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AGILE THERAPEUTICS INC (AGRX)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 2023 net revenue was $6.70M, up 21% QoQ and 122% YoY; gross margin expanded to 63% from 58% in Q2, driven by stronger factory sales across channels and improved mix lowering gross-to-net deductions .
  • Management reaffirmed full-year 2023 net revenue of at least $25M and guided to positive cash flow from operations in Q1 2024, shifting the narrative from survival to self-funding as gross margin improves .
  • Operating expenses fell modestly to $8.2M (-2% QoQ, -11% YoY), while GAAP net loss narrowed to $0.8M ($0.27 per share) aided by non-cash warrant remeasurement; non-GAAP net loss was $4.3M ($1.47 per share) .
  • Demand and factory sales reached new highs: total cycles up 33% QoQ and 147% YoY; retail cycles +13% QoQ; non-retail +71% QoQ; wholesalers’ inventory levels “stabilized” in 2023—key supports for ongoing growth and margin expansion .

What Went Well and What Went Wrong

What Went Well

  • “We once again achieved all-time highs across several leading indicators, including net revenue, Twirla demand, factory sales, and gross margin,” underscoring execution consistency and operating leverage as revenue scales .
  • Gross margin expanded to 63% (from 58% in Q2) on mix and gross-to-net benefits; gross profit rose to ~$4.2M (from $3.2M in Q2) .
  • Non-retail channel acceleration (+71% QoQ cycles) alongside retail growth (+13% QoQ) and factory sales growth (+20% QoQ) demonstrates multi-channel momentum and stabilization of wholesaler inventories .

What Went Wrong

  • Liquidity remains tight: cash was $2.9M at 9/30/23; management continues to evaluate financing options despite positive cash flow guidance for Q1 2024 .
  • GAAP profitability still negative; results subject to volatility from non-cash warrant remeasurement, complicating earnings predictability and investor interpretation .
  • Full-year revenue outlook narrowed to “at least $25M” from $25–$30M previously, effectively removing the upper bound and signaling prudence amid execution and mix dynamics .

Financial Results

MetricQ1 2023Q2 2023Q3 2023
Revenue ($USD Millions)$3.813 $5.503 $6.700
Gross Profit ($USD Millions)$1.810 $3.196 ~$4.200
Gross Margin %47% 58% 63%
GAAP EPS ($USD)-$5.91 -$2.15 -$0.27
Non-GAAP EPS ($USD)-$7.76 -$3.10 -$1.47
Operating Expenses ($USD Millions)$8.518 $8.322 $8.200
Cash ($USD Millions, period-end)$4.429 $2.785 $2.900
Weighted Avg Shares (Millions)0.912 1.770 2.950
MetricQ3 2023Q2 2023Q3 2022Consensus (S&P Global)vs Consensus
Revenue ($USD Millions)$6.700 $5.503 $3.000 N/A (S&P Global consensus unavailable)N/A
GAAP EPS ($USD)-$0.27 -$2.15 -$8.01 N/A (S&P Global consensus unavailable)N/A
Non-GAAP EPS ($USD)-$1.47 -$3.10 -$26.58 N/A (S&P Global consensus unavailable)N/A
Gross Margin %63% 58% N/AN/A (S&P Global consensus unavailable)N/A

KPIs

KPI (Cycles)Q1 2023Q2 2023Q3 2023
Twirla Demand – Total Cycles45,036 55,687 74,325
Retail Demand – Cycles30,576 35,682 40,196
Non-Retail Demand – Cycles14,460 20,005 34,129
Factory Sales – Cycles43,446 61,770 74,424

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net RevenueFY 2023$25–$30M At least $25M Lowered (upper bound removed)
Operating ExpensesFY 2023Full-year OpEx lower than FY 2022 Full-year OpEx lower than FY 2022 Maintained
Cash Flow from OperationsQ1 2024Not providedExpect positive cash flow from operations New
Gross MarginFY 2023/near-termNot quantified“Continued improvement” implied by mix/GTN Qualitative only

