Speaker 4: Operating expenses, excluding impairment expenses, changes in contingent consideration and amortization of intangible assets were $74.2 million in fiscal 2023 compared to $82.5 million in fiscal 2022. Research and development expenses were $4.1 million in fiscal 2023 compared to $12.7 million in fiscal 2022. As the company suspended activities on its pipeline assets to How Lanterned.............

Joshua Disbrow: Nistromatic transformation of our operating results is due to the strength of our RX segment, which is comprised of our RX product lines of Dennis XR OTT and Cotemple XR OTT, and our pediatric multivitemons, along with our anti-Histamine carbon all-ERR. Our ADHD products continue to experience tailwinds from the ongoing stimulant shortages, while all of our prescription products are benefiting from strong field execution in internal operating and margin. Improvements. This is all setting the stage for continued growth and improvement in fiscal 2024.

Research and development expenses were $4 1 million in fiscal 2023 compared to $12 $7 million in fiscal 2022 as the company suspended activities on its pipeline assets to focus on its commercial operations.

Speaker 4: Net loss was $17.1 million or $5.11 per share compared to $108 million or $74.1 $74.1 per share in fiscal 2022. Adjusted EBITDA was a positive $3.2 million in fiscal 2023 compared to a negative $21.5 million in fiscal 2022.

Net loss was $17 1 million or $5 11 per share compared to a $108 million or <unk> $74 $174 <unk> per share in fiscal 2022.

Joshua Disbrow: I'll touch on this more in a moment. The transformation of our results did not happen overnight and I'm pleased to see our operating plan coming to fruition. It was a deliberate strategic plan undertaken to indefinitely pivot away from clinical development and place the company on a financial pathway to sustainability, particularly in light of the current market environment. Step one in that plan was announced last October when we indefinitely suspended our pipeline programs to minimize the research and development expenses until such time that we can fund those efforts with internally generated cash flow or through a strategic partnership.

Adjusted EBITDA was a positive $3 2 million in fiscal 2023 compared to a negative $21 $5 million in fiscal 2022.

For fiscal 2023, when we add back the consumer health segments net loss of $9 $8 million and the R&D pipelines net losses of $2 $6 million, we see that $12 $4 million of the $17 1 million consolidated net loss.

Speaker 4: For fiscal 2023, when we add back the consumer health segments, net loss of $9.8 million and the R&D pipelines net losses of $2.6 million, we see that $12.4 million of the $17.1 million consolidated net loss came from now non-core operations that we've either curtailed or winding down.

Joshua Disbrow: This was a difficult decision but one we knew was in the best long-term interests of the companies and a shareholders. The second component of that plan was implemented in June of this year when we announced that we would focus our commercial efforts on our growing and profitable RX segment, while de-emphasizing our consumer house segment, through either monetizing or discontinuing it. To put some perspective on this strategy, our consumer house segment had negative adjusted EBITDA during fiscal 23 of $3.6 million.

It came from now noncore operations that we've either curtailed or winding down.

Speaker 4: This view becomes even more striking when we do the same calculation to our fiscal 2023 adjusted EBITDA. Now our positive $3.2 million adjusted EBITDA includes negative adjusted EBITDA of $3.6 million and $2.6 million from the consumer health segment and pipeline spending. Respectively.

This view becomes even more striking when we do the same calculation to our fiscal 2023 adjusted EBITDA.

Joshua Disbrow: Our clinical development program, which was really only operational for a quarter of this year, had negative adjusted EBITDA of $2.6 million. So we're looking at a negative adjusted EBITDA of $6.2 million across these two segments. In contrast, our RX segment, which I'll note supports all of our corporate overhead, had positive adjusted EBITDA of $9.4 million for the year. Going forward by exclusively focusing our business on the RX segment, we've highlighted an operating company that's a growing, has positive EBITDA in its poised to achieve ongoing and consistent profitability.

Now a positive $3 $2 million adjusted EBITDA includes negative adjusted EBITDA of $3 6 million and $2 $6 million from the consumer health segment and pipeline spending respectively. Excluding these operations our pro forma adjusted EBITDA is a positive $9 4 million.

Speaker 4: Colleading these operations, a pro forma adjusted to EBITDA is the positive $9.4 million.

Speaker 4: On June 13th, we announced the closing of a $4 million public offering which was priced at the market.

On June 13th we announced the closing of a $4 million public offering which was priced at the market.

Speaker 4: This offering was led by Nantahela, capital management and we welcome its representative, Abhi Jain to our board. Our cash and cash equivalent holdings on June 30th, 2023 were 23 million dollars compared to 19.2 million dollars on March 31, 2023.

This offering was led by non Taylor capital management, and we welcome. It's representative of <unk> to our board, our cash and cash equivalents holdings on June 32023.

$23 million compared to $19 2 million on March 31, 2023.

Speaker 4: We believe that this additional capital provides us with comfort.

We believe that this additional capital provides us with comfort.

And the wherewithal to aggressively proceed with our focus on corporate profitability. We have assisted in the strategy with the help of Avenue venture opportunity Fund, which has extended the interest only period of under $15 million secured facility through the maturity date in January 2025.

Speaker 4: and the world with all to aggressively proceed with our focus on corporate profitability. We are assisted in the strategy with the help of Avenue Venture Opportunity Fund, which has extended the interest only period on our $15 million secured facility through the maturity date in January 2025.

Joshua Disbrow: As we looked at fiscal 2024, as our RX segment becomes the go-forward company, we will look to carefully wind down our consumer house segment by selling off a remaining inventory and minimizing its expenses. We expect there to be neutral to minimal impact to our job that EBITDA from this segment in fiscal 2024. The strategic focus on prescription products and the de-emphasis on the consumer house segment should result in fiscal year 2024 company wide adjusted EBITDA improvement, and barring any unforeseen impacts, closing in on company wide profitability. We do anticipate some residual fiscal 2024 right-downs associated with the exits of our Texas manufacturing facility and the consumer house segment, but these are non-cash gap actions that will not impact our adjusted EBITDA.

With our cash on hand available borrowing under our revolving line of credit and the extension of the Avenue capital note.

Speaker 4: With our cache on hand, available borrowing under our revolving line of credit and the extension of the Avenue Cable note.

Speaker 4: Interest only period we are feeling quite comfortable with our cast position and we and believe we are adequately capitalized. It is our attention to refinance the avenue note prior to or upon its maturity.

Interest only period, we're feeling quite comfortable with our cash position.

And believe we are adequately capitalized.

It has our attention to refinance the avenue prior to or upon its maturity.

Speaker 4: Well, our corporate philosophy is not to give Ford guidance. We're very excited about how A2 is positioned for its fiscal 2024 year.

While our corporate philosophy is not to give forward guidance. We're very excited about how <unk> is positioned for its fiscal 2024 years.

Speaker 4: We were slimmed down and focused on our Rx products. We were transitioning ADHD products.

We have slimmed down and focused on our RF products were transitioning ADHD product from an underutilized facility to our outsourced and very efficient manufacturing partner and we've bolstered our balance sheet and taking on new <unk> taken on a new lead investor.

Joshua Disbrow: Let's take a moment to dive further into what is our core business going forward, our RX segment. As mentioned at the beginning, we operate in the ADHD category with the Denis VexR, ODT, and KotemplexR, ODT. The first and only FDA-approved and fedamine and methylphenidate extended release or lead disintegrating tablets for the treatment of ADHD, respectively. These novel branded medications utilize our proprietary, microparticle, modified release, drug delivery technology platform, and each help multiple orange-book listed patents.

