Q3 2024 Aytu BioPharma Inc Earnings Call
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Operator: Good afternoon, everyone, and welcome to the Aytu Biopharma fiscal 2024 third quarter earnings call. At this time, all participants have been placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Roger Weiss.
Speaker Change: Good afternoon, everyone and welcome to the <unk> Biopharma fiscal 2024 third quarter earnings call.
At this time all participants have been placed on a listen only mode. If you have any questions or comments. During the presentation. You May press star one on your phone to enter the question queue at any time and we will open the floor for your questions and comments after the presentation.
Speaker Change: It is now my pleasure to turn the floor over to your host Roger Wise, Sir the floor is yours.
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Roger Weiss: Good afternoon, everyone, and thank you for joining us for Aytu BioPharma's Fiscal 2024 Third Quarter Financial and Operational Results Conference Call for the period ended March 31, 2024. Joining us on today's call is Aytu's CEO, Josh Disbrow, and the company's Chief Financial Officer, Mark Oki.
Roger Weiss: Good afternoon, everyone and thank you for joining us for <unk> Biopharma is fiscal 'twenty 'twenty four third quarter financial and operational results conference call for the period ended March 31, 2020 for Joy.
Roger Weiss: Joining us on today's call is a two CEO, Josh disbrow and the company's Chief Financial Officer Mark Okay.
Roger Weiss: 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 press release issued earlier today.
Speaker Change: 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 provided in the press release issued earlier today.
Roger Weiss: Finally, I'd like to call your attention to 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 Aytu 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. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay.
Speaker Change: Finally, I'd like to call your attention to 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.
Roger Weiss: 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. A2 undertakes no obligation to update or revise any of these forward-looking statements. With that said, let me turn the call over to Josh Disbrow, Chief Executive Officer of Aytu Biopharma. Josh, the mic is yours.
Speaker Change: Two biopharma.
Speaker Change: 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 web cast replay.
Speaker Change: 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.
Speaker Change: Two undertakes no obligation to otherwise to update or revise any of these forward looking statements.
Speaker Change: With that said, let me turn the call over to Josh Disbrow, Chief Executive Officer of <unk> Biopharma, Josh the Mic is yours.
Joshua R. Disbrow: Thank you, Roger, and welcome, everyone. The positive operating momentum we've experienced over the past two years continued during the third quarter of Fiscal 24, as ADHD portfolio revenue continued its rapid growth, increasing 49% over the Fiscal 23 third quarter. Furthermore, we improved our adjusted EBITDA by $7 million compared to the year-ago third quarter. On a trailing 12-month look back, our company-wide adjusted EBITDA is now in excess of $15 million, and our RxBusiness operating income over that same period is over $7 million. This is a significant achievement for the company as it continues to reinforce the strategic initiatives we've undertaken to reposition Aytu as a growing specialty pharmaceutical company focused on commercializing novel prescription therapeutics.
Joshua R. Disbrow: Thank you Roger and welcome everyone.
Joshua R. Disbrow: Positive operating momentum we've experienced over the past two years continued during the third quarter of fiscal 'twenty four as ADHD portfolio revenue continued its rapid growth increasing 49% of the physical 23 third quarter. Further we improved our adjusted EBITDA by $7 million compared to the year ago third quarter on a trailing.
Speaker Change: 12 month look back our companywide adjusted EBITDA is now in excess of $15 million and our Rx business operating income over that same period is over $7 million a significant achievement for the company as it continues to reinforce the strategic initiatives, we've undertaken to reposition <unk> as a growing specialty pharmaceutical company focused on commercializing novel proof.
Speaker Change: Scripps in therapeutics.
Joshua R. Disbrow: Recall that just two years ago, we had an annual net loss in excess of $100 million, so this has been quite a transformation of our operating profile. As a reminder, our repositioning started back in October of 2022, when we indefinitely suspended our clinical development programs and continued with that decision to wind down our consumer health segment, which we announced in mid-calendar 23. These two parts of our business were a drain on cash and masked the strength of our RxSector business.
Speaker Change: Recall that just two years ago, we had an annual net loss in excess of $100 million. So this has been quite a transformation of our operating profile.
Speaker Change: As a reminder, our repositioning started back in October of 2022, when we indefinitely suspended our clinical development programs and continue with that decision to wind down our consumer health segment, which we announced in mid calendar 'twenty three.
Speaker Change: These two parts of our business, where a drain on cash and masked the strength of our Rx segment.
Joshua R. Disbrow: When you look back specifically at RxBusiness, it has generated over $17 million in adjusted EBITDA over the last four quarters and has achieved positive adjusted EBITDA in seven of the last eight quarters. Our goal is for the consumer health segment to be wound down and closed in mid-calendar 2024, and once completed, Aytu will solely be a specialty pharmaceutical business with our growing ADHD portfolio as our lead products, coupled with our pediatric portfolio focused on our multivitamin franchise and Carbonyl ER.
Speaker Change: When you look back specifically at the Rx business. It has generated over $17 million and adjusted EBITDA over the last four quarters and has achieved positive adjusted EBITDA and seven of the last eight quarters.
Speaker Change: Our goal is for the consumer health segment to be wound down and closed in mid calendar 2024, and once completed a tool solely be a specialty pharmaceutical business with our growing ADHD portfolio as our lead products, coupled with our pediatric portfolio focused on our multi vitamin franchise and carbon all you are at.
Joshua R. Disbrow: As we close the loop on the wind-down of the consumer business, we believe the aforementioned operating highlights will be made clearly visible to the market and those investors that screen for growth, margin expansion, and profitability, and this could lead to a re-rating of our corporate valuation as we go forward. Importantly, our financial wherewithal is solid, as seen by our cash balance holding steady at $19.8 million compared to $19.5 million at the end of the December quarter.
Speaker Change: As we close the loop on the wind down of the consumer business. We believe our aforementioned operating highlights will be made clearly visible to the market and those investors that screen for growth margin expansion and profitability.
Speaker Change: And this could lead to a re rating of our corporate valuation as we go forward importantly, our financial wherewithal as solid as seen by our cash balance holding steady at $19 8 million compared to $19 5 million at the end of the December quarter to.
Joshua R. Disbrow: To expand on the financials in more detail, let me run through a few key points within both our ADHD and pediatric portfolios, starting first with ADHD. As I mentioned, our ADHD portfolio demonstrated a 49% year-over-year increase in net revenue during the third quarter to $12.3 million. The growth in net revenue was driven by strong sales force execution, along with the company continuing to leverage and adapt our innovative A2RxConnect platform, which we believe is a best-in-class patient support program.
Speaker Change: To expand on the financials in more detail, let me run through a few key points within both our ADHD and pediatric portfolios starting first with ADHD.
Speaker Change: As I mentioned, our ADHD portfolio demonstrated a 49% year over year increase in net revenue during the third quarter to $12 3 million the growth in net revenue was driven by strong sales force execution, along with the company continuing to leverage and adapt our innovative <unk> Rx connect platform, which we believe is a best in class patient support program.
Joshua R. Disbrow: As a reminder, from a seasonal standpoint, our third fiscal quarter is where RxConnect's access and pricing guarantees provide the greatest benefit to patients and healthcare providers as a result of the January deductible reset for many health insurance plans. Our Transparent Drug Pricing Plan works directly through our 1,000-plus RxConnect partner pharmacies nationwide to deliver our products, ensuring predictability of out-of-pocket costs for the patients who need them. Aytu remains committed to ensuring predictable and clear out-of-pocket costs around our branded portfolio.
