Q1 2025 Evolus Inc Earnings Call
Speaker Change: Please stand by, your program is about to begin. If you need audio assistance during today's program, please press star zero.
Speaker Change: Good afternoon everyone and thank you for standing by. Welcome to Evelace's first quarter earnings conference call. As a reminder, today's conference is being recorded in webcast lives.
Speaker Change: All participants are in a listen only mode. After the speaker's remarks, there will be a question and answer session. I would now like to turn the conference over to Nareg, Sergei and Vice President and Head of Global Investor Relations and corporate communications. Please go ahead. Thank you very much.
Speaker Change: Thank you, Operator, and welcome to everyone joining us on today's call to review Evela's first quarter financial results.
Speaker Change: Our first quarter press release is now on our website at adlist.com [inaudible]
David Moatazedi: With me today are David Moatazedi, President and Chief Executive Officer and Sandra Beaver, Chief Financial Officer
David Moatazedi: Today's call will include forward-looking statements. Actual results may differ materially due to risks and uncertainties outlined in our earnings press release and SEC filing. These forward-looking statements are based on current assumptions and we undertake no obligation to update them.
David Moatazedi: Additionally, we will discuss certain non-GAAP financial measures. These measures should be considered in addition to and not as a substitute for our gap results.
David Moatazedi: A reconciliation of gap to non-GAAP measures is included in today's earnings release. At a reminder, our earnings release and SEC filings are available on the SEC's website and on our Investigations website.
David Moatazedi: Following the conclusion of today's call, a replay will be available on our website at investors.evilus.com
David Moatazedi: With that, I'll turn the call over to our C.E.O. David Moatazedi.
David Moatazedi: Thank you, Nareg, and good afternoon, everyone. We're pleased to report a successful start to the year, delivering double-digit revenue growth as we last an exceptionally strong quarter from the prior year, which had grown 42% and we're pleased to report a successful start to the year.
David Moatazedi: We gained meaningful market share in the first quarter, more than offsetting slower market growth, and performing it multiples above the market.
David Moatazedi: Considering this backdrop, we've incorporated this higher share into our projections and reduced our 2025 talks of market growth expectation to low single digits, remaining on track to deliver our full year guidance.
David Moatazedi: Our ability to consistently execute is driving continued market out performance and strengthening customer loyalty. In our final quarter of the single product company, we achieved 68.5 million in revenue, representing 15.5% growth over the prior year.
David Moatazedi: Backroath is supported by a strong commercial engine. In the quarter, we added 675 new purchasing accounts, bringing our total to more than 16,000 of the 30,000 estimated in the category.
David Moatazedi: On a consumer side, our loyalty program continues to serve as a competitive differentiator, driving repeat usage and increasing brand engagement.
David Moatazedi: We reached a new record this quarter with over 220,000 redemptions, 65% of which came from existing consumers, underscoring the high-level consumer satisfaction and repeat treatment.
David Moatazedi: Our repeat treatment rate indicates that once consumers try to vote, loyalty bills, traction increases, and its leads to sustainable growth.
David Moatazedi: Building on that foundation, we officially launched Aveli Torm and Aveli Smooth on April 18th in the US.
David Moatazedi: We are encouraged by the strong early momentum. This marks our evolution into a multi-product company.
David Moatazedi: Prior to launch, we conducted extensive research with both consumers and professionals to better understand market dynamics and identify how Avelese could be uniquely positioned for success
David Moatazedi: A key insight was the shifting consumer sentiment surrounding the word filler, which is contributed to lower engagement in the category.
David Moatazedi: To address this, we introduce a bold initiative, drop the F-word, encouraging clinicians to shift the conversation from filler to harmonic asset.
David Moatazedi: This new lexicon emphasizes HA as a natural ingredient in the body, which resonates with consumers seeking a natural look.