Speaker 4: from an underutilized facility to our outsourced and very efficient manufacturing partner. We've bolstered our balance sheet and taken on a new lead investor.

Speaker 4: As many of you are aware, we typically file our 10K or 10Q on the same date as our quarterly earnings release in conference call. We're in the process of completing the audit with our new auditors, Grant Thorden, and expect to file the 10K, the week of October 1st. We believe the financial results presented in today's conference call and the earnings release are final and the remaining tests to be completed for the audit are administrative in nature. With that, let me-

Many of you are aware, we typically file our 10-K or 10-Q on the same data as our quarterly earnings release and conference call.

We are in the process of completing the audit with our new auditors Grant Thornton and expect to file the 10-K. The 10-K the week of October one.

We believe the financial results presented in todays conference call and the earnings release are final and the remaining tests to be completed for the audit are our administrative in nature.

Joshua Disbrow: On the pediatric side, our portfolio includes our fluoride-based multivitamin, so available in various formulations for infants and children to fluoride deficiency. We also market carbonol ER and extended release carbonoxamine based and a histamine suspension indicated to treat numerous allergic conditions for patients two years and older. These products serve well-established pediatric markets and offer distinct clinical features and patient benefits over the branded and generic competitive products and have strong intellectual property protection.

With that let me turn it back to Josh.

Speaker 3: Thank you, Mark. Let me just conclude where I started. We are dedicated to creating shareholder value. And with the exclusive focus going forward on our X-Fegment, which is growing and profitable, we believe we can accomplish this objective. We've an improved balance sheet and a business poise to accelerate our path to generating both net income and positive cash flows as we actually...

Thank you Marc let me just conclude where I started we are dedicated to creating shareholder value and with the exclusive focus going forward on our Rx segment, which is growing and profitable. We believe we can accomplish this objective we have an improved balance sheet and a business poised to accelerate our path to generating both net income and positive cash flows as we execute.

Joshua Disbrow: Let's go into ADHD first. Met revenue for ADHD products was up 30% for the quarter and up 9% for the fiscal year. The long-term trends we've talked about in the last few quarters persist, including overall growth in the ADHD market. We continue to see an increase in new diagnoses of children and adults as well as the ongoing impacts from the supply disruptions for generic, overall XR and various methylphenidate products. These disruptions and shortages are continuing with several stimulant products being discontinued all together as of late.

Speaker 3: We understand the path here at A2 has not been straight, as it's not often for most companies. But our focus and our objectives are clear, with a great opportunity going.

We understand the path here at <unk> has not been straight as it is not often for most companies, but our focus and our objectives are clear with a great opportunity going forward, we positioned ourselves well to achieve our objectives in fiscal 'twenty four is off to a solid start I appreciate everyone's participation on the call today and your commitment to the future of <unk> I will now be happy to answer.

Speaker 3: We've positioned ourselves well to achieve our objectives and fiscal 24 is off to a solid start. I appreciate everyone's participation on the call today and your commitment to the future of A2. I'll now be happy to answer any questions. Operator.

Any questions operator.

At this time it will be conducting a question and answer session.

Speaker 1: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line isn't the question queue. You may press star 2 if you would like to remove your question from the queue.

You'd like to ask a question. Please press star one on your telephone keypad.

Joshua Disbrow: The news around these widespread stimulant shortages abounds with articles and editorials being published almost daily at this point. We've done an exceptional job maximizing the growth opportunity presented by the ongoing ADHD market supply disruptions while having no negative impact on our operations. IE, we have maintained supply to meet our growing demand throughout these market events and expect to continue to meet this ever increasing demand. We believe the competitive supply disruptions over the past number of quarters have enabled the dentist to gain both market and mind share, propelling new prescribers and patients to find their way to a dentist.

A confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue.

Speaker 1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again. Please press star one if you have a question at this time.

Speaker 1: Once again, please press star one if you have a question at this time.

And one moment, while we poll for questions.

And your first question today is coming from <unk> Rama from Maxim Group. Your line is live.

Speaker 1: your first question today is coming from Nas Rahman from Maxim Group. Nas, your line is

Speaker 5: Hello everyone, congrats on the record quarter and the record year. And thanks for taking my questions. I have a few if you don't mind. So obviously you had significant growth in your prescription business in both the ADHD and pediatric business. I guess could you come and provide us some detail, there's some color on what initiatives you might have to accelerate growth further for both the ADHD business and the pediatric business in fiscal 24th?

Joshua Disbrow: To illustrate this, consider that from our fiscal 22 to our fiscal 23, new adzenis writers for the year grew by 28%. When looking at new writer growth over two years, we have more than doubled adzenis writers with new writers representing 48% of our total writers. We have increased co-templariders by almost 70% over that same time frame with new writers representing almost 40% of total co-templariders. As a reminder, adzenis is approved as bio-quivalent to add to all XR, so our brand is well positioned to continue to capture additional share as the extended release and fedemine shortage remains ongoing.

Hello, everyone and congrats on the record quarter and a record year and thanks for taking my questions I have a skew if you don't mind. So obviously you had significant growth in your prescription business in both the HD and pediatric business.

I guess could you provide us some details or some color on what initiatives you might have to accelerate growth further for both.

ADHD business and the pediatric business in fiscal 'twenty four.

Okay.

Speaker 3: Yeah, sure. Thanks. Thanks for joining us. Thanks for the questions. Um, we have quite a bit, uh, ongoing, some of which we, you know, uh, share publicly, other which is, um, you know, somewhat, somewhat confidential because it's, uh, competitive in nature. That haven't been said. It's, it's a, it's, uh,

Yeah sure Thanks, and thanks for joining us thanks for the questions.

We have quite a bit ongoing some of which we.

Joshua Disbrow: Also, we expect to hold onto this new share as ADHD prescriptions are sticky as both clinicians and patients generally continue with drugs that work for them. The impact from the supply disruptions coupled with the continued strong execution of our commercial team and the leverage we are driving with our A2RX Connect platform for a prescriptions to record levels during the fourth fiscal quarter. All told adzenis and co-templar scripts were up 15.3% for the fiscal year and up 37.5% for the fourth quarter compared to the same previous year ago.

Share publicly other which is.

Somewhat confidential because its competitive in nature that having been said, it's a it's a significant list of things that we've implemented on the commercial side on the ADHD piece of course, we expect to continue to realize the tail winds afforded to us obviously through the shortages. We continue to hear a daily as I've mentioned about ongoing supply issues with the stimulants.

Speaker 3: It's a significant list of things that we've implemented on the commercial side. On the ADHD piece, of course, we expect to continue to realize the tailwinds afforded to us, obviously, through the shortages. We continue to hear daily, as I mentioned, about ongoing supply issues with the stimulants and more and more lately around methylphenidate almost as much as we had heard about the infetamine. That will certainly continue to play into our growth. We do not think it's transient. It's been going on for a year now.

And more and more lately around methylphenidate almost as much as we had heard about the amphetamine. So that will certainly continue to play into our growth. We do not think it's transient it's been going on for a year now and.

Joshua Disbrow: And if we look at factory sale units, factory sales units, year to date, here so far in our fiscal 24, adzenis shipments are up 42% over the same period last year, the momentum continues. We discussed this last quarter, but it bears reminding that in order to be for us to be responsive to market dynamics and to keep up with rising costs, we implemented a customary pricing increase for ADHD products effective April 1st.

Several manufacturers have actually dropped out of the market to one large brand got was generic sized and it's got many competitors, which is causing significant.

Speaker 3: Several manufacturers have actually dropped out of the market. One large brand got with genera size, and it's got many competitors, which is causing significant.