Speaker Change: As a reminder, from a seasonality standpoint, our third fiscal quarter is where Rx connects access and pricing guarantees provide the greatest benefit to patients and healthcare providers. As a result of the January deductible reset for many health insurance plans are transparent drug pricing plan works directly through our 1000, plus Rx partner, our connect partner pharmacies nationwide to deliver our <unk>.
Speaker Change: Products, ensuring predictability of out of pocket costs for patients, who need or treatments <unk> remains committed to ensuring predictable and clear out of pocket costs around our branded portfolio.
Joshua R. Disbrow: In addition to our strong operational execution, the trends we've talked about the past two years within the ADHD market have continued. The market continues to experience intermittent supply disruptions and accompanying patient access challenges for generic amphetamine and now Lisdex amphetamine with Vyvanse having gone generic, along of course, with various methylphenidase products which continue to experience shortages and, in some cases, discontinuations. These access disruptions are negatively impacting the lives of too many ADHD patients and their families and continue to frustrate physicians and pharmacies alike.
In addition to our strong operational execution the trends we've talked about the past two years within the ADHD market have continued the market continues to experience intermittent supply disruptions and accompanying patient access challenges for generic amphetamines and now <unk> with Vyvanse, having gone generic along of course with various methylphenidate products, which continue to experience.
Speaker Change: George isn't in some cases discontinuation. These access disruptions are negatively impacting the lives of too many ADHD patients and their families and continue to frustrate physicians and pharmacies alike.
Joshua R. Disbrow: Having just been in the field visiting customers, I can tell you that these disruptions are very real, and the positive impact RxConnect and our products are having is notable as a real solution for these patients and providers. As these intermittent shortages and patient access challenges have continued, our team has done an exceptional job meeting the demands of patients, having maintained supply to meet the growing demand for Adzenis and Cotempla. As a reminder, Adzenis, the only approved extended-release ODT amphetamine for the treatment of ADHD, is approved as bioequivalent to Adderall XR.
Speaker Change: Having just been in the field visiting with customers I can tell you that these disruptions are very real and the positive impact Rx connect and our products are having is notable as a real solution for these patients and providers as these intermittent shortages and patient access challenges have continued our team has done an exceptional job meeting the demands of patients having maintained supply to meet the growing demand for <unk> and <unk>.
Speaker Change: As a reminder, at Zen is the only approved extended release ODT and Feta mean for the treatment of ADHD is approved is bio equivalent to adderall XR. So our brand is well positioned to continue to capture additional market share as amphetamine patient access remains unpredictable go template as the only approved extended release ODT methylphenidate for the treatment of ADHD would compete.
Joshua R. Disbrow: So our brand is well positioned to continue to capture additional market share as amphetamine patient access remains unpredictable. Cotempla is the only approved extended-release ODT methylphenidate for the treatment of ADHD, which competes against the likes of Concerta and other long-acting methylphenidates, which are also in the midst of continuing channel uncertainty.
Against the likes of Concerta and other long acting methylphenidate, which are also in the midst of continuing channel uncertainties.
Joshua R. Disbrow: We view the ongoing ADHD supply and patient access situation as one that will likely continue for the foreseeable future in some form or fashion. And perhaps more importantly, this long-term disruption is causing and has caused undue uncertainty well into the future. Even as some manufacturers' stimulant products have returned to more normal levels, patients, parents, and physicians continue to question when the next shortage will occur. And in many providers' minds, other shortages will occur, as they have in the past. We just don't know when, and we don't know what the coverage may be like at that time.
Speaker Change: View the ongoing ADHD supplied patient access situation is one that will likely continue for the foreseeable future in some form or fashion and perhaps more importantly, this long term disruption is causing and has caused undue uncertainty well into the future. Even if some manufacturers stimulant products have returned to more normal levels patients parents and physicians continue to.
Question when the next shortage will pop up and in many providers minds. Other shortages will occur as they have in the past. We just don't know when and we don't know what coverage may be at that time.
Joshua R. Disbrow: So, that's where RxConnect comes in, and that creates the opportunity for more and more patients and prescribers to get experience with the Xenesco template. Not only do patients get effective, reliable ADHD brands at a pharmacy they know and trust, but they get these products at a consistent price and, perhaps more importantly, on a timely and predictable basis. With our products and our robust support services, we're filling a huge gap that continues to be pervasive across the pharmaceutical ecosystem, affecting both brands and generics and reaching beyond ADHD stimulants.
Speaker Change: So that's where our extra that comes in and that creates the opportunity for more and more patients and prescribers to get experience with incentives go template not only do patients get effective reliable ADHD brands at a pharmacy, they know and trust. They get these products at a consistent price and perhaps more importantly on a timely and predictable basis with our products and our Robo Robo.
Speaker Change: Support services, we are filling a huge gap that continues to be pervasive across the pharmaceutical ecosystem affecting both brands and generics and reaching beyond ADHD stimulants, we're solving this issue and our results speak to that and as we look at prescription trends in April and into May we're seeing growth in rx's for the ADHD brands in fact ADHD tiara.
Joshua R. Disbrow: We're solving this issue, and our results speak to that. And as we look at prescription trends in April and into May, we're seeing growth in RXs for the ADHD brands. In fact, ADHD TRXs through the middle of May are trending to make this the highest month in a year, following what were consistent all-time highs last year.
Speaker Change: Access to the middle of May are trending to make this the highest month in a year. Following what were consistent all time highs last year, we're excited about finishing fiscal 'twenty four with both a growing and strong stimulant franchise.
Joshua R. Disbrow: We're excited about finishing fiscal 24 with both a growing and strong stimulant franchise. We're transitioning now to pediatrics, which represents about 12% of our third quarter RxNet revenue. Similar to what we discussed last quarter, our pediatric portfolio net revenue, which was down $33 and a half million, was impacted primarily by payer changes that occurred in the September 23 quarter.
Speaker Change: Transitioning now to pediatrics, which represents about 12% of our third quarter Rx net revenue.
Speaker Change: Similar to what we discussed last quarter, our pediatric portfolio net revenue, which was down $3 5 million was impacted primarily by payer changes that occurred in the September 23 quarter.
Joshua R. Disbrow: We've seen the multivitamin business stabilize during the past quarter and have started to see some growth here almost halfway through the fourth quarter. We've implemented a number of tactics that give us comfort that we can get back to growth mode across the pediatric portfolio. Given the early signs of recovery and some recent coverage wins across the pediatric portfolio, we're reallocating resources in real time to the pediatric products to capitalize on numerous opportunities with respect to this improved coverage and patient access. The team has moved swiftly, and those actions are beginning to show some positive early results.
Speaker Change: We've seen the multi vitamin business stabilized during the past quarter have started to see some growth here almost halfway through the fourth quarter. We've implemented a number of tactics that give us comfort that we can get back to growth mode across the pediatric portfolio given the early signs of recovery in some recent coverage wins across the pediatric portfolio, we're reallocating resources in real time to the pediatric products to <unk>.
Speaker Change: <unk> on numerous opportunities with respect to this improved coverage and patient access. The team has moved swiftly and those actions are beginning to show some positive early results.
Joshua R. Disbrow: I think it's important for everyone to note how well the overall operations of our business have progressed in light of the current downdraft in the PEDS operations and the potential positive swing that can occur as the initiatives we have implemented come to fruition. But transitioning just here for a bit, one item I think is important to discuss in context to our third quarter was the widespread and widely reported cyber attack that impacted UnitedHealthcare's subsidiary Change Healthcare beginning back in February.