David Moatazedi: The early response to our drop the effort campaign has been overwhelmingly positive with many practices embracing the message on social media and aligning themselves with the effort to reframe the narrative and replace filler with injectable H.A.
David Moatazedi: Our differentiated go-to-market strategy with Evelief expands beyond redefining the category.
David Moatazedi: The Koldex technology is first in class and designed to create a more natural H.H.L. Prada.
David Moatazedi: Our clinical data demonstrates statistical superiority versus one of the market-leading HHLs, and our label is first in class with the mention of weight loss. These combined factors have reinvigorated a depressed market.
Early interest in Avelese has significantly exceeded expectations.
David Moatazedi: Several thousand clinicians attended our launch webcast, and several thousand more have viewed the on-demand recordings. We've already sampled nearly 2,000 customers, and early ordering activity is strong.
David Moatazedi: The strength of our commercial platform is evident as Avelis is outperforming the initial launch of Jubucks.
David Moatazedi: As we expand our presence, we're taking a discipline strategic approach to the launch strategy focused on building long-term customer relationships and deepening our presence within existing accounts.
David Moatazedi: Evelese is already proving to be a powerful complement to Jibbo. This broader offering enhances our value proposition and sets the stage for continued share gains and long term growth.
David Moatazedi: We are operating from a position of strength both strategically and financially and we remain confident in our past forward. As market conditions evolve, the early success of Avelis is providing new momentum, reinforcing our growth and engagement across the portfolio.
David Moatazedi: We are reaffirming our full-year revenue guidance of $345 million to $355 million on track for a six consecutive year of over 30% growth
David Moatazedi: Our growth engine is built to scale, and we have clear visibility into the levers that will continue to drive performance in the months ahead.
David Moatazedi: Evolus is gaining competitive ground, capturing share and solidifying its position as a performance beauty company with a growing product portfolio. With that, I'll turn it over to Sandra to watch through the financial details.
Sandra: Thank you, David. As I answer the second quarter, Avelis is well positioned to deliver on our full-year guidance.
Sandra: With a challenging market backdrop in the first quarter, we have continued to deliver meaningful growth, multiple above the market, effectively navigating the dynamic market environment in our last quarter as a single product company.
Sandra: As we recently announced, we have taken pro-active steps to efficiently strengthen our balance sheets with our debt refinancing, providing increased flexibility to support long-term growth.
Sandra: We have absorbed tariff impacts on medical devices within our previously announced guidance and continue to build a solid foundation to support the launch of Eveli.
Sandra: These achievements reflect the strong execution across the organization and that the value of our business model resonates with our customers.
Sandra: Now, let me take you through the details of our first photo performance.
Sandra: Global net revenue for the first quarter was $68.5 million, a 15.5% increase over the first quarter of 2024
Sandra: U.S. product revenue accounted for approximately 94% of total sales for the customer reorder rate of approximately 70%.
Sandra: Notably, we also saw a continued momentum internationally, where revenue contributions increased and is expected to continue to outpaste U.S. growth. Further validating the strong growth trajectory of our cost and business outside of the U.S.
Sandra: Sales growth in the first quarter was primarily driven by higher volumes and market share means while pricing remained stable.
Sandra: As David mentioned, considering our outside market performance in the first quarter, we have rebalanced the market dynamics reflected in our guidance.
Sandra: To elaborate further on those dynamics, we edited 2024 with a 14% share, which is 1% above what was originally implied in our 2025 guidance, and continued to gain share in the first quarter.
Sandra: 1% of market share gain has a value of over 20 million in revenue on an annual basis, and 1% of market growth has a value of approximately 3 million in revenue on an annual basis, or 1.7% of the value of market share gain.
Sandra: Given these dynamics, we have reduced our market growth assumptions from high-thinkers to low-thinkers and factored our current share position, remaining confident in our projected 2025 revenue guidance.
Thank you for watching!
Sandra: Our reported gross margin for the first quarter was 68.1%, and adjusted gross margin was 69.2%, which excludes the amortization of intangible.