Speaker 3: issues and so we expect that to continue to play into our growth. We're capitalizing that on that in various ways. Obviously through our field initiatives, with our Salesforce, through our pharmacy initiatives, through the network of pharmacies that we work with, we have several initiatives that are aim more at the consumer and some of the things that we can do to highlight some of the issues and capitalize on some consumer pathways and get directly to patients and their parents.

Issues and so we expect that to continue to play into our growth. We're capitalizing on that in various ways, obviously through our field initiatives with our sales force through a pharmacy initiatives through the network of pharmacies that we work with we have several several initiatives that are aimed more at the consumer and some of the things that we can do to highlight.

Joshua Disbrow: This resulted in a one-time channel adjustment last quarter which we indicated would even itself out this quarter with script growth and net revenues being more closely aligned and it did. It's worth reminding everyone that we do see the impact from the payer changes and the resetting of the underlying patient insurance deductibles at the beginning of the calendar year and these impact our patient savings offer offers and are overall gross to nets.

Some of the issues and capitalize on some consumer consumer pathways and get directly to patients and their parents. Those are those are well underway and we've seen those bear very good fruit.

Speaker 3: Those are well underway and we've seen those bear very good fruit.

Speaker 3: We continue to, obviously, produce at a high level. We have no concerns about being able to continue to meet demand on the ADHD side. And so we're excited about all the issues we have underway. On the pediatric side, not dissimilar from the ADHD, we've got a strong execution on the Salesforce side. We continue to look at our pharmacy partners as a way to continue to drive demand. That's been a tremendous boom for the pediatric product, particularly the multivitamins, as we've talked about. Those initiatives will continue. We've got a very focused, efficient Salesforce on the pediatric side. We have a very small number of reps, but with these products and the categories they compete in, as well as the geographies in which we sell them, we believe we're well positioned to continue to grow there. And we do have some patient centric and parent centric.

We continue to.

Joshua Disbrow: We've seen improved margins since the March quarter and expect to see that improvement continued through the calendar year as deductibles are met and the numerous initiatives we've undertaken continue to gain traction which they are indeed doing. Beyond the success we're seeing from the sales side, we're also implementing initiatives to improve profitability through the outsource manufacturing of both adzenis and co-templar. As we've discussed, this changes expected the further improved gross margins of our ADHD products.

Obviously produce at a high level, we have no concerns about being able to continue to meet demand on the ADHD side and so we're excited about all the initiatives we have underway on the pediatric side not dissimilar from the ADHD. We've got a strong execution on the sales force side, we continue to look at of our to our pharmacy partners as a way to continue to drive demand thats been.

A tremendous boon for the pediatric product, particularly the multi vitamins as we've talked about those initiatives will continue.

Joshua Disbrow: So, let me update you on this process. In July, we submitted the Cotempla Prior Approval Supplement, or PAS, to the FDA, which once approved enables us to transfer the production of a Cotempla to our third-party manufacturer. We expect a six-month review of the PAS submission, which should enable FDA approval by late calendar 23 or early calendar 24. As you may recall, we previously received FDA approval of the Adzenis Site Transfer PAS and have already begun shifting Adzenis production to the company's contract manufacturer.

Got a very focused efficient sales force on the pediatric side, we have a very small number of reps but.

With these with these products in the categories. They compete in as well as the geographies in which we sell and we believe we are well positioned to continue to grow there and we do have some patient centric and parents centric initiatives underway whereby we can.

Speaker 3: initiatives underway whereby we can market directly to those patients and their parents. So we've implemented several things around social media and several non-personal promotional tactics as well. So it's all coming together to really spell strong growth across the portfolio of ADHD as well as pediatric.

Market directly to those patients and their parents.

So we've and we've implemented several things around social media and several non personal promotional tactics as well. So it's all coming together to really spell as strong growth across the portfolio of ADHD as well as pediatrics and we will continue to keep the pedal down to keep the growth the growth going.

Joshua Disbrow: So, assuming we get the Cotempla approval, we expect to start realizing the margin improvements for the ADHD brands in calendar 24. This has been a tremendous team effort to advance us to this point, and I applaud the entire team's hard work in advancing the site transfer of these important ADHD brands.

Speaker 3: and we'll continue to keep the pedal down to keep the growth going.

Speaker 5: Alright, that was helpful. During your run remarks, you commented that there was a pair change regarding multiple items with the single pairs. Did you comment a little more on what happened there and how does A2 plan on contending without change?

All right that was helpful. During your remarks, you commented that there was a clear change regarding multivitamins single clear could you comment a little more on what happened there and how does <unk> plan on contending without change.

Joshua Disbrow: Let's transition to our pediatric portfolio now. Net revenue in our pediatric portfolio was of 18% for the quarter and up 58% for the fiscal year, remarkable growth that we're very pleased with. The key drivers here are the ongoing commercial execution and increasing product awareness, as well as our continued A2Rx Connect platform leverage. These improvements are providing tailwinds for the product's prescription growth trajectory. Since we added the multivitamins to the A2Rx Connect platform, we have increased prescription significantly.

Speaker 3: Yeah, and this is, you know, a part for the course in branded pharmaceuticals today, Nas. So it's nothing that we, it's certainly not something we take lightly, but it's not something that we look at as necessarily a huge market event. So one particular PBM has made a change around how they're paying for the category multibitamins. And it's not all of their, it's not all of their plans. It's sort of a select isolated number of plans. And we have already demonstrated strong growth sort of from July when the change was made to August . It's a really nice sort of return to kind of levels close to where they had been. So we're already seeing the initiative that we put in place coming in the play. There's several things that we are doing and already have put in the place. One of the things that's important is, you know, when one door closes, another door opens, we've actually had positive pay or changes. Some of the public payers have actually picked up coverage on on our multibitamins brands. And we are beginning to realize some of the benefits of that positive change. So, you know, one, one negative, one positive to some degree, we think more than cancel that out. That also enables us to expand geographically into an area where we hadn't really been strongly promoting the products of several initiatives underway to enable some success through that new channel. So we also continue to look at some of the non-personal tactics that I spoke to earlier in the previous answer. Some non-position directed tactics whereby we've been started to influence some telehealth.

Yeah, and this is par for the course in branded pharmaceuticals today now so it's nothing that we at.

It's certainly not something we take lightly but it is not something that we look at it as necessarily a huge market event. So one particular PBF has has made a change around how they are paying for the category multi vitamins and it's not all of their it's not all of their plans, it's sort of a select isolated number of plans and we have already demonstrated strong growth from <unk>.

Joshua Disbrow: Scripps for our pediatric products grew almost 80% over two years. Further, the number of multivitamins prescribers have grown over 250% from two years ago, which was prior to these products being added to the A2Rx Connect platform previously developed at NEOS. The number of carbon-all-ear prescribers grew over 120% over that same timeframe. A2Rx Connect affords us leverage, and these numbers surely bear that out.

July when the change was made to August really nice sort of.

Returned to kind of levels close to where they had been so we're already seeing the initiatives that we put in place coming into play there are several things that we are doing and already have put into place one of the things. That's important is when one door closes another door opens we've actually had positive payer changes some.

Joshua Disbrow: We discussed this a bit last quarter that we are also launching a multivitamins line extension with the novel folic acid ingredient, Arcafolin. Arcafolin offers an improved profile over metafolane as a body-ready L-metafolane. Arcafolin's low water content and low molecular weight of the counter ion yield higher levels of acid folate than other forms of L-metafolane currently available on the market. It also has an improved purity profile, enhanced water solubility, and an excellent overall stability profile.