Speaker Change: It's important for everyone to note how well the overall operations of our business have progressed in light of the current downdraft in the peds operations and the potential positive swing that can occur as the initiatives, we have implemented come to fruition, but.
Speaker Change: Transitioning just here for a bit one item I think is important to discuss and context to our third quarter was the widespread and widely reported cyber attack that impacted United Healthcare subsidiary change healthcare beginning back in February for those not familiar change health care. Among many other things enables branded manufacturers copay program savings programs by Downs et.
Joshua R. Disbrow: For those not familiar, Change Healthcare, among many other things, enables branded manufacturers, copay programs, savings programs, buy-downs, et cetera, to be processed through what is essentially a switchboard that interfaces with pharmacy dispensing and reimbursement systems. It also interacts with physician billing and reimbursement systems to get those physicians paid for their services. Among other things, the cyber attack created havoc across the healthcare ecosystem and resulted in many pharma companies' coupon programs not working properly, or in some cases, not working at all, for extended periods of time.
Speaker Change: Cetera to be processed through is there what's the what was essentially a switchboard that interfaces with pharmacy dispensing and reimbursement systems. It also interact with pharmacy, the physician billing and reimbursement systems to get those physician offices paid for their services are mothers among other things the cyber attack created havoc across the health care ecosystem and resulted in many pharma companies coupon.
Speaker Change: It was not working properly or in some cases not working at all for extended periods of time. This in turn significantly impacted out of pocket pricing and patient access to branded products and often resulted in prescriptions going unfilled in some cases for long durations of time or in some cases, losing those prescriptions altogether. Fortunately, we had a minimal impact due to.
Joshua R. Disbrow: This, in turn, significantly impacted out-of-pocket pricing and patient access to branded products and often resulted in prescriptions going unfilled, in some cases for long durations of time, or in some cases losing those prescriptions altogether. Fortunately, we at Aytu felt minimal impact due to the unique attributes of RxConnect and how we interface with pharmacy partner systems, along with the broader commercialization approach we take that doesn't rely on any single system of adjudication or any single switch. But it did have some very minimal and transient impact on us, but I'm happy to say we fully recovered and moved past it very quickly.
Speaker Change: The unique attributes of Rx connect and how we interface with pharmacy partner systems, along with the broader commercialization approach, we take that doesn't rely on any single system of adjudication or any single switch, but it did have some very minimal and transient impact us Thanos, but I'm happy to say, we fully recovered and move past it very quickly.
Joshua R. Disbrow: Moving to our progress on the outsourcing of our ADHD brand manufacturing and overall operation improvements, we continue to do a great job improving our gross margins. RX gross margins during the quarter were 74% compared to 61% in Q3 of last year, an improvement of 1,300 basis points. We believe there will be continued, albeit smaller, improvement as we complete the transition of Adzenis and Cotempla manufacturing to our outsourcing partners. For those that may not be familiar, we will be shutting down our manufacturing operations in Texas, where we have a manufacturing facility that is much larger than we need and therefore is a source of large fixed overhead expenses and a source of significantly elevated COGS.
Speaker Change: Moving to our progress on the outsourcing of our ADHD brand manufacturing and overall operational improvements we continue to do a great job on improving our gross margins are X gross margins during the quarter were 74% compared to 61% in Q3 of last year, an improvement of 3500 basis points. We believe there will be continued albeit smaller improvement.
Speaker Change: As we complete the transition of <unk> manufacturing to our outsourcing partners for those that may not be familiar we will be shutting down our manufacturing operations in Texas, where we have a manufacturing facility is much larger than we need and therefore as a source of large fixed overhead expenses.
Speaker Change: And a source of significantly elevated cogs.
Joshua R. Disbrow: Everything's on track in terms of the manufacturing transfer, and we expect to complete our final in-house production run by the end of June, and that remains very much on track. We will continue to incur some costs related to the manufacturing facility through the calendar year as we close down the facility to return it to the landlord.
Everything is on track in terms of the manufacturing transfer and we expect to complete our final in house production run by the end of June and that remains very much on track. We will continue to incur some costs related to the manufacturing facility through the calendar year as we closed down the facility to return it to the landlord.
Joshua R. Disbrow: An additional exciting change we've recently implemented is the onboarding of a new distributor to help further optimize the RxConnect platform. Integration of this new distributor into the program, along with some modifications around our pharmacy interfacing, has been going well. And with these changes, we expect to further improve the robustness of our pharmacy partner offerings to further add to the stickiness of the business overall. We view this change as an important one, and it's already showing positive signs for future growth quickly on the Consumer Health Wind-Down.
Speaker Change: And Additionally, exciting change we've recently implemented as the on boarding of a new distributor to help further optimize the Rx connect platform integration of this new distributor into the program along with some modifications around our pharmacy interfacing has been going well and with these changes we expect to further improve the robustness of our pharmacy partner offerings to further add to the stickiness of the business overall.
Speaker Change: We view this change as an important one and it's already showing positive signs for future growth.
Speaker Change: On the consumer health wind down now.
Joshua R. Disbrow: Our team has done an exceptional job effectively managing the wind-down of our consumer health operations. The process's effect on our adjusted EBITDA was minimal, with just a negative $370,000 impact during the third quarter, more than a $1 million improvement from the third quarter a year ago. We expect to have inventory write-downs and final shutdown expenses booked in the fourth quarter, and then minimal revenue into the first quarter of Fiscal 25. From that point forward, we don't expect to discuss the consumer health segment further, as we will be 100% focused on the prescription business.
Speaker Change: Our team has done an exceptional job of effectively managing the wind down of our consumer health operations. The processes effect on our adjusted EBITDA was minimal which is the negative $370000 impact during the third quarter more than a $1 million improvement from the third quarter a year ago, we expect to have inventory write downs and final shutdown expenses booked in the fourth quarter and then minimal.
Speaker Change: Revenue into the first quarter of fiscal 'twenty five from that point forward, we don't expect to discuss the consumer health segment further as we will be 100% focused on the prescription business.
Joshua R. Disbrow: To wrap things up before I turn it over to Mark, it has been our objective to transition AITU from a multipronged operation that included not only our Rx segment but also our consumer health segment and pipeline development programs, both of which generated negative cash flows. To a hyper-focused pharmaceutical company with management concentrated on growing sales, increasing margins, and adjusted EBITDA and profitability, the Rx Business has been adjusted EBITDA positive for seven of the last eight quarters, as witnessed by our trailing four-quarter company-wide adjusted EBITDA of over $15 million and generating over $7 million in operating income for our Rx Business.
Speaker Change: To wrap things up before I turn it over to Mark It has been our objective to transition <unk> from a multi pronged operation, which included not only our Rx segment, but also our consumer health segment and pipeline development programs, both of which generated negative cash flows.
Speaker Change: Two a hyper focused pharmaceutical company was management concentrated on growing sales, increasing margins and adjusted EBITDA and profitability. The Rx business has been adjusted EBITDA positive for seven of the last eight quarters witnessed by our trailing four quarter company wide adjusted EBITDA of over $15 million and generating over $7 million in operating income for our Rx business.
Joshua R. Disbrow: Our team's planning, coordination, and hard work are all resulting in transitioning this business from a negative cash flow one with losses to now being on the cusp of free cash flow generation and net income as we move forward. Now, I will turn the call over to Mark, and I will then come back to wrap things up briefly before turning over to questions.