For more information, visit www.FEMA.gov
Sandra: On the topic of tariffs, our exposure is limited to the transfer price of our products, which is accounted for in cost of goods sold and included in both our reported and adjusted growth of carbon.
Sandra: Our injectable tyoeronic acid gel, Eveline, is soared from france and is currently subject to a 10% tarot which went into effect on April 5th and is expected to increase to 20% under live
Sandra: The impact of this tariff is estimated at less than $2 million for 2025 and has been incorporated into our planning assumptions with no impacts to our guidance.
Sandra: Evol overmeans unaffected by tariffs, as pharmaceuticals are currently exempt.
Sandra: That said, we are closely monitoring developments that are taking prudent and proactive measures to mitigate any potential exposures moving forward.
Sandra: With a three-year product shelf life, we are able to proactively manage inventory flows in the US.
Sandra: In addition, we have flexibility to absorb additional costs within our P&L, if necessary. Our high margin business provides capacity with engrossed margin, and we also benefit from meaningful leverage within our operating expense structure.
Sandra: These structural elements of our business give us multiple levers to manage through this dynamic environment effectively.
Thank you for watching!
Sandra: Gap operating expenses for the first quarter were $61.8 million up from $54.9 million in the fourth quarter. non-GAAP operating expenses for the first quarter were $52.9 million compared to $46.6 million in the fourth quarter.
Sandra: Non-GAQ operating expenses increased for the quarter to support the launch of Eveli.
Sandra: As a reminder, non-GAAP operating expenses exclude stock-based compensation expense, re-evaluation of the contingent royalty obligation, and depreciation and amortization.
Sandra: Within Operating Expenses, Delling General, and Administrative Expenses for the first quarter were 56.6 million, up from 50.2 million in the fourth quarter.
Sandra: Reflecting Investments in Growth and Commercial Expansion in support of our beliefs. This included $5.7 million of non-tash stock-based compensation compared to $5.8 million in the prior form.
[inaudible]
Sandra: Non-gas operating loss in the first quarter was $5.5 million compared to $0.9 million in Q1 of 2024. We are on track to profitability for the full year 2025 with positive non-gas operating income generated heavily in Q4 2025.
Sandra: Both non-dap operating expenses and non-dap operating income, exclusive stock rates compensation expense, re-evaluation of the contingent royalty obligation, and appreciation and amrization.
Sandra: Turning to the balance sheet, we ended the first quarter with 57.9 million in cash as compared with 87 million at the end of the fourth quarter. We expected this use of cash in the first quarter due to seasonality of revenue coupled with the timing of our annual bonus payment and inventory for stocking to support the launch of Evelief.
Sandra: On Monday, we announced that we further strengthened our financial position for refinancing of our debt facility.
Sandra: Under favorable market conditions, we were able to reduce interest expense, increase in tax generation, and at incremental optional capacity to ensure non-dilutive access to capital to support strategic growth initiatives.
Sandra: With this new facility, we achieved three key structural improvements. First, we reduced our borrowing cost by 350 basis points on current interest rates.
Sandra: Second, we converted from an amortizing structure to a bullet maturity payment due in 2030, which reduced with reduced pre-payment fees.
And third, we added incremental available capacity of $100 billion.
Sandra: The senior secured turn loan is up to 250 million in three charges.
Sandra: 150 million being drawn upon the execution of the agreement, and at our discretion, we may draw up to two additional branches of 50 million each through December 31, 2026.
Sandra: These 2nd and 3rd trances are available with no additional performance conditions or financial
Sandra: In addition, by staying with our existing lender, this transaction was very cost-effective, avoiding any free payment fees on the existing facility and additional consideration of only 1% of the drawn value for the new facility.
Sandra: As we look beyond 2025, we remain on track to achieve total net revenue of at least 700 million by 2028.
Sandra: We anticipate long-term underlying, healthy aesthetic market growth, driven by high-sensitum room stress and low penetration for facial injectable.