Some of the public payers have actually picked up coverage on on our multi vitamin brands and we are beginning to realize some of the benefits of that positive change. So one one negative one positive to some degree we think more than cancel that out that also enables us to expand geographically into an area, where we hadn't really been.

Strongly promoting the products and several initiatives underway to kit to enable some success through that new channel. So we also.

Continue to look at some of the non personal tactics as I spoke to earlier in the previous answer some some non non physician directed tactics, whereby we have been started to employ some telehealth.

Joshua Disbrow: The transition to Arcafolin also extends the brand's IP protection and provides further differentiation from other products. We believe the addition of Arcafolin to the multivitamins product lines will enhance those products profile, and we look forward to continued growth and adoption of our unique pediatric portfolio.

Speaker 3: tactics and starting to see some early fruit being being born there. So we're very comfortable that you know the pediatric products will return to form and have you know have good growth.

Tactics and starting to see some early fruit being being born there. So we're very comfortable that the pediatric products will return to form and have you don't have good growth out of them.

Joshua Disbrow: We've seen some payer changes in the multivitamins category, specifically with a big payer, a single payer, rather. But we believe we can and already have begun to offset this reimbursement downdraft through growth outside of this payer, and through several novel approaches we're taking to both deepen prescribing from current writers and broaden our prescriber base. These efforts are well underway and we're starting to get real traction. And I'll remind you again that the ADHD portfolio continues its tremendous growth, so we're excited about how the portfolio was performing when put all together.

Speaker 5: Thanks, that was helpful. So obviously over the last year, you've been seeing a significant increase in, you're basically at a new level in terms of your prescription business, especially with the ADHD business. How has, I guess, conversations with pairs sort of evolved due to, I guess, your new level or higher level of scripts? And how do you sort of see that impacting your growth net? How do you see your growth net to really playing out in fiscal 24?

Thanks that was helpful. So obviously over the last year, you've been seeing a significant increase in your base at a new level in terms of your prescription business, especially with the AAC business. How has I guess conversations with payers has sort of evolved.

Due to I guess, your new level or higher level of scripts.

And how do you sort of see that impacting your growth in that but how do you see your growth and that's really playing out in fiscal 'twenty four.

Joshua Disbrow: Overall, I'm pleased with the traction we're achieving across our RX segment. This elevated performance has been driven by strong execution from our sales organization. The leverage we continue to achieve through our RX Connect platform and enhanced category tailwinds with both ADHD brands.

Yes, I'll answer that last one first which is we you know we've seen gross to net stabilized and actually improve here and certainly as the year has gone on the blip that we saw in the March quarter, Notwithstanding we have seen a real good stabilization and sort of solid growth, particularly.

Speaker 3: Yeah, I'll answer the last one first, which is we, you know, we've seen gross to net stabilize and actually improve here. And certainly, as the year has gone on, the blip that we saw in the March quarter, notwithstanding, we've seen a real good stabilization and and sort of solid growth, particularly, you know, across the two ADHD products. And I will point out the pediatric products gross to nets are have always been sort of healthy and they're stable and no issues there with respect to really how it plays out with payers. Look, we're always we're always going to take the opportunities to engage with payers when those opportunities present themselves. And we have had payers engage.

Joshua Disbrow: With the windout of our consumer health segment, our RX segment is the core business going forward. And it's what I would draw your attention to as you think about A2's financial profile as we move into fiscal 24 and beyond. Fund. One that is growing net revenues at double digit rates with strong prescription growth, expanding gross margins, achieving positive adjusted EBITDA, and closing in on net income. In fact, income from operations for the fourth quarter for the RX segment was $6.3 million, and adjusted EBITDA was $8.3 million, representing a 35% adjusted EBITDA margins for the quarter.

Across the two ADHD products and I will point out the pediatric products gross to nets are have always been sort of healthy and they're stable and no issues. There with respect to really how it plays out with payers look we're always we're always going to take the opportunity to engage with payers when those opportunities present themselves and we have had payers engaged that doesn't suggest that we're going to change our strategy in <unk>.

Speaker 3: That doesn't suggest that we're going to change our strategy entirely and go heavy into contracting necessarily. We'll be opportunistic, we'll be thoughtful, and we'll do what's right for the business as it relates to whether to contract in if so to what degree. But we have had conversations with payers. It's to some degree a result of the movement of our products. It's also an artifact of sort of the landscape within ADHD. Some of the products going generic, some of the products potentially approaching the loss of exclusivity. We think they may present some opportunities to engage with payers. But we certainly are not at the point of making any decisions with respect to engaging in a formal sense. Pay or rebating is an art unto itself. Sometimes you don't get what you pay for. We want to be very conscientious about how we think about contracting if at all. What's great here is we really have underlying the entire portfolio RxConnect.

Early and go heavy into contracting necessarily we'll be opportunistic we'll be thoughtful and we will do what's right for the business when it as it relates to whether the contract and if so to what degree, but we have had conversations with payers. It's to some degree a result of the movement of our products. It's also an artifact of sort of the landscape within ADHD.

Joshua Disbrow: And while we don't necessarily expect that level of EBITDA every quarter going forward in the near term, we have great confidence in this growing segment and its prospects for consistent bottom line strengths. You'll also need to keep in mind that as we wind down the consumer health segment, that may create some small drag on our quarterly EBITDA numbers. But once we've closed that business, the full strength of the RX segment will be reflected in the company YP&L. We believe the prescription business is very attractive. And with the emphasis we're applying exclusively to this segment going forward, we believe it should enhance shareholder value.

And.

Some of the some of the products going generic some of the products potentially approaching the loss of exclusivity. We think there may present, some opportunities to engage with payers, but we certainly are not at the point of making any decisions with respect to.

Engaging in a formal sense payer rebating is as it is an art unto itself, sometimes you don't get what you pay for and so we want to be very conscientious about how we think about contracting if at all what's great. Here is we really have underlying the entire portfolio Rx connect and I'd like to describe Rx connect as a sort of underwriting we do ourselves we can.

Mark Oki: 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 joining us on this call.

Mark Oki: I'd like to expand upon Josh's comments starting with revenue. Net revenue for the fiscal 2023 fourth quarter was the company record $30.7 million up from 12% compared to the fiscal 2022 fourth quarter of $27.4 million. Looking at the component parts, net revenue from RX product sales in the fiscal 2023 fourth quarter was $23.3 million compared to $18.7 million in the same quarter last year. The ADHD products generated 30% net revenue growth to $15.9 million in the fiscal 2023 fourth quarter against $12.2 million in fiscal 2022's fourth quarter.

Speaker 3: And I like to describe RS Connect as a sort of underwriting we do ourselves. We can take payers really out of the mix entirely by virtue of the fact that we guarantee a maximum copay. For example, the ADHD brands of a patient have commercial insurance. Those patients will pay no more than $50. Irrespective of whether they met their deductible, whether it's a prior authorization, a step at it, and so forth, it is a guarantee no more than $50.

Take payers really out of the mix entirely by virtue of the fact that we guarantee a maximum co pay for example, with the ADHD brands. If a patient has commercial insurance those patients will pay no more than $50 irrespective of whether they met their deductible, whether there's a prior authorization or step edit and so forth. It is a guaranteed no more no more than $50 and we've got a similar program set up.

The pediatric product, particularly with the multi vitamins. So we can work with the payers. We can work alongside of them we can work.

Around them in the event that data yet have negative coverage policies or don't have our products on formulary and even in the event when they do have them on formulary. If there if they for some reason get removed or there is a block that get put gets put in place. We can really step around all of that through the dynamics of Rx connect so that having been said I think we've given ourselves good leverage by virtue of momentum with <unk>.