Mark K. Oki: Our team's planning coordination and hard work of all our all resulting in transitioning this business from a negative cash flow one with losses to now beyond the cusp of free cash flow generation net income as we move forward, Let me turn the call over now to Mark and I will then come back to wrap things up briefly before turning over to questions Mark.
Mark K. Oki: Thank you, Josh, and thank you to everyone joining this call. Let's look at the third quarter results in a bit more detail. Net revenue in the third quarter of 2024 declined 21% to $18 million from $22.7 million in the prior year period, as we continued our ongoing wind-down of our consumer health segment. As a reminder, in October 2022, we initiated a strategic mandate to focus our efforts solely on the existing RxBusiness.
Mark K. Oki: Thank you Josh and thank you to everyone. Joining this call, let's look at the third quarter results and a bit more detail net revenue in the third quarter of 2024 declined 21% to $18 million from 22, 7% $22 $7 million in the prior year period, as we continued our ongoing wind down of our consumer health.
Mark K. Oki: This process continues with the Consumer Health Segment's revenue declining from $8.9 million in the third quarter of 2023 to $4 million in the current quarter, which primarily consists of selling off existing inventory. The other component of our consolidated revenue is the RX segment sales, which rose to $14 million from last year's light quarter of $13.8 million. Breaking down the IRF revenues shows that our core ADHD franchise increased 49% to $12.3 million from $8.3 million in 2023, and the pediatric portfolio declined to $1.7 million from $5.3 million in 2023.
Mark K. Oki: As a reminder, in October 2022, we initiated a strategic mandate to focus our efforts solely on the existing <unk> business.
Mark K. Oki: This process continues with the consumer health segment revenue declining from $8 $9 million in the third quarter of 2000 $23 million to $4 million in the third.
Speaker Change: Good quarter.
Which primarily consist of selling of existing inventory.
Speaker Change: The other component of our consolidated revenue is Rx segment sales, which rose to $14 million from last year's late quarter of $13 8 million.
Speaker Change: Breaking down the revenue shows that our core ADHD franchise increased 49% to $12 3 million.
Speaker Change: From $8 $3 million in 2023, and the pediatric portfolio declined to $1 7 million from $5 $3 million in 2023.
Mark K. Oki: As we've discussed previously, the decline in our pediatric portfolio resulted from some ongoing reimbursement issues. As Josh mentioned, we are implementing several initiatives in real time to improve the demand for pediatric portfolio products and are seeing solid signs of improved reimbursement across the portfolio. Gross margins increased to 65% in 2024's third quarter from 56% in 2023, driven by increasing ADHD revenue and the decline in consumer product sales.
Speaker Change: As we've discussed previously the decline in our pediatric portfolio resulted from some ongoing reimbursement issues. It's just mentioned we are implementing several initiatives in real time to improve the demand for pediatric portfolio products and are seeing solid signs of improved reimbursement across the portfolio.
Speaker Change: Gross margins increased to 65% in 2020 for his third quarter from 56% in 2023, driven by increasing ADHD revenue and the decline in consumer product sales.
Mark K. Oki: This improvement was adversely impacted by the previously noted decline in sales of our pediatric product, our historically highest-margin product group. As a reminder to any new listeners today, A2's top line and margins are impacted by the seasonal nature of our business. On the demand side, many patients take a summer scale back from their ADHD meds, which primarily affects our first fiscal quarter and, to a lesser extent, our fourth fiscal quarter.
Speaker Change: This improvement was adversely impacted by the previously noted decline in sales of our pediatric program products are.
Speaker Change: Our historically highest margin product group.
Speaker Change: As a reminder to any new listeners today.
Speaker Change: <unk> top line and margins are impacted by the seasonal nature of our business.
Speaker Change: On the demand side, many patients take a similar scale.
Speaker Change: <unk> from the ADHD, meds, which primarily affects our first fiscal quarter and to a lesser extent, our fourth fiscal quarter.
Mark K. Oki: During the third fiscal quarter, most insurance plans reset deductible amounts beginning January 1st. From January through March, we generally experienced a greater use of our ARCS-CNIC price protection program, which historically has lowered our gross dinette margin. Please remember that this is part of our normal seasonality, and those gross to net adjustments historically improved throughout the calendar year. Our operating expenses, excluding restructuring costs, changes in contingent consideration, and amortization of intangible assets, were $12.6 million in the third quarter of 2024, compared to $20.8 million in the same period a year ago.
Speaker Change: During the third fiscal quarter, most insurance plans reset deductible amounts beginning January one.
Speaker Change: From January through March we generally experience a greater use of our click price protection program, which historically has lowered our gross to net margins.
Please remember that this is part of our normal seasonality in.
Speaker Change: And those group and those gross to net adjustments historically improved throughout the calendar year.
Speaker Change: Our operating expenses, excluding restructuring costs changes in contingent consideration and the amortization of intangible assets were $12 $6 million in the third quarter of 2024 compared to $28 million in the same period a year ago.
Mark K. Oki: This 39% decrease reflects our continued focus on cost reduction and the winding down of the consumer health segment. Research and Development expenses were $619,000 in the third quarter of 2024, compared to $856,000 in the corresponding 2023 quarter. Reflecting a normalized base level and highlighting the absence of any substantive drudge work is all but extensive, consistent with our prior announcement. We recorded a $2.9 million net loss, or $0.52 per share, versus last year's $7.2 million net loss, or $1.93 per share. Please note that due to the difference between US GAAP and tax accounting, almost $250,000 of our net loss was from an income tax expense.
Speaker Change: This 39% decrease reflects our continued focus on cost reduction and the winding down of the consumer health segment.
Speaker Change: Research and development expenses were $619000 in the third quarter of 2024 compared to the 856000 in the corresponding 2023 quarter.
Speaker Change: Reflecting a normalized base level in highlighting the absence of any substantive drug development expenses consistent with our prior announcements.
Speaker Change: We recorded a $2 million.
Speaker Change: We recorded a $2 9 million net loss or <unk> 52 per share versus last year's $7 2 million net loss or $1 93 per share.
Speaker Change: Please note that due to the difference between U S GAAP and tax accounting almost $250000 of net losses from an income tax expense.
Mark K. Oki: Adjusted EBITDA expanded by $7 million, to a positive $425,000 from a negative $6.5 million on a year-over-year basis. Cash and cash equivalents on March 31st, 2024 were $19.8 million compared to $19.5 million on December 31st, 2023. We are comfortable with this capital level and believe that our balance sheet provides us with a continuing solid foundation to execute our corporate game plan. I should point out that the biggest change on the balance sheet is the classification shift of our $15 million term note from long term to short term as it matures in January 2025.
Speaker Change: Adjusted EBITDA expanded by $7 million.
Speaker Change: So a positive 425000 from a negative $6 $5 million on a year over year basis.
Speaker Change: Cash and cash equivalents on March 31, 2024 were $19 8 million compared to nine to $19 5 million on December 31, 2023, we are comfortable with this capital level and believe that our balance sheet provides us with a continuing solid foundation.
Speaker Change: Execute our corporate game plan.
Speaker Change: I should point out that the biggest change in the balance sheet classification shift over $15 million term note from long term to short term as it matures in January 2025.