Sandra: Our revenue growth will be driven by continued performance in our mirror crossing business, both in the US and internationally.
Sandra: Along with an increasing contribution from our novel line of Injectible, Hyaluronic Assets Jells, which launched within the US in Q2 2025 and will launch internationally in the second half of 2025 [inaudible]
Sandra: Achieving this revenue milestone equates to a compound annual growth rate of 27% from 2024.
and Nareg Sagherian. And I'm Nareg Sagherian. Thank you.
Sandra: Additionally, by leveraging our highly synergistic infrastructure, we expect to expand non-gas operating income margins and target at least 20% for 2028.
Sandra: With that context in mind, we are constantly reiterating our guidance for the full year 2025, which includes the following [inaudible]
Sandra: Total net revenues are expected to be between 345 million and 355 million, which represents a 30 to 33 percent growth from our 2024 results. We anticipate that Evelief, Injectible H.H. Jowls will contribute 8 to 10 percent of total revenue in 2025.
Sandra: non-GAAP Operating Expenses are expected to be between 230 million and 240 million driven primarily by continued investments in expanding Djibault in the U.S., Gaili Naseva International and supporting the launch of Evelief and esteem injectable HHL.
Sandra: We expect to achieve profitability, positive non-gavel operating income on a consolidated basis for the full year 2025.
Sandra: Non-depth operating income is anticipated to be achieved back to the launch of Emily Storm and Emily Smooth.
Sandra: Given the timing of investments being concentrated in Q2 2025 and revenue contribution weighted towards the second half of the year, we expect that non-gas operating income will be generated in Q4 2025.
Sandra: As a point of note, other modeling assumptions for 2025 include quarterly interest expense of 3.6 million reduced from our previously communicated assumption of 4.5 million and full year weighted average shared upstanding of approximately 63 million.
Sandra: With that, I will now turn the call back to the operator to begin Q&A.
Speaker Change: Thank you. As a reminder, ladies and gentlemen, if you would like to ask.
Speaker Change: and a question that is star one on your telephone keypads. If you need to remove yourself from the queue, please press star two. And again that is star one for a question. We'll take our first question from Annabel, Sammy Mead, with Steve Old, please go ahead.
Speaker Change: Thanks for taking my question. So I just want to get a little bit of more color on market trends here so we all listen to the various competitors conference calls to assess this market and you know all the comments were pretty cautious on the difficult environment for fillers but just curious from your discussions with injectors.
Speaker Change: as you prepare for this launch. How much of this is demand changes due to macroeconomic factors and how much is it away? How much of it is a broader trend away from filler usage because exactly that? That?
Speaker Change: and a trend towards more natural use, and if it's the latter...
Speaker Change: Then I guess your campaign makes sense but if it's a former I just want to know how you feel about launching into this market and then while we're talking about the market contraction we're seeing the same for neuromodulators which tends to be a pretty resilient market so what's changed there?
and then one last question on the tariffs. Yes, I...
Speaker Change: Is it clear that neuromodulators are considered a pharmaceutical product right now as opposed to a consumer product if you're an aesthetic, you have an aesthetic use as opposed to a medical use. So just want to get your understanding there. Thanks.
Thank you for watching!
Okay.
Speaker Change: A couple of questions there. Annabel, maybe I'll take the first two, and then turn over to Sandra, talk a little bit about tariffs. As far as the market for fillers, whether it's the filler word or the category or procedure volume, I think it's both in fairness. We saw the filler market, see some pressure as consumers spend started to reduce. And that's...
Speaker Change: Persistent now across companies for a number of quarters and we do believe that are the research we did and the early read we're getting from the market is that [inaudible]
The term filler itself is...