Mark Oki: This ADHD sales mount mirrored our quarterly ADHD written prescriptions, which were up 38% in driven by our execution and the continuing manufacturing and supply issues at large providers of ADHD products. A situation recently highlighted by the public letter jointly issued by both the FDA and DEA. Besides the benefit of market shortages, patients are fulfilling their deductibles and we're executing on several gross net improvement initiatives as a result of our product gross, excuse me, as a result, our product grossed net's returned to normal from the depressed third quarter levels.

Speaker 5: all of that through the dynamics of RX Connect. So that having been said, I think we've given ourselves good leverage by Virtua Momentum. We're creating in the field with the ADHD brands and the pediatric brands and you know, we'd expect to continue to have free full discussions with pairs and we'll have the ability to decide how we wanna take those discussions. Thank you, that was very insightful. And my last question, so obviously your growth has been driven by demolish charges. Could you sort of give us some color on, I guess your confidence on being able to successfully obtain API and getting acceptable or especially in quarter from the DA, she continues.

<unk> in the field with the ADHD brands and the pediatric brands and would expect to continue to have fruitful discussions with payers and we'll have the ability to decide how we want to how we want to take those discussions.

Speaker 5: Thank you, L.D. R. Insightful. And my last question. So obviously your growth has been driven by similar shortages. Could you sort of give us some color on, I guess your confidence on being able to successfully obtain API and getting acceptable or especially colder from the DEA. You continue service your ADHD operations.

Thank you that was very insightful and my last question. So obviously your growth has been driven by demand charges could you sort of give us some color on I guess your confidence on being able to successfully obtain API and getting.

Mark Oki: We're seeing further improvement in the current September quarter on the ADHD brands based on positive pair changes that have affected grossed net adjustments. Outside of ADHD, the prescription pediatric portfolio experienced 18% growth in net revenue to $7.2 million in our fiscal 2023 fourth quarter compared to $6.1 million in 2022, our highest quarter in history. While the fourth quarter was an excellent quarter for the pediatric brands, those brands do have some seasonality and calendar fluctuations, so we'd expect the September quarter to come in lighter than the fourth quarter.

Acceptable or especially in quarter from the D. As you continue to service your ADHD operations.

Speaker 3: And short now we're very confident. NEOs and all of their history and now with our combined history following the acquisition of NEOs two and a half years ago, there's never stocked out.

In short now is we're very confident nios in all of their history and now with our combined history. Following the acquisition of <unk>, two and a half years ago Theres no we've never stocked out.

Speaker 3: We've always been successful in securing the API that we need even in the face of increasing demand. It is iterative. The DEA is willing to work with you. It is not a, here's your annual supply and you'll never get anymore. We in real time, certainly monthly, and in some cases more frequently than that, we'll go back and request additional quota. We've got the demand trends. They look at our prescription data. They look at sales to customers. And...

We've always been successful in securing the API that we need even in the face of increasing demand.

It is iterative.

The DEA is.

He is willing to work with you. It is not a here's your annual supply and you'll never get anymore, we in real time.

Certainly monthly and in some cases more frequently than that we'll go back and request additional quota we've got the demand trends. They look at our prescription data they look at sales to customers.

Mark Oki: That said, we're pleased with the performance of our pediatric portfolio. For the fourth quarter of 2023, net revenue from the consumer health segment was $7.4 million compared to $8.7 million in the same quarter last year, a decrease of 15%. As Josh noted, as part of our goal of improving corporate profitability, we are deemphasizing the consumer health segment and are actively wanting to get down. Through this process of gradually selling through our inventories, we expect to wind down operations by the end of fiscal 2024.

And they can see very clearly that these are real sales going to real customers and there's a real need so we've been able to secure API. We just we just got new API released from the DEA here recently, our contract manufacturer has already secured their initial some initial allocation of API on <unk> since we've begun to shift some manufacturing to them.

Speaker 3: They can see very clearly that these are real sales, going to real customers and there's a real need. So we've been able to secure API. We just got new API release.

Speaker 3: from the DEA here recently, our contract manufacturer has already secured their initial some initial allocation of API on AdVentist since we've begun to share some manufacturing to them.

Speaker 3: So we're comfortable. You know, people have asked us, look, if you continue to rise at this level, can you continue to satisfy the level of demand that's resulted from this gap in the market? And the short answer is yes, we believe we can.

So we're comfortable.

People have asked US look if you continue to rise at this level can you continue to satisfy the level of demand that has resulted from this gap in the market and the short answer is yes, we believe we can.

Mark Oki: Yes, during the process of winding down that business, a buyer comes forward, will of course consider a sale of the entire business or parts of it. But irrespective of that, we expect to drive the cash use from that business down dramatically, and by the end of the fiscal year, drive cashmurn close to zero and close it out. I'll re-emphasize what Josh noted. Consumer health may create some minor drag on EBIT down for the next few quarters, which is why we point you to the RX segments performance as outlined in our quarterly earnings releases to get good sense for what the company profile will look like going forward company wide.

Speaker 3: You know, these products have collectively less than 1% of the market. So it's a relatively small piece when you look at the aggregate quota that gets allocated out there across all stimulant brands and generics.

These products have collectively less than 1% of the market. So it's it's a relatively small piece when you look at the aggregate quota that gets allocated out there across all stimulant brands and generics.

Speaker 3: That having been said, if we only quote unquote got to 2% of the market, that would obviously double our revenues that fill a relatively small piece of the overall pie and the DEA's been very collaborative. One little anecdote I'd like to share is we, our vice president of manufacturing and supply, her spouse is employed by the DEA's been an agent for many, many years. There's an element of comfort familiarity and certainly not to suggest that that helps us necessarily in any unique ways, but certainly there's a level of familiarity with the people that are there in the Texas facility, Granting Quota. We just had a very successful review by the DEA actually over the last couple of months. So relationships good there and certainly

That having been said if we if we only quote unquote got to 2% of the market without would obviously double our revenue that's still a relatively small piece of the overall pie and.

The DEA has been very collaborative one little anecdote I would like to share is our vice president of manufacturing and supply.

Her spouse is employed by the DEA has been an agent for many many years. There is there is an element of comfort familiarity and certainly not.

Mark Oki: We continue to have small amount of other prescription revenue, both this year and last, this other pertains to discontinued our products during this year's fourth quarter. It totaled 210,000 in revenue against last year's fourth quarter of $365,000. Overall, these amounts continue to decrease to zero. Gross margins grew to 60% in the 2023 fourth quarter compared to 54% of net revenues in the year ago quarter. The fourth quarter gross margins were impacted by a write-off of consumer health inventory of $2.1 million that's part of our decision to wind down that business.

Not to suggest that that helps us necessarily.

Eddie and unique ways, but certainly theres a level of familiarity with the people that are there in the Texas facility granting quota, we just had a very successful.

By the by the DEA actually over the last couple of months. So the relationship's good there and certainly.

Speaker 3: Certainly feel highly confident and being able to continue to secure more and more more quota

Certainly feel highly confident in being able to continue to secure more and more more and more quotes.

Speaker 5: Thank you, that was very helpful and thanks for taking my questions and once again, congrats on the record gear.

Thank you that was very helpful and thanks for taking my questions and once again congrats on the record here.

Thanks very much.

Thank you once again, ladies and gentlemen, please press star one on your phone if you wish to ask a question Thats Star one if you wish to ask a question.