Mark K. Oki: In our 10-Q filed earlier today, we continue to include going concern language in the footnotes to our financial statement. Given our success in restructuring the company's operations, financials, and outlook, we are quite pleased with where we sit regarding our borrowers. We have begun the refinancing of our term loan and believe that a new facility can be obtained at equal or better terms versus the maturing one. We will reevaluate the requirement to include going concern language in our financial statements if and when we complete this refinance.
Speaker Change: Our 10-Q filed earlier today, we continue to include going concern language in the footnotes to our financial statements.
Speaker Change: Given our success in restructuring the Companys operations.
Speaker Change: <unk> an outlook, where we are quite pleased with where we sit regarding our borrowings.
We have begun the refinancing process of our term loan and believe that the new facility can be obtained at equal or better terms versus the maturing one we will reevaluate the requirement to include going concern language in our financial statements if and when we complete this refinancing.
Mark K. Oki: Again, as we finish up our fiscal 2024 and look into fiscal 2025, we anticipate the exit from our consumer health segment, a completed ADHD production shift to our outside contract manufacturer and related exit from our Texas manufacturing facility, a steady rebound in our pediatric portfolio revenue, and the refinancing of our term loans. These ongoing shifts and improvements should bolster our top line while lowering our cost structure and allowing us to focus on free cash flow and net income aspirations. With that, let me turn it back over to Josh. Thanks, Mark.
Again, as we finish up our fiscal 2024 and look into fiscal 2025, we anticipate from our consumer health segment.
Speaker Change: The completed ADHD progestin shift to our outside contract manufacturer.
The related exit from our Texas manufacturing facility.
Speaker Change: The steady rebuild in our pediatric portfolio revenue and the refinancing of our term loan.
Speaker Change: These ongoing shifts in improvements to bolster our top line, while lowering our cost structure and allowing us to focus on free cash flow and net income aspirations.
Jeff: With that let me turn it back over to Jeff. Thanks, Mark as you might imagine I continued to be extremely pleased with the continued progress in our business is better positioned today than at any point in our history with over $15 million in companywide trailing 12 months adjusted EBITDA nearly $12 million of cash at the end of March.
Joshua R. Disbrow: Thanks, Mark. As you might imagine, I continue to be extremely pleased with the continued progress in our business at its better position today than at any point in our history, with over $15 million in company-wide trailing 12-month adjusted EBITDA and nearly $12 million of cash at the end of March. And while there is still work to be done with our pediatric portfolio, given the strength of our ADHD portfolio, the pending benefits from the wind-down of the consumer health business, as well as the outsourcing of manufacturing, we're excited about the overall trajectory of the business as we finish Fiscal 24 on a high note.
Jeff: And while there is still work to be done with our pediatric portfolio given the strength of our ADHD portfolio, depending benefits from the wind down of the consumer health business as well as the outsourcing of the manufacturing we're excited about the overall trajectory of the business as we finish fiscal 'twenty four on a high note.
Joshua R. Disbrow: I want to thank the entire team at Aytu for their hard work and dedication to delivering for both patients and stockholders. Thank you to everyone participating on today's call. I'll now be happy to answer any questions.
Jeff: I want to thank the entire team at a two for their hard work and dedication to delivering for both patients and stockholders. Thank you to everyone participating on today's call I will now be happy to answer any questions.
Speaker Change: Certainly everyone. At this time, we conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time, we do ask that we're posing a question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.
Operator: Everyone will be conducting a question and answer session at this time. If you have any questions or comments, please press star 1 on your phone at this time. We do ask that while you're posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Naz Rahman from Maxim. Your line is live.
Speaker Change: Once again, if you have any questions or comments. Please press star one on your phone.
Speaker Change: Your first question is coming from Robin from Maxim Your line is live.
Nazibur Rahman: Hi everyone, congrats on the progress and thanks for taking my questions. I have a few. I would just like to start on the ADHD business.
Robin: Hi, everyone. Congrats on the progress and thanks for taking my questions.
Nazibur Rahman: Do you know how the sales are continuing to grow and the franchise is seemingly growing larger and larger every day? How have your conversations with the DA evolved? Have they changed at all? Has the frequency changed, or have there been any concerns? or anything regarding getting additional quota.
Robin: I, just I'd like to start on the ADHD business.
Robin: E Commerce sales are to kind of grow the franchise is growing larger and larger every day.
Robin: Has your conversations with the D. A vault how they changed at all has it changed.
Robin: Has there been any concerns or anything regarding getting additional quota.
Joshua R. Disbrow: Yeah, hi, Naz. Great question. The short answer is that communications with the DEA, I would say, have been extremely productive. Our team that interfaces with the DEA on a regular basis has had, you know, significant conversations. DEA has increased the frequency of quotas, and their dialogue with industry has really picked up. So I would say we stand to benefit. You know, the rest of the industry does, of course, as well with that. That having been said, we are very comfortable with our ability to get quota as we move forward. We've, again, increased the frequency of dialogue with them.
Speaker Change: Yeah, Hi, <unk> Great question. The short answer is the communications with the DEA I would say have been extremely productive our team that interfaces with the DEA and regular basis has had.
Speaker Change: Significant conversations DEA is increase the frequency of quotas.
Speaker Change: Their dialogue with industry has really picked up so I would say we stand to benefit the rest of the industry does.
Speaker Change: Of course, as well with that that having been said very comfortable with our ability to get quota as we as we move forward.
Joshua R. Disbrow: The transparency that the DEA, I'd say, I suggest is at the highest level ever in terms of what they look at when they're allocating, when they are granting quotas, and the data sources that they're referencing. And I think we continue to do a better and better job as an industry of making sure that we're giving the DEA what they need and understanding what it is that they look at when they're allocating and granting quotas.
Speaker Change: Again increase the frequency of dialogue with them.
Speaker Change: The transparency that from the DEA I'd say I would suggest is at the highest level ever in terms of what they look out when they are allocating when they are granting quotas.
Speaker Change: The data sources that they are referencing.
Speaker Change: And I think we continue to do a better and better job as an industry are making sure that we're giving them what they need and understanding what it is that they look out when they're allocating and granting quota. So that is all to say.
Joshua R. Disbrow: So that is all to say; these products at San Francisco Temple have never had a stock out. We continue to have solid levels of supply, always seeking to increase our supply, but more or less at the thresholds that we'd like to be in terms of our days on hand. So, comfortable with where we are, comfortable as we move into the outsourcing setup with our manufacturer, Halo, that we can continue to get access. It's really all about communication, and DEA has been exceptional as of late in picking up their level of communication with the industry and, notably, with us.
Speaker Change: These products had Dennis go tempo of never having stock out we continue to have solid levels of supply always seeking to increase our supply, but more or less at our thresholds that we'd like to be in terms of our days on hand, so comfortable with where we are comfortable as we move into the outsourcing setup with with our manufacturer Halo that we can continue to get at.
Speaker Change: It's really all about communication and D has been exceptional as of late and picking up their of their level of communication with industry and and notably with us.
Nazibur Rahman: Got it. Thank you. That's helpful. And in terms of your promotional strategy, can you sort of comment on what the current strategy is now with prescribers? Are you trying to get your existing prescribers to write more scripts, or are you also more focused on getting more prescribers? Probably a combination of both. Could you also comment on what that dynamic is right now, too?
Speaker Change: Got it. Thank you that's helpful and in terms of your promotional strategy is is that a comment on what the current strategy is now prescribers I didn't get your existing prescribers to write more scripts or you're awesome.
Speaker Change: Okay.
Speaker Change: Our prescribers, probably combination thereof, it helped the comp.