Speaker Change: has been viewed negatively and HAs have been lumped into that in the shift to talking about HAs in a positive light. The big insight with consumers was many of them are using HAs or familiar with HAs because they're available in the number of over-the-counter ingredients. [inaudible]
Speaker Change: Is it when you talk to them about an injectable form of A.J.? [inaudible]
Speaker Change: It has them looking at the categories through a completely different lens and in this case because we have a unique new technology that's designed to create a more natural gel. It actually plays really well into debunking this idea that fillers are unnatural. And our clinicians that we've partnered with have clung onto that because, as you just said, a combination of procedure volume being down and a negative sentiment around the word filler.
This is an opportunity to revive.
David Moatazedi, Rui Avelar, Nareg Sagherian
Speaker Change: by bringing our full-year assumptions to the market into single digits.
Speaker Change: Keep in mind we wrap around on what will be a depressed back half. [inaudible]
Speaker Change: of the year when we get there this year. And so I think our assumptions are in line with that. I do believe, you know, the toxic market has never gone into negative growth. And so we don't assume that on the full year it will be a negative growth. We have seen quarters where that happens, but not on the full year. So we feel that this is something that over the next quarter called Q2 will wrap around on a positive growth environment for the back half of the year. And I'll turn it over to Sandra. I'll turn it over to Sandra.
Sandra: Annabel, thanks for the question. Yeah, it's a relief to Tara.
Sandra: Obviously at this stage with pharmaceuticals, we don't know the nature of what tariffs may or may not be applied and how they will be enacted across any geography or otherwise any specific distinction. However, as we do import the product today, the classification of the product is as a pharmaceutical and it is assigned as such by the customs and duties of it.
Okay. That's helpful. Thank you. Thank you.
Speaker Change: And if I could ask one more question, with the additional capital available, do you have anything specifically in mind that you're going to do with this additional capital or is it just a question for you?
Speaker Change: Yeah, I think we had a really opportunistic moment in time to get a great transaction done with the re-financing of our capital facility. And as we know it, that facility goes out to 2030 for maturity. So ensuring that we created enough capacity that we had the ability to access capital in a non-diluted way at our discretion with very favorable terms and the events that we were to have something that could provide meaningful growth to the business, this gave us the opportunity.
to create that capacity.
Speaker Change: I think, as you know, we're very dilution sensitive. We're also very capital-assissioned. We're very thoughtful about how we invest as we noted with the transactions we've historically done with the MSA. We were very thoughtful about how we invested that money. And we will continue to be as disciplined as we have historically been in any use we might have applied for this additional capacity.
Great, thank you.
Thank you.
Speaker Change: We'll take our next question from Marc Goodman with Lee Rink Parton.
Speaker Change: David, just to lump onto the last question about the market dynamic, I mean there was something really funky going on in fourth quarter and first quarter with respect to add V having trouble with their loyalty program.
So...
Speaker Change: Is that what has just caused the mess in the market, or if you exclude that factor and just say, you know, the market has slowed a little bit more? I'm just trying to dissect between the two. And then second of all, have y'all announced the pricing on the filler yet for some reason I haven't seen it?
Speaker Change: Hey, Marc. This is David. A couple of things. One is we are aware of the changes in the loyalty program for Abby. Abby.
Speaker Change: and for Q1 in particular, which is when those changes we believe impact the revenue more meaningfully, are share assumptions that Sandra outlined, reflect.
Speaker Change: There's some assumptions around that additional impact of those rebates. So as a result, you don't see an outside shared growth in the end of the day.
Speaker Change: in the first quarter on our side but we do believe we continue to gain share even when you factor for the Consumer Loyalty Program and that's...
Speaker Change: That's why we do believe there's been a significant outperformance but it does factor for that and that does my comments around the overall market to reflect that as it relates to Q4 and Q1 and we'll see that continuing to keep mine. We look at a number of factors beyond what companies report. We look at transactional data at the point of sale. We also have consumer loyalty data to understand consumer behavior. So we're triangulating through a number of points and we do believe that direction we have a really good reflection where the markets go.