Speaker 1: Thank you once again ladies and gentlemen, please press star one on your phone if you wish to ask a question That's star one if you wish to ask a question The next question is coming from Alan Vier from Stonegate Healthcare. Alan your line is live

Mark Oki: Without this adjustment, our gross margins would have been 67%. This movement in the gross margin percentage was primarily driven by improved manufacturing efficiencies and higher volumes of ADHD product sales. Product mix, more sales from our higher margin pediatric product lines, and reduced lower margin and reduced lower margin consumer health revenue, as well as the decision to discontinue low margin or its product in fiscal 2022. Gross margin percentages can vary due to both seasonal and other factors.

Next question is coming from Alan <unk> from Stonegate Healthcare Allen Your line is live.

Speaker 2: Hi, thanks for taking the question and congratulations again on the performance this year with Rx and Pediatric Cectors. My questions are surrounding your transition away from the Consumer Health SIGN and R&D as well as your plans to outsource manufacturing. Could you expand on what sort of impact these changes will have on margins and revenues over the next year?

Hi, Thanks for taking the question and congratulations.

This year with the RSV pediatric sectors.

My question's on surrounding your transition away from the consumer hopefully.

D.

As well as new clients outsource manufacturing could you expand.

On what sort of impact these changes will have on margins revenues over the next year.

Speaker 3: Yeah, good question. Mark, you can jump in here, but generally speaking.

Yeah. Good question Mark you can jump in here, but generally speaking.

Mark Oki: As I noted above, the fiscal fourth quarter corresponds to the calendar's second quarter and reflects our moving away from being impacted by the first quarter's high deductible period. Additionally, we continue to progress with the manufacturing outsourcing of our ADHD products. As Josh mentioned, we've received the FDA approval of the Adzenez PAS and have begun the transfer of Adzenez manufacturing. We anticipate a constructive FDA response from the Contemplar PAS, which was submitted in July and should be reviewed and approved by the FDA by calendar year end or early calendar 2024.

Speaker 3: Most of the drag on our margin has been on those two pieces as we spoke to, significant negative EBITDA on the consumer piece over the trailing 12 months and actually higher when you go back to the trailing 24 months. And then R&D was a significant drag as well. Mark, maybe you can put some numbers to it. But if you look at the company on a go-forward basis and really treat

Most of the drag on our margin has been on those two pieces as we spoke to significant negative EBITDA on the consumer piece over the trailing 12 months and actually.

Mark Oki: When both ADHD drugs have received their respective PAS approvals, we anticipate ramping up production at our contract manufacturer coupled with the ramping down of production at our Texas facility. Obviously, during this time of ADHD medication shortages, our goal is to be cognizant of the ADHD patients who have prescriptions for our products and to be judicious in balancing this production transfer. Once accomplished, we expect that this outsourcing will improve our ADHD products gross margin profits.

Higher when you go back to the trailing 24 months and then R&D was a significant drag as well and Mark maybe you can put some numbers to it but it's.

If you look at the company on a go forward basis and really treat <unk>.

Speaker 3: A2 as the RX segment. You're looking at a significantly evadot positive company on a go-forward basis.

Two as as the Rx segment, you are looking at a significantly EBITDA positive company on a go forward basis.

Speaker 3: The RX segment had positive net income from operations or positive income from operations. When you look at it from a P&L perspective,

The Rx segment had positive net income from operations of positive income from operations. When you look at it from a P&L perspective.

So those it's going to be addition by subtraction by removing those two pieces of the business that have been historical burners.

Speaker 3: It's going to be addition by subtraction. I mean, by removing those two pieces of the business that have been historical burners.

Speaker 3: And while we'd like to continue our end-to-date at some point in the future, to it's not in the cards anytime soon. And so we are going to be squarely focused on operating that strongly EBITDA positive segment. That segment, by the way, fully supports GNA, all of our public company calls, all of our overhead staffing and so forth. So we are comfortable staying as a go-forward company, we're a prescription business.

And while we'd like to continue R&D at some point in the future. It's not in the cards anytime soon and so we are going to be squarely focused on operating that strongly EBITDA positive segment.

That segment by the way fully supports G&A for all of our public company costs all of our overhead.

Staffing and so forth. So we are comfortable saying that as a go forward company, we are a prescription business.

Mark Oki: Moving to operating expenses in the fourth quarter of 2023, excluding the impairment expenses, changes in contingent consideration and amortization of intangible assets, operating expenses were $14.6 million compared to $20.6 million in the period. A year ago, and reflect our continuing focus on cost reductions, including the indefinite suspension of our development pipeline. Research and development expenses were $465,000 in the fourth quarter of 2023 compared to $3.3 million in the 2022 fourth quarter.

Speaker 3: And ultimately revenues will be, on the consumer piece, obviously they're down, year over year that's by design. You'll see the consumer business sort of drop off and the hope is that goes to zero, but the berm will obviously go to zero as well. And so we'll really be relying upon the growth from the Rx sector segment to propel the company forward.

And ultimately revenues will be.

On the other consumer piece, obviously theyre down year over year, that's by design Youll see the consumer business sort of drop off and the hope is that goes to zero, but the burn will obviously go to zero as well and so we'll really be relying upon the growth from the Rx sector segment to to propel the company forward.

Speaker 4: Yeah, we just want to stress, the RX business, again, absorbs all of the kind of

Yes, we just want to stress the Rx business again absorbs all of the kind of.

Public company Standalone business expenses.

Speaker 4: public company standalone business expenses. When you carve out, if you look at our earnings releases, if you take out a novice and you take out pipeline spending, that is the remaining company. There's very little expense that the arts business would pick up with the closing down of the consumer health business.

Mark Oki: Net loss for the fourth quarter of 2023 was $2.5 million or $59 per share compared to $16.1 million, or $8.95 per share for the same quarter last year. We generated a strong positive adjusted EBITDA for the fourth quarter of $7.7 million compared to a negative adjusted EBITDA of $3.9 million in last year's fourth quarter. Full reconciliation of net income to adjusted EBITDA can be found in the press release issued earlier today. Without the intangible asset impairment associated with the consumer health wind down, company-wide net income would have been $648,000.

When you carve out if you look at our earnings releases, if you take out <unk> and you take out pipeline spending that that is the remaining company there is no.

Theres very little expense that the Rx business would pick up with the closing down of the consumer health business.

Speaker 2: Excellent. Thanks for answering that question. Just a short follow-up question. Could you expand on your cash needs moving forward?

Excellent. Thanks, Thanks for answering that question.

One short follow up question could you expand on your cash needs moving forward.

Speaker 4: Yeah, so we think we're in good shape for cash. We have the appropriate amount of cash and borrowing capacity to fund operations. We do have the debt that comes up in January of 2025 and we have some other liabilities that will have to be paid over time. We...

Yes. So we think we're in good shape for for cash we have the appropriate amount of cash and borrowing capacity to fund operations.

We do have the debt that comes up in January of 2025, and we have some other.

Mark Oki: Turning from the fourth quarter to the full year, net revenue increased 11% to $107.4 million compared to fiscal 2022. Net revenue from the RX segment in fiscal 2023 was $73.8 million compared to $61.1 million for the fiscal 2022. An increase of 21%. The ADHD portfolio experienced a 9% increase in revenue to $46.9 million in fiscal 2023 while the pediatric portfolio net revenue increased 58% to $25.4 million. Net revenue from the consumer health segment was $33.6 million in fiscal 2023, a decrease of 5% compared to fiscal 2022.

Other liabilities that we will have to be paid over time.

<unk>.

Speaker 4: you know, the big bow is the refinancing of the Avenue debt.

The big Bogey is the refinancing of the Avenue that and so we.