And what that dynamic is right now too.
Speaker Change: Okay.
Joshua R. Disbrow: Yeah, happy to. So we're always focused on both breadth and depth of prescribing. We obviously want to get new prescribers on board. The shortage is, if not, it'll be brought on by a significant number of new prescribers. And the objective is always to get them to keep Xenocyclo-Templa top of mind and keep prescribing that among their chosen stimulants. Particularly in the face of continuing uncertainty, we can go to them with the obvious fact that we've never had a stock out of these products, and the fact that we've been consistent with our pricing programs.
Speaker Change: Yeah happy to so we're always focused on both breadth and depth of prescribing, we obviously want to get new prescribers onboard the.
The shortages of node will be brought on a significant number of new prescribers and the objective is always to get them to keep that Zen is a good template tops.
Speaker Change: Top of mind, and keep that keep them prescribing that among their chosen stimulants, particularly in the face of the continuing uncertainty. We can go to them with obviously the fact that we've never had a stock out with these products with the fact that we've been consistent on our pricing programs are a connect is a huge benefit to their patients understanding that we backstopped the prescriptions they pay no more than.
Joshua R. Disbrow: RxConnect is a huge benefit to their patients. Understanding that we backstop the prescriptions, they pay no more than $50 for a commercially insured patient or if they're commercially insured. That's irrespective of whether it's in that formula or not. So we cut out any of the guesswork in terms of whether it's available or not. We cut out the guesswork in terms of where they can get it because they know they can get it at one of the RxConnect partner pharmacies. And we cut out the guesswork around how much they can get it for, which is capped.
Speaker Change: $50 for commercially insured patient if they're commercially insured that's irrespective, whether it's on that form or not so we cut out any of the guess work in terms of whether its available or not we cut out the guesswork in terms of where they can get it because they know they can get it at one of the Rx connect partner pharmacies, and we cut out the guesswork around how much they can get it for which again is capped so that all come.
Joshua R. Disbrow: So that all comes together to present sort of a holistic solution for these physicians, and we've continued to grow prescriptions by virtue of not just the fact that they are good products that patients improve their symptoms on. They are products that, again, they can get consistently at a consistent price at a neighborhood pharmacy that they know and trust. And it has continued to resonate with prescribers. Because even as we enter a period where perhaps they're able to get access to what they used to be writing more routinely, even as Adderall, XR, for example, and the generics come back into more of a normal level of inventory and availability, they've been stung.
Speaker Change: Together to present sort of a holistic solution for these physicians and we've continued to grow prescriptions by virtue of not just the fact that they are good products that patients improve their symptoms on.
Speaker Change: They are products that again, they can get consistently at a consistent price at a at a neighborhood pharmacy that they know and trust and it has continued to resonate with prescribers because even as we enter a period, where perhaps they're able to get access to what they used to be writing more routinely even as adderall XR for example in the generics come back into more of a <unk>.
Speaker Change: Normal.
Speaker Change: More of a normal level of inventory and its availability.
Speaker Change: They've been stung and they've that's that that continues to linger with with physicians that really continues to linger with patients and their parents and caregivers.
Joshua R. Disbrow: And that continues to linger with physicians. It really continues to linger with patients and their parents and caregivers. And they sort of wonder when it's going to happen again. So to go out and say, "Look, it's never happened to these products." We continue to meet all the demand that we're able to drive here as these products continue to grow, and it's enabled us to get physicians more actively prescribing our products. And that's been encouraging to see.
Speaker Change: Sort of wondering when it's going to happen again sort of go in and say look it's never happened as these products. We continue to meet our meet all the all the demand that we're able to drive here is these products continuing to grow.
Speaker Change: And it's enabled us to give physicians more actively prescribing our products and to.
Speaker Change: It's been encouraging to see.
Nazibur Rahman: That was helpful. Thank you. On the pediatric multivitamin business, obviously, you said you were engaged in a lot of initiatives and you're starting to sort of see a return to normalization. I was curious if you could elaborate more on that. How much of the prior business do you think you can get back, revenue-wise, and what do you think the new normal might look like for that PH business?
Speaker Change: That was helpful. Thank you.
Speaker Change: On the pediatric multi vitamin business. Obviously, you said you were engaged in a lot of initiatives and you're starting to start to see with Torrance amortization, principally elaborate more on that how much of the acquired business.
Speaker Change: We'll get back like revenue wise and what do you think the new normal might look like for that business.
Joshua R. Disbrow: Yeah, good question, Naz. We haven't guided, as you know, historically, and so as not to guide, I would suggest we think we can get a significant percentage of our business back across the portfolio. Without giving a specific number, what I can say is, look, we've recently done some work and have really started to put some things into place to capitalize on some of the positive payer changes that we've observed in some major areas. And if things go as we're sort of projecting, I think we can get both Carbinol and the multivitamin line back to a substantial level. Is that to suggest we bring it all the way back?
Speaker Change: Yes. Good question no we haven't guided as you know historically and so as not to guide I would suggest we think we can get a significant percentages of our of our business back across the portfolio without giving a specific number what I can say is look we've recently done some work and have really started to put some things into place to capitalize on some of the positive payer changes that we've observed.
Speaker Change: And some major areas.
Speaker Change: And if things go as we're sort of projecting I think we can get both carbonara and the multi vitamin line back to a substantial level is that to suggest we bring it all the way back perhaps not but I think over the long term with all the things that we have in place and being able to manage.
Joshua R. Disbrow: You know, perhaps not, but I think over the long term, with all the things that we have in place and being able to manage some of these new coverage aspects, particularly as we look at some of the state plans that have begun covering both sets of products, both portfolios, if you will, I feel very good that we can get these back to a reasonable level. And obviously, coupled with that, is what we expect to be continuing growth on the ADHD side.
Speaker Change: Some of these new coverage aspects, particularly as we look at some of the state plans that have begun covering.
Speaker Change: Both sets of products both portfolios. If you will feel very good that we can get these back to a reasonable level.
Joshua R. Disbrow: And so, you know, imagine, if you will, for a company that still, even in our lowest quarter, which is seasonally consistently our lowest revenue quarter, and that's our lowest margin quarter, for us to have generated almost half a million dollars in positive EBITDA, despite the fact that PEDS really was, it has significantly declined. If we can bring those products back to any degree, 20, 30, 40 percent, or even more, that obviously starts to translate immediately into not just operating income but net income and free cash flow.
Speaker Change: Obviously, coupled with that is what we expect to be continuing growth in the ADHD side and so imagine if you will for a company that still even even in our lowest quarter, which is seasonally consistently our lowest revenue quarter and thats, our lowest margin quarter for us to have generated almost half a million dollars in positive EBITDA. Despite the fact that peds really was it has significant.
Speaker Change: It was significantly declined if we can bring those products back to any degree 20, 30%, 40% or even more.
Speaker Change: That obviously starts to translate immediately into into not just operating income, but net income.
Speaker Change: And our free cash flow. So we don't need to see a tremendous amount of growth back from the bottom, which we think we're at at this point, we think we've actually sort of started to move up from the bottom is we really see the business stabilize again on both carbon all as well as the multi bites so encouraged with the early.