Thank you for watching.
and Evolus Pracing.
Speaker Change: Yeah, on Adely Price, we don't disclose our price publicly as relates that but consists of what we said before we launched that we are priced in line with the market leading products on the market and we've also introduced
Speaker Change: A loyalty program in our portfolio where customers that participate in our Avalox program, they earn pricing benefits on Avalese, as they purchase more just as they do on Jubo, and for accounts that purchase both products.
Speaker Change: Jeuvo and Avelis, not only do they get the pricing benefits, they earn with competitive programs. In addition to that, they're going to earn more co-brand and media now with the introduction of Avelis, that they're total purchasing combined between both products.
Speaker Change: Determines the total co-branded media spend and that is a differentiated program from anything offered in the space because I'll see our cash pay focus enables us to do that. And that's very exciting because you'll see a lot of new ideas in the back half of this year with our focus around the mention of weight loss and evolution and the co-branded media dollars will be directed partly towards that.
Thanks
Speaker Change: Thank you and we'll take our next question from the Van Tai with BNP Parabob, please go ahead.
Speaker Change: Hi, thanks for taking my question. Can you discuss your confidence into reiterating the 2025 revenue
Van Thai: After the squatter, do you expect maybe an extra step to performance or higher evidence than initially expected or anything else? And can you also provide and share early metrics that allow comparison of evidence versus the jewel launches? Thank you.
Speaker Change: Thanks, Navann. As far as your first question on the confident reiteration of our 2025 guidance, we've actually seen two quarters of slower market growth within the face of that slower market growth and accelerated share uptake by our product. Right? So we have performed exceedingly well where the market's been a little bit pressured. Thank you very much.
Speaker Change: and so we saw it consistently over Q4 and then we saw it again even more meaningfully in Q1. So at this stage we're actually tracking well ahead of this 14% share that we're implying in our revised.
for Underline Assumption.
Speaker Change: Whereas we historically had assumed a high single digit market of 13% share, we're now assuming a 14% share which we are already ahead of and a low single digit market. And as I mentioned on the call, that market growth is a 7x factor to that share number right so for every one percent of [inaudible]
Speaker Change: Markett, you can have one seventh chair gain to fully offset it. And so with us being able to capture that high share, we're really confident that we continue to be in a good position to deliver on this guidance in this market. Thank you very much.
Speaker Change: And I'll take the second question as it relates to the...
Speaker Change: Launch Update, of course, we're not in position to talk about revenue. The second quarter is really about sampling and educating customers. I'll tell you that we're really pleased with the activity at the between the marketing and the commercial teams and that's why we're seeing such strong results. At the end of March, we trained our national sales organization on Avelese and we launched the product the week of April 7. [inaudible]
Speaker Change: And in just about a month, we deployed a program called The Ice Trial, which gave...
A number of clinicians over a thousand across the U.S. [inaudible]
Speaker Change: Primarily high volumes of O-Users, the ability to trial the product. So we trained them on it and then they were able to trial it. On April 18th we deployed a webcast with several key opinion leaders. [inaudible]
Speaker Change: We're aware that, you know, roughly 20% of those are not currently Avelist customers, so we're really pleased [inaudible]
Speaker Change: to see that the composition included some more existing customers and others that are interested in partnering with us. And since then, we've been equal as many joined the live replay. And will we compare against?
Are early metrics for Jubello again, the same parameters.
Speaker Change: Of course, it's different law and strategy, the numbers are quite different and so we have a high degree of confidence that this product is off to an incredibly fast start.
Speaker Change: Of course we'll wait until we're through with the second quarter before we can give you further color but we're really pleased with the response we're getting to early uptake and we do know on social media we're generating more noise in any other competitive product that's launched in the in the recent several years as well so the activity all around triangulate so very strong uptake early on.
Thanks. Thanks. Thanks. Thank you.
Speaker Change: Next, we'll go to Ili Ear with Mizuhou, please go ahead.