Speaker 4: And so we will be releasing our 10-K next week. We expect that we will continue to have a going concern opinion.

We will be releasing our 10-K next week.

We expect that we will continue to have a going concern opinion.

Speaker 4: But we think it's primarily folks to surround again the avenue debt as we don't currently have it refinanced. We don't want to be in a situation where we take off the going concern and then immediately jump back into it as that debt becomes current. So.

But we think it's primarily focused around again the avenue that we don't currently have it refinanced.

We don't want to be in a situation, where we take off the going concern and then immediately jumped back into it as that debt becomes current so you will see that in our 10-K, but.

Speaker 4: You will see that in our 10K, but you know, funding operations we are very comfortable with.

Funding operations, we are very comfortable with and then most of our other non debt liabilities are managed at our discretion. We may have to pay a little bit of interest on it but we don't have to pay it all at once.

Speaker 4: And then most of our other non-depth liabilities are managed at our discretion. We may have to pay a little bit of interest on it, but we don't have to pay at all at once.

Mark Oki: Gross profit was $66.6 million or 62% of net revenue in fiscal 2023 compared to $52.3 million or 54% of net revenue. In fiscal 2022, excuse me, the fiscal 2022 reflects the strong performance of our X products. Operating expenses excluding impairment expenses changes in contingent consideration and amortization of intangible assets were $74.2 million in fiscal 2023 compared to $82.5 million in fiscal 2022. Research and development expenses were $4.1 million in fiscal 2023 compared to $12.7 million in fiscal 2022 as the company suspended activities on its pipeline assets to focus on its commercial operations.

Excellent. Thanks, Thanks for answering my questions.

Speaker 6: Excellent. Thanks for answering your questions. That's it. Thank you.

Yes.

Thank you.

Speaker 1: Thank you. There were no other questions at this time. I would now like to hand the call back to management for closing remarks. Great.

Thank you there were no other questions at this time I would now like to hand, the call back to management for closing remarks.

Great. Thanks, very much again, we appreciate everyone's participation on today's call. We appreciate your commitment to the future of <unk>.

Speaker 3: We appreciate everyone's participation on today's call. We appreciate your commitment to the future of A2. We are very pleased with this year's results, with this last quarter's results.

We are very pleased with this year's results with this last quarter's results. We're really excited about the progress we're making on all fronts. As we've shared we are also very pleased with how we're starting off fiscal 'twenty four as we look at prescription trends factory sales units.

Speaker 3: We're really excited about the progress we're making on all fronts as we've shared. We are also very pleased with how we're starting off fiscal 24 as we look at prescription trends, factory sales units.

Speaker 3: and the overall progress we're making to further consolidate our expenses and improve margins. So again, thanks for joining us today. We look forward to updating you following the close out of our fiscal Q1 for fiscal 24, which will report out in November . Until then, wish you all a good afternoon and evening. Thanks again for joining and goodbye.

Overall progress were making to further consolidate our expenses and improve margin. So again, thanks for joining US today, we look forward to updating you following the close out of our fiscal Q1 for fiscal 'twenty, four which will report out in November until then we wish you all a good afternoon and good evening, Thanks, again for joining and Goodbye.

Mark Oki: Net loss was $17.1 million or $5.11 per share compared to $108 million or $74.1, $74.1 per share in fiscal 2022. Adjusted EBITDA was a positive $3.2 million in fiscal 2023 compared to any negative $21.5 million in fiscal 2022. For fiscal 2023, when we add back the consumer health segments net loss of $9.8 million and the R&D pipelines net losses of $2.6 million, we see that $12.4 million of the $17.1 million consolidated net loss came from now non-core operations that we've either curtailed or winding down.

Speaker 1: Thank you. This concludes today's conference. You may disconnect your lines at the same time. Thank you for your participation.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation. Thanks.

Thanks, everyone.

Mark Oki: This view becomes even more striking when we do the same calculation to our Cisco 2023 adjusted EBDA. Now, our positive $3.2 million adjusted EBDA includes a negative adjusted EBDA of $3.6 million and $2.6 million from the consumer health segment and pipeline spending, respectively. Excluding these operations, our pro-forma adjusted EBDA is the positive $9.4 million.

Mark Oki: On June 13th, we announced the closing of a $4 million public offering, which was priced at the market. This offering was led by Nantahala, capital management, and we welcome its representative Abhi Jain to our board. Our cash and cash equivalent holdings on June 30th, 2023, were $23 million compared to $19.2 million on March 31, 2023. We believe that this additional capital provides us with comfort and the world with all, to aggressively proceed with our focus on corporate profitability.

Mark Oki: We are assisted in the strategy with the help of Avenue Venture Opportunity Fund, which is extended the interest to only period on our $15 million secured facility through the maturity date in January 2025. With our cash on hand, available borrowing under our revolving line of credit and the extension of the Avenue Capital note. Interest only period, we are feeling quite comfortable with our cash position and we believe we are adequately capitalized. It is our attention to refinance the Avenue note prior to or upon its maturity.

Joshua Disbrow: Well, our corporate philosophy is not to give four guidance. We are very excited about how A2 is positioned for its fiscal 2024 year. We are slimmed down and focused on our arts products. We are transitioning ADHD product from an underutilized facility to our outsourced and very efficient manufacturing partner. When we've bolstered our balance sheet and taken on new taken on a new lead investor. As many of you are aware, we typically file our 10K or 10Q on the same date as our quarterly earnings release in common skull.

Joshua Disbrow: We are in the process of completing the audit with our new auditors, Grant Thornton, and expect to file the 10K the week of October 1. We believe the financial results presented in today's conference call and the earnings release are final and the remaining tests to be completed for the audit or administrative nature. With that, let me turn it back to Josh. Thank you, Mark. Let me just conclude where I started. We are dedicated to creating shareholder value and with the exclusive focus going forward on our arts segment, which is growing and profitable.

Joshua Disbrow: We believe we can accomplish this objective. We've been improved balance sheet and a business voice to accelerate our path to generating both net income and positive cash flows as we execute. We understand the path here at A2 has not been straight as it's not often for most companies. But our focus and our objectives are clear with a great opportunity going forward. We've positioned ourselves well to achieve our objectives and fiscal 24 is off to a solid star. I appreciate everyone's participation on the call today and your commitment to the future of A2. I'll now be happy to answer any questions.

Operator: Operator. At this time, we will be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line isn't the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, please press star 1 if you have a question at this time. On one moment, while we pull for questions.

Naz Rahman: And your first question today is coming from Naz Rahman, from Maxim Group, Naz your line as life. Hello everyone, congrats on the record quarter in the record year. And thanks for taking my questions. I have a few feet on mind. So obviously you had a significant growth in your prescription business in both the ADHD and pediatric business. I guess if you can provide us some details or some color on what initiatives you might have to accelerate growth further for both the ADHD business and the pediatric business in fiscal 24.

Joshua Disbrow: Yeah, sure, thanks for joining us. Thanks for the questions. We have quite a bit ongoing, some of which we share publicly, other which is somewhat confidential because it's competitive in nature. That having been said, it's a significant list of things that we've implemented on the commercial side. On the ADHD piece, of course, we expect to continue to realize the tailwinds afforded to us obviously through the shortages. We continue to hear daily, as I mentioned, about ongoing supply issues with the stimulants and more and more lately around methylfinternate, almost as much as we heard about the infetamine.