Joshua R. Disbrow: So, we don't need to see a tremendous amount of growth back from the bottom, which we think we're at at this point. We think we've actually sort of started to move up from the bottom as we really see the business stabilize again on both carbonyl as well as the multibytes. So, I'm encouraged by the early work that's been done. Our commercial team has done an exceptional job of moving very quickly, being very, very nimble and responsive to some of these payer changes, and excited to see how these favor us as we move forward. We'll take some time to get it back to a significant level, but we are encouraged by the momentum, and we're really looking solid here as we enter our fiscal 25 here in the next month and a half.
Speaker Change: Early work that's been done our commercial team has done an exceptional job of moving very quickly being very very nimble and responsive to some of these payer changes and excited to see how these how these favor us as we move forward, we will take some time to get it back to a significant level, but encouraged with with the momentum and we're really really looking solid here as we enter our fiscal 25 here in the next months.
Speaker Change: I have.
Speaker Change: Got it that's very helpful and my last question is actually just on the change healthcare impact I know you said it was minimal but what is it possible for you to quantify the potential sales impact.
Nazibur Rahman: That was very helpful. And my last question is actually just on the change healthcare impact. I know you said it was minimal, but is it possible for you to quantify the potential sales impact? And did that impact all the different business lines or just a couple of them, or a few of them?
Speaker Change: That is the change healthcare.
Speaker Change: Situation impact all the different business lines, there just a couple of them.
Joshua R. Disbrow: Yeah, good question. So we have not and won't quantify anything specific in terms of potential revenue impact, understanding that it was transient, and we did solve for it relatively quickly. That having been said, there is probably an indeterminate, relatively small amount of revenue impact that we did have. I'd hesitate to put a number on it.
Speaker Change: Yeah. Good question, so we have not and won't quantify anything specific in terms of potential revenue impact understanding that it was transient and we do software relatively quickly that having been said there is some probably in determinant relatively small amount of revenue impact that we did have I'd hesitate to put a number on it I know some companies have a wee weed.
Joshua R. Disbrow: I know some companies have done that, but we'd resist that just by virtue of the fact that we moved past it. We were able to really respond effectively. We have multiple switches that our customers can utilize, and so we were able to sort of delever from change. That having been said, we know for a fact that several of our competitors and even some competitors within the ADHD category did experience far more than just a transient impact. Some had significant downdrafts in their prescriptions.
That just by virtue of the fact that we moved past it we were able to really respond effectively we have multiple switches that our customers can utilize and so that was we were really able to sort of de lever from change that having been said we know.
Speaker Change: For a fact that several of our competitors and even some competitors within the ADHD category did experience far more than just transient impact. Some some has significant downdrafts in their in their prescriptions are programs, our copay cards across the portfolio. So across the entire prescription line continue to work.
Joshua R. Disbrow: Our programs, our copay cards across the portfolio, so across the entire prescription line, continue to work, continue to work very effectively. It was a handful of days that I would say there was some level of things having to get sort of rewired, but really, more than anything else, as a backbone, we're not relying upon any single vendor that really affects us from a switch perspective, so I'm positive about that. That having been said, not a huge impact for us.
Speaker Change: <unk> worked very effectively it was a handful of days that I would say there was some level of things having to get sort of re.
Speaker Change: <unk> wired, but really more than anything else as a backbone, we're not reliant upon any single vendor that really affects us from a switch perspective, so positive with that that having been said.
Speaker Change: Not a huge impact for us it's in the rearview mirror.
Speaker Change: Our Q4 looking healthy and really it's a it's an afterthought for us it's not an afterthought for many so I would say it's a.
Joshua R. Disbrow: It's in the rearview mirror, RQ4 looking healthy, and really, it's an afterthought for us. It's not an afterthought for many, so I would say it's an opportunity for us to potentially go back and gain leverage with some of our customers to say, look, the nightmare that you had been living through, and, in some cases, providers are still living through; we, we can say, look, we weren't affected by that.
Speaker Change: It's a it's an opportunity for us to potentially go back and gain leverage to some of our customers and say look the nightmare that you had been living through and in some cases providers are still living through.
Speaker Change:
Speaker Change: We can say look we werent affected by that our programs have not been do not leverage that so in the event that this lingers there's been there's been rumors more than rumors reports in fact that there were there additional ransom ware or additional sort of ran some requests there was sort of some knock on effects.
Joshua R. Disbrow: So in the event that this lingers, there's been rumors, more than rumors, reports, in fact, that there were additional ransomware or additional sorts of ransom requests. There were sort of some knock-on effects. Andrew Witte, UHG's CEO, has said specifically that they haven't solved for all of it. They certainly haven't gotten their physicians and pharmacies caught up.
Andrew Witty: Andrew witty.
Speaker Change: <unk> CEO has said specifically that if they haven't solved for all of it they certainly haven't gotten their physicians and pharmacies caught up so for us to be able to potentially be a solution and say look when you think about ADHD multi vitamins or an antihistamine.
Joshua R. Disbrow: So for us to potentially be a solution, say, look, when you think about ADHD, multivitamins, or antihistamines, we certainly have a robust platform that doesn't rely on any single switch. So, you know, to put a finer point on it, you know, again, a relatively small amount, certainly less than 10% of our revenues and odds were affected, and again, very transient. But despite that fact, it shows a couple of things.
Speaker Change: We certainly have a robust platform that.
Speaker Change:
Speaker Change: It.
Speaker Change: It doesn't doesn't rely on any single a single switch so.
Speaker Change: Put a finer point on it you know again, a relatively small amount certainly less than 10% of our revenues were affected and again very transient.
Speaker Change: But despite the fact, so it shows a couple of things despite the down draft in the peds. Despite this disruption, which I don't want to suggest it wasn't disrupting at all there was some short period of time, where there were certainly some disruptions. Despite all of that we posted positive EBITDA and obviously now we're coming out of the time of year when the deductibles are largely getting fulfilled.
Joshua R. Disbrow: Despite the downdraft in the piece, despite this disruption, which I don't want to suggest it wasn't disrupting at all, there was some short period of time where there were certainly some disruptions. Despite all of that, we posted positive EBITDA, and, you know, obviously, now we're coming out of the time of year when the deductibles are largely getting fulfilled, and so our growth to NETs will improve as we move throughout the calendar year. And, you know, Q4 for us, our quarter ending June 30th is always a strong one for us. So, but, yeah, that is definitely in the rear view mirror.
Speaker Change: So our gross to nets will improve as we move throughout the calendar year and Q.
Speaker Change: Q4 for us our quarter ending June 30th as you know.
Speaker Change: As always there's always a strong one for us so, but yes that is definitely in the rearview mirror.
Nazibur Rahman: Thank you. That was very helpful. Thanks for taking all my questions. And once again, congrats on the progress.
Speaker Change: Thank you that was very helpful. Thanks for taking all my questions and once again congrats on the progress.
Thanks, a lot.
Operator: Thank you. Once again, everyone, if you have any questions or comments, please press star, then 1 on your phone.
Speaker Change: Thank you once again, everyone. If you have any questions or comments. Please press star then one on your phone.
Roger Weiss: Operator, while we're waiting to see if there are any other questions, let me relay a couple that have been sent in offline. Josh, this quarter showed very strong ADHD revenue growth again. How much of the up 49% do you think is growth from the ongoing disruptions in the category versus organic execution-based growth? And then the other question was... You know, I know you don't give forward guidance, but what do you think about next year, fiscal 2025? Yeah, thanks, Roger, for passing those on.
Operator, while were waiting to see if there are any other questions. Let me relay a couple that are.
Speaker Change: I have been sent in offline.
Speaker Change: Josh.