Speaker Change: Inventory stocking I mentioned for emulation the call Charles was related to the first quarter cash use rate as we prepared for the launch we were bringing the inventory and proactively to be prepared to get the products into customers and are stocking rapidly doesn't extend out into next year specific to being prepared for the launch itself.
Speaker Change: And as far as our early.
Speaker Change: Views on adoption.
Speaker Change: You said first of all underlying early.
Speaker Change: And then point out that some of the research we did our existing customers 99% of them said they are interested in trialing or at least when it comes out and then they would be willing to potentially adopt so long as the product performed so our launch focus with the ice program that I mentioned was targeting our existing <unk> customers and we are.
Speaker Change: <unk> seen a very open and that's too high openness to wanting to learn about the product and to start trailing at their patients and the early feedback we're getting is very positive in that group. So.
Speaker Change: Think about the initial launches of high overlap against our existing customer base.
Speaker Change: Great. Thank you.
Speaker Change: And we'll next go to Serge Belanger with Needham. Please go ahead.
Serge Belanger: Hey, good afternoon.
Serge Belanger: Another question regarding the market trends are more on seasonality just curious if the usual step down between Q4 and Q1 was more pronounced than usual this year may be affected by the macro.
Serge Belanger: Or if we could see.
Serge Belanger: If that could portend, a big bounce back for <unk>, and then regarding tariffs it sounds like Atlas.
Serge Belanger: <unk> can take some action to mitigate the impact of potential pharmaceutical tariffs that could come in the coming weeks, but just curious if you've seen any.
Serge Belanger: Behavior changes regarding <unk>.
Serge Belanger: Purchases by injectors.
Serge Belanger: If you're buying an additional product ahead of these tariffs.
Serge Belanger: Thanks.
Speaker Change: Yeah, I'll comment just on seasonality in the market. There's a few factors here to think about the first is I think the market has had a fairly consistent seasonality in that Q4 is the strongest quarter followed by the second quarter and then you generally see Q3 and Q1 being lower than those we bought.
Speaker Change: That trend historically as we've had as you vote brand. It has grown consistently over 30% our implied guide this year on jumbo reflects growth that's in the high teens to low 20%. So naturally you would expect that as our growth moderates that will start to fall more in line with the traditional seasonality that you've seen historically the only thing.
Speaker Change: Thats unique now and in this year that you'd want to think about seasonality as we started to see some slowing in the back half of last year will wrap around on that so you want to think about the reflected growth rates are back half market versus prior year, and then of course, a slightly slower front half of the year relative to what we saw in the front half last year.
Speaker Change: I think if you're thinking debit to that way you'd end up in a similar place to where we did where you end up with the market growing sort of in this low single digit range, which we believe is the proper view to have based on how we've seen the last couple of quarters trending.
Speaker Change: Hey, first as it relates to your question on tariffs I think obviously, we're all anticipating news that may come in yet to get more specificity on the pharmaceutical care and we're also preparing wisely for that information to come across as I outlined in the call. We're taking in as much inventory at this.
Speaker Change: Reasonable to make sure that we are protected for some period of time against the tariffs.
Speaker Change: We also have a lot of flexibility in our P&L and I think as others have quoted they are also taking their own mitigating actions as it relates to ensuring that protecting the terror.
You said that given that the industry is preparing as we are there's not an immediate.
Speaker Change: You that any of us would be passed on to the practice. So we have not seen the practices changing any of their own purchasing behavior anticipation about potentially right.
Speaker Change: Alright.
Speaker Change: Okay. Thank you.
Speaker Change: Next we'll go to Douglas Tsao with H C. Wainwright. Please go ahead.
Speaker Change: Okay.
Douglas Tsao: Hi, good afternoon. Thanks for taking the questions just I'm curious in terms of the broader market are you seeing softness with any particular segments and how is it manifesting is it people youre seeing fewer new patient starts of practices being new fewer new patients where are they seeing patients sort of spread out their treatments more thank you.