Joshua Disbrow: So that will certainly continue to play into our growth. We do not think it's transient, it's been going on for a year now. And several manufacturers have actually dropped out of the market. So one large brand got with genericized and it's got many competitors, which is causing significant issues. And so we expect that to continue to play into our growth. We're capitalizing that on that in various ways. Obviously through our field initiatives, with our sales force, through our pharmacy initiatives, through the network of pharmacies that we work with.

Joshua Disbrow: We have several several initiatives that are aim more at the consumer and some of the things that we can do to highlight some of the issues and capitalise on some consumer pathways and get directly to patients and their parents. Those are those are well underway and we've seen those bear very good fruit. We continue to obviously produce at a high level. We have no concerns about being able to continue to meet demand on the ADHD side.

Joshua Disbrow: And so we're excited about all the initiatives that we have underway on the pediatric side. Not dissimilar from the ADHD. We've got a strong execution on the sales force side. We continue to look at our to our pharmacy partners as a way to continue to drive demand. That's been a tremendous boon for the pediatric product, particularly the multi vitamins that we've talked about. Those initiatives will continue. We've got a very focused efficient sales force on the pediatric side.

Joshua Disbrow: We have a very small number of reps, but with these products and the categories they compete in as well as the geographies in which we sell. And we believe we're well positioned to continue to grow there. And we do have some patient centric and parent centric initiatives underway whereby we can market directly to those patients and their parents. So we've and we've implemented several things around social media and several non personal promotional tactics as well. So it's all coming together to really spell strong growth across the portfolio of ADHD as well as pediatrics. And we'll continue to keep the pedal down to keep the growth the growth going.

Joshua Disbrow: Thank you, those are insightful, and my last question, so obviously your growth has been driven by similar shortages, could you sort of give us some color on, I guess, your confidence on being able to successfully obtain API and getting acceptable or especially quarter from the DA, you continue on service, your ADHD operations? And short, now's we're very confident, Nios and all of their history and now with our combined history following the acquisition in Nios two and a half years ago, there's, we've never stocked out.

Joshua Disbrow: We've always been successful in securing the API that we need even in the face of increasing demand. It is iterative, you know, the DEA is willing to work with you, it is not a, here's your annual supply and you'll never get any more. We in real time, certainly monthly in some cases more frequently than that, we'll go back and request additional quota. We've got the demand trends, they look at our prescription data, they look at failed to customers and they can see very clearly that these are real sales going to real customers and there's a real need.

Joshua Disbrow: So we've been able to secure API, we just, we just got new API released from the DEA here recently, our contract manufacturer has already secured their initial, some initial allocation of API on a dentist since we've begun to share some manufacturing to them. So we're comfortable, you know, people of assos look, if you continue to rise at this level, can you continue to satisfy the level of demand that's resulted from this gap in the market and the short answer is yes, we believe we can.

Joshua Disbrow: You know, these products have collectively less than 1% of the market. So it's, you know, it's a relatively small piece when you look at the aggregate quota that gets allocated out there across all stimulant brands and generics that having been said, if we, if we only quote unquote, got to 2% of the market, that would obviously double our revenue that's still a relatively small piece of the overall pie and the DEA's been very collaborative.

Joshua Disbrow: One little anecdote I'd like to share is we, you know, our vice president of manufacturing and supply. Her spouse is employed by the DEA's been an agent for many, many years. There's, there's an element of comfort familiarity and certainly not to success that that helps us necessarily in any, any unique ways, but certainly there's a level of familiarity with the people that are there in the Texas facility granting quota. We just had a very successful review by the DEA actually over the last couple of months. So relationships good there and certainly certainly feel highly competent and being able to continue to secure more more quotas. Thank you.

Naz Rahman: That was very helpful and thanks for taking my questions and once again, congrats on the record here. Thanks very much, Nose. Thank you.

Operator: Once again, ladies and gentlemen, please press star one on your phone if you wish to ask a question. That star one if you wish to ask a question.

Alan Vier: The next question is coming from Alan Vier from Stone Gate Healthcare. Alan, take in the question and congratulations to you and on your performance this year with the RX and pediatric sectors. My questions are surrounding your transition away from your consumer outside and on the exposure plans to outsource manufacturing.

Joshua Disbrow: Could you expand on what sort of impact these changes will have on margins of revenues over the next year? Yeah, good question. Mark, you can jump in here, but generally speaking, you know, most of the drag on our margin has been on those two pieces as we spoke to, you know, significant negative EBITDA on the consumer piece over the trailing 12 months and actually higher, higher when you go back to the trailing 24 months and then R&D was a significant drag as well.

Joshua Disbrow: And Mark, maybe you can put some numbers to it, but it's, you know, if you look at the company on a go-forward basis and really treat A2 as the Rx segment, you're looking at a significantly EBITDA positive company on a go-forward basis. The Rx segment had positive net income from operations or positive income from operations when you look at it from a P&L perspective. And so those, it's going to be addition by subtraction.

Joshua Disbrow: I mean, by removing those two pieces of the business that have been historical burners. And while we'd like to continue R&D at some point in the future, it's not in the cards any time soon. And so we are going to be squarely focused on operating that, you know, strongly EBITDA positive segment. That segment, by the way, fully supports G&A, all of our public company calls, all of our overhead staffing and so forth.

Joshua Disbrow: So we are comfortable staying as a go-forward company. We're a prescription business. And ultimately revenues will be, you know, on the consumer piece, obviously, they're down. You're over a year that's by design. You'll see the consumer business sort of drop off. And the hope is that goes to zero, but the burn will obviously go to zero. And so we'll really be relying upon the growth from the Rx sector segment to propel the company forward.

Joshua Disbrow: Yeah, we just want to stress. The Rx business, again, absorbs all of the kind of public company standalone business expenses. When you carve out, if you look at our earnings releases, if you take out a novice and you take out pipeline spending, that is the remaining company. There's no, there's very little expense that the Rx business would pick up with the closing down of the consumer health business.

Alan Vier: Excellent. Thanks for answering that question. Just a short follow-up question.

Mark Oki: Could you expand on your cash needs moving forward? Yeah, so we think we're in good shape for cash. We have the appropriate amount of cash and borrowing capacity to fund operations. We do have the debt that comes up in January of 2025. And we have some other liabilities that will have to be paid over time. We, you know, the big bowie is the refinancing of the avenue debt. And so we will be releasing our 10k next week.

Mark Oki: We expect that we will continue to have a going concern opinion. But we think it's primarily folks to surround again the avenue debt as we don't currently have it refinanced. We don't want to be in a situation where we take off the going concern and then immediately jump back into it as that debt becomes current. So you will see that in our 10k, but, you know, funding operations, we, we are very comfortable with. And then most of our other non debt liabilities are managed at our discretion. We may have to pay a little bit of interest on it. But we don't have to pay it all at once.

Alan Vier: Excellent. Thanks for answering our questions. That's it. Thank you.

Operator: There were no other questions at this time.

Joshua Disbrow: I would now like to hand the call back to management for closing remarks. Great. Thanks very much. Again, we appreciate everyone's participation on today's call. We appreciate your commitment to the future of A2. We are very pleased with this year's results, with this last quarter's results. We're really excited about the progress we're making on all fronts as we've shared. We are also very pleased with how we're starting off fiscal 24 as we look at prescription trends, factory sales units, and the overall progress we're making to further consolidate our expenses and improve margins.

Joshua Disbrow: So, again, thanks for joining us today. We look forward to updating you following the close out of our fiscal Q1 for fiscal 24, which will report out in November. Until then, wish you all a good afternoon and good evening. Thanks again for joining and goodbye. Thank you.

Operator: This concludes today's conference. You may disconnect your lines at the same time. Thank you for your participation. Thanks, everyone.