Joshua R. Disbrow: This quarter showed very strong ADHD revenue growth again, how much of the up 49% do you think is growth from the ongoing disruptions in the category versus organic execution.
Joshua R. Disbrow: Base growth and then the other question was.
Joshua R. Disbrow: I know you don't give.
Joshua R. Disbrow: Forward guidance, but how do you think about.
Joshua R. Disbrow: Next year of fiscal 2025.
Joshua R. Disbrow: Yeah, thanks, Roger, for passing those on. I guess, you know, we are really in a situation where the levels of the shortages have come and gone. But what I would say is the macro environment around ADHD is starting to normalize. So this growth is largely and almost entirely organic. It's execution-based.
Roger: Yeah, Thanks, Roger for passing those on it gets.
We are really in a situation where the the levels of the shortages have they they they come and go but what I would say is the.
Roger: The macro environment around ADHD is starting to normalize. So this growth is largely and almost entirely organic it's execution base. It's a sales force thats out there continuing to execute well.
Joshua R. Disbrow: It's a sales force that's out there continuing to do well. We've actually entered some new areas. So we're seeing growth in areas where the historic NEOs had been, but we hadn't really been for quite a few years. So it's good to see some of that uptake in some new territories around the country. And we are continuing to leverage RX Connect. And certainly, the pain continues to be felt from the historical shortages.
Roger: We've actually entered some new areas. So we're seeing seeing growth in areas, where the historic news had been but we hadn't been really in quite a few years. So it's good to see some of that uptake into some new territories around the country.
Roger: And we are continuing to leverage Rx connect and certainly the pain continues to be felt from the historical shortages, but even again as that normalizes I would say you know remember what that was like I remember the fact that we have two very reliable products that are effective that are obviously unique in a delivery and patients obviously respond well to them. So I've got a really commit.
Joshua R. Disbrow: But even again, as that normalizes, I would say, you know, remember sort of what that was like and remember the fact that we have two very reliable products that are effective and that are obviously unique in their delivery, and patients obviously respond well to them. So I've got to really commend the team. They've executed well across the board and really continue to demonstrate solid growth, territory by territory. And then even in areas where we don't have a sales force presence, we're continuing to see growth. So largely organic and on the back of the execution the team is having.
Roger: And the team they've executed well across the board and really continued to demonstrate solid growth territory by territory and then even in areas, where we don't have sales force presence, we're continuing to see growth so largely organic.
Roger: On the backs of the execution. The team is having as we think about 2025, we're excited about the future outlook as we look out just a few months from now when you look to exit our fiscal 'twenty four and June really strong understanding obviously the seasonality of ADHD has an effect, but our gross to nets again, we really expect to continue to improve there is lots of things that are being done.
Joshua R. Disbrow: As we think about 2025, we're excited about the future outlook. As we look out just a few months from now, we look to exit our fiscal 24 and June really strong, understanding, obviously, that the seasonality of ADHD has an effect. But our growth, and that's again, we really expect to continue to improve. There are lots of things that are being done and have been done behind the scenes to improve profitability on a per prescription basis.
Roger: And had been done around the seems to improve profitability on a per prescription basis, bringing on this new distributor has been exciting and it's been great and in many ways seamless nothing's ever perfect, but it really has been a very seamless transition as we begin to integrate this new this new distributor and so as we look out, particularly exiting this calendar year into into the new.
Joshua R. Disbrow: Bringing on this new distributor has been exciting, and it's been great. And, in many ways, seamless. Nothing's ever perfect, but it really has been a very seamless transition as we begin to integrate this new distributor. And so as we look out, you know, particularly exiting this calendar year into the new calendar year, you're going to look at a company that is significantly streamlined from where it has been. We're going to be focused squarely on the Rx business, obviously, the ADHD and pediatric portfolios.
Roger: Calendar year, you're going to look at a company that is significantly.
Roger: Significantly streamline from where it's been we're going to be focused squarely on the Rx business, obviously, the ADHD in pediatric portfolios, we're going to be out of the Grand Prairie, Texas facility understanding the lease expires. The end of this calendar year. So by definition, we will be entirely out physically.
Joshua R. Disbrow: We're going to be out of the Grand Prairie, Texas facility, understanding the lease expires at the end of this calendar year. So, by definition, we will be entirely out physically there. Obviously, R&D has been wound down to a diminutive amount.
There, obviously R&D has been wound down to a de Minimis amount. We expect to continue to have that low level of spending we expect to refi your debt here and as Mark alluded to we would certainly expect favorable a more favorable terms. So a lot of things to really further improve the health of the company as we get into 'twenty five and.
Joshua R. Disbrow: We expect to continue to have that low level of spending. We expect to rein in debt here. And as Mark alluded to, we would certainly expect favorable, more favorable terms. So a lot of things to really further improve the health of the company as we get into twenty five. And, you know, we think we'll be in a position to obviously continue to post positivity but significantly grow revenues and, obviously, continue to manage expenses.
Roger: We think we'll be in a position to obviously continue to continue to post positive EBITDA significantly grow revenues and obviously, we continue to manage expenses. So.
Joshua R. Disbrow: So, you know, this quarter, I think it's a pretty good look at what the expense base will look like, although it's actually going to come down probably even more as we get fully out of Grand Prairie, get fully out of consumer. And, of course, we would expect gross margins to stick up a little bit once we're fully transitioned out of the facility to the contract manufacturer and packager. So all positive signs; still a little bit of work to do.
This quarter I think is a pretty good look of what the expense base will look like although it's actually going to come down and probably even more as we get fully out of Grand Prairie get fully out of.
Roger: Out of consumer and of course, we would expect gross margins to tick up a little bit once we're fully transitioned out of the facility to the contract manufacturer and packagers. So all positive signs still a little bit of work to do I would say you don't use a baseball analogy and now that we're in baseball Yeah. We're certainly sort of rounding third base heading for home in terms of completing the major.
Joshua R. Disbrow: I'd say, you know, use a baseball analogy. Now that we're in baseball, we're certainly sort of rounding third base, heading for home in terms of completing the major initiatives. I think you give us another quarter or two, and we're going to be sliding into home and really kind of having completed the transformation of really what's been a couple of years in the making.
Roger: <unk>.
Roger: I think he would give us another another quarter or two and we're going to be sliding into home and really kind of having completed the transformation of really what's been a couple of years in the making.
Roger: Okay.
Roger Weiss: Josh, thank you. Operator, are there any other questions?
Speaker Change: Josh. Thank you operator are there any other questions.
Operator: Thank you. There are no further questions in the queue. I'll now hand the conference back to management for closing remarks. Please go ahead.
Speaker Change: Thank you there are no further questions in the queue I'll now hand, the conference back to management for closing remarks. Please go ahead.
Joshua R. Disbrow: Well, thanks everyone for joining us. Thanks to those who are asking questions, and we look forward to finishing this quarter. Our Q4 was very strong, and we equally look forward to sharing our full year and quarterly results in September upon the filing of our 10k. So thanks very much to all of you. Appreciate your ongoing support, and have a good afternoon and a good evening wherever you may be. Thanks.
Well thanks, everyone for joining thanks to those who were asking questions and we look forward to finishing this quarter. Our Q4 very strong and equally look forward to sharing our full year and quarterly results in September upon the filing of our 10-K. So thanks very much to all of you. Appreciate your ongoing support and have a good afternoon and a good evening wherever you may be.
Speaker Change: Thanks.
Speaker Change: Okay.
Operator: Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Speaker Change: Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.