Speaker Change: Sure.
Speaker Change: What we're hearing consistently is a slight slowing in their schedules and that is reflected primarily in new patients and we're seeing some early signs of extension of the intervals between treatments, but keep in mind the toxin procedures. So affordable for these consumers that were seeing a very.
Speaker Change: Small increase on that level. So we do believe largely existing patients are sticking with it that's not as much a driver in this is it is new patients coming into the category.
Speaker Change: And then we also continue to see very strong adoption in our loyalty program, which is a good indicator of outside demand.
Speaker Change: There's a more of a wallet consideration, but it's been consistent with our historical trends if nothing extraordinary outlined about it and it continues to move up into the right.
Speaker Change: Strong indicators that patient demand is still strong.
Speaker Change: Okay, great. Thank you.
Speaker Change: And it's worth pointing out we don't see any further deterioration either because we watch this closely on a monthly basis, we see sort of this consistent pattern here and that's why we expect it to continue through the front half of the year, we're not seeing further step downs or anything like that.
Speaker Change: And our last question comes from Sam <unk> with BTG. Please go ahead.
Speaker Change: Hey, good afternoon, thanks for taking the questions here, maybe I can start on the.
Speaker Change: The police launch and I know, it's still early days here, but how should we think about the halo effect that could have on the toxin business and any details on how you're thinking about the opportunity whether it's I'm getting into accounts that maybe you don't want to work with a one product company.
Speaker Change: Or even driving deeper penetration into existing accounts now with the filler product.
Speaker Change: Yes, we think Apple lease creates a meaningful opportunity for gibeau overtime.
Speaker Change: As I mentioned before we are surprised that roughly 20% of those who joined our webcast had never worked with Apple is indicating a level of interest that we're hearing across the country that account that we were struggling to get into are interested and willing to trials Applebee's now of course, that's it.
Speaker Change: Two step conversation it starts with <unk> and the product performing them experiencing the product seeing that in patients and they'll want to follow some of those patients over time in some accounts and then of course as they have a good outcome and we established that relationship with them, we form our partnership between our <unk> rewards program our consumer.
Speaker Change: Media that we do around these accounts and TBM then it opens the door to our different education platform for us to talk about <unk>.
Speaker Change: We do know that the.
Speaker Change: There is going to be a direct relationship between accounts trial at least and adopt it and their willingness to trial <unk> and so we're looking forward to that I'd. Just say initially at launch we don't expect that to be a driver for <unk>. We think that's a bigger idea for 2020.
Speaker Change: Yeah.
Speaker Change: Thanks for taking the question.
Speaker Change: Yes.
David Moatazedi: Thank you all for your questions at this time I'd like to turn the call back over to David <unk>, President and Chief Executive Officer for closing comments David.
David Moatazedi: Thank you we delivered a strong start to the year, achieving key milestones that underscore the strength of our commercial model and strategic execution in a moderating aesthetics market. We gained share in the U S continued our rapid growth internationally successfully launched <unk> and strengthened our financial foundation through our highly <unk>.
David Moatazedi: Verbal refinancing.
David Moatazedi: <unk> continues to perform ahead of the market and early results from ever lease confirm its potential to be a meaningful growth driver and category disruptor with a proven operating model a disciplined approach to investment and a compelling expanded portfolio, we are well positioned to deliver another year of robust growth.
David Moatazedi: About 30% and profitability, we remain on track to achieve at least 700 billion in net revenue and 20% non-GAAP operating income margin by 2028.
David Moatazedi: <unk> is advancing as a leader in performance beauty and we remain confident in our ability to continue delivering meaningful long term value for our shareholders.
David Moatazedi: We have reached the end of our call you may disconnect your lines.
David Moatazedi: Hello.
David Moatazedi: [music].
David Moatazedi: Yes.
David Moatazedi: [music].