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2023)Previous Mentions (Q2 2023)Current Period (Q3 2023)Trend
Promotional focus in five key statesInitiated focus; targets ~45% of U.S. women 18–24 Continued focus; basis for second-half growth Ongoing; room for growth via increased prescriber penetration Up/Executing
Afaxys network (non-retail growth)Non-retail factory sales +15% QoQ; Planned Parenthood drive Non-retail cycles +38% QoQ; added FPA Women’s Health/MMCAP Reaching <20% of Afaxys network; plan to tap more volume Up/Underpenetrated
Telemedicine platforms (Nurx, TwentyEight Health, Pandia)Nurx collaboration expected to impact retail channel Telemedicine footprint expanding to support retail growth Telemedicine highlighted as part of retail growth strategy Up/Scaling
Wholesaler inventory stabilizationWorkdown in Q1 (inventory -24% vs 12/31) Stabilized in Q2 Stabilized in 2023 Stabilized
Gross-to-net improvementsSlightly higher non-retail mix pressured GTN in Q1 Improved mix drove lower GTN in Q2 Improved mix led to lower GTN in Q3 Improving
Financing/liquidityATM in place; evaluating financing options Post-May offering; continued evaluation of options Cash $2.9M; continue evaluating financing to bridge to positive CFO Near-term constrained

Management Commentary

  • “We once again achieved all-time highs across several leading indicators, including net revenue, Twirla demand, factory sales, and gross margin… We believe this plan will… help us begin to generate positive cash flow from operations in the first quarter 2024.” — Al Altomari, Chair and CEO .
  • “We believe our continued focus on revenue growth and fiscal discipline can help us achieve our 2023 net revenue goal of at least $25 million… and, in turn, help us begin to generate positive cash flow from operations in the first quarter 2024.” — Al Altomari .
  • “We set single-quarter record highs in demand, net revenue and factory sales, all while reporting another quarterly decrease in operating expenses… focus is on accelerating future growth and achieving 2023 net revenue of $25-$30 million.” — Al Altomari (Q2 context) .
  • “Strong, focused external relationships… allow us to expand without incurring significant costs… foundation for our confidence in continued Twirla growth in the second half of 2023.” — Amy Welsh, CCO (Q2 context) .

Q&A Highlights

  • Management emphasized multi-channel demand drivers (Afaxys network expansion, retail growth via telemedicine) and sustained gross-to-net improvement underpinning margin expansion and positive cash flow target for Q1 2024 .
  • Clarifications around inventory levels indicated stabilization, reducing volatility in factory sales and aiding forecasting reliability .
  • Liquidity and financing flexibility remained a focus, with ATM capacity and evaluation of alternatives to bridge to self-funded operations .
  • Note: Full transcript access via internal tool was unavailable; validated thematic points rely on company disclosures and referenced transcript sources (Seeking Alpha/InsiderMonkey/MarketScreener). Transcript links:

Estimates Context

  • S&P Global/Capital IQ consensus estimates were unavailable for AGRX in our SPGI mapping; as a result, formal comparisons to Wall Street consensus could not be performed (S&P Global consensus unavailable) [GetEstimates tool error].
  • Investors should focus on the company’s reaffirmed FY 2023 net revenue target (≥$25M) and Q1 2024 positive cash flow guidance to anchor near-term expectations .

Key Takeaways for Investors

  • Momentum broad-based: demand, factory sales, and margin all improved QoQ; net revenue reached $6.7M (+21% QoQ; +122% YoY) and gross margin rose to 63% .
  • Mix and channel strategy working: retail cycles grew +13% QoQ, non-retail +71% QoQ, indicating stronger monetization and margin conversion as Afaxys and telemedicine initiatives scale .
  • Liquidity risk persists near term (cash $2.9M), but path to Q1 2024 positive operating cash flow is a potential inflection catalyst if execution and margin trajectory hold .
  • FY revenue guidance narrowed to “at least $25M,” signaling prudence; watch Q4 demand and mix to assess upside vs prior $25–$30M framework .
  • Operating discipline continues: OpEx declined to $8.2M; ongoing management of expenses provides leverage as volumes grow .
  • Stock narrative drivers: confirmation of positive cash flow timeline, continued gross margin expansion, and evidence of deeper Afaxys penetration (<20% reached to date) could re-rate the equity as financing reliance recedes .
  • Risk factors: warrant-related non-cash volatility in GAAP results, low absolute liquidity, and execution risk in scaling underpenetrated channels and state-focused promotion .

Appendix: Source Documents

  • Q3 2023 8-K and press release (Exhibit 99.1): net revenue, margin, demand, guidance, and financial metrics .
  • Q2 2023 8-K and press release (Exhibit 99.1): prior quarter demand, margin, guidance, and operational updates .
  • Q1 2023 8-K and press release (Exhibit 99.1): initial year setup for demand/mix and OpEx trajectory .
  • Q3 2023 press release on GlobeNewswire for cross-verification:
  • Q3 2023 transcript references: