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AGILE THERAPEUTICS INC (AGRX)·Q4 2023 Earnings Summary

Executive Summary

  • Q4 2023 underwhelmed: net revenue fell 46% QoQ to $3.615M as demand dipped and gross-to-net deductions rose; FY23 still grew 80% YoY to $19.6M on stronger Twirla uptake .
  • Management cited increased Medicaid activity, higher returns reserve, and a larger non‑retail mix as primary drivers of Q4’s revenue shortfall; operating expenses fell 33% QoQ to $5.5M, reflecting tight cost control (no 2023 bonuses) .
  • Balance sheet actions dominated the quarter’s catalysts: Nasdaq delisting to OTC (Mar 26) and full payoff of the Perceptive debt facility (Mar 2024) to add flexibility; $4.8M gross proceeds from February warrant exercise bolstered liquidity .
  • Early 1Q24 signs showed demand rebound: January cycles were the highest retail month since launch; February totals exceeded any single month of Q4 in retail and total cycles, supporting management’s expectation of a 1Q recovery .

What Went Well and What Went Wrong

  • What Went Well

    • FY23 net revenue rose 80% YoY to $19.6M; Twirla demand and factory sales climbed 131% and 117%, respectively, underscoring structural growth despite a soft Q4 .
    • OPEX discipline: Q4 GAAP OPEX of $5.5M (–33% QoQ) and FY23 OPEX of $30.5M (–33% YoY) as the company forwent all 2023 bonuses; non-GAAP net loss also improved YoY .
    • Balance sheet de-risking: Perceptive debt fully repaid in March 2024, enhancing flexibility; February 2024 warrant exercise added $4.8M gross proceeds .
    • Management quote: “We believe we answered questions about our business model’s sustainability in 2023 by once again demonstrating meaningful year-over-year growth … while simultaneously keeping operating expenses at responsible levels.” .

  • What Went Wrong

    • Q4 revenue fell 46% QoQ to $3.615M on demand softness and higher gross‑to‑net deductions (more Medicaid activity, higher returns reserve, larger non-retail mix) .
    • FY23 revenue finished at $19.6M vs “at least $25M” guidance from Q3; management issued a preliminary 2023 range of $20–$21M in mid‑Feb before reporting actuals .
    • Delisting from Nasdaq to OTC on Mar 26 potentially reduces liquidity and raises financing frictions (company applied for OTCQB) .

Financial Results

MetricQ4 2022Q2 2023Q3 2023Q4 2023
Net Revenue ($M)$3.996 $5.503 $6.700 $3.615
GAAP Net Loss ($M)$(3.929) $(3.809) $(0.8) $(4.467)
GAAP EPS ($)$(0.10) $(2.15) $(0.27) (loss) $(1.51)
Non-GAAP EPS ($)$(8.82) $(3.10) $(1.47) $(1.46)
Gross Profit ($M)$2.343 $3.196 ~$4.2 $1.424
Gross Margin (%)—58% 63% —
GAAP Operating Expenses ($M)$9.219 $8.322 $8.185 $5.474

KPIs

KPIQ2 2023Q3 2023Q4 2023
Twirla Demand (cycles)55,687 74,325 68,793
Twirla Factory Sales (cycles)61,770 74,424 68,580
Retail Demand (cycles)35,682 40,196 —
Non‑Retail Demand (cycles)20,005 34,129 —

Balance Sheet and Liquidity (select items)

  • Cash: $2.5M at 12/31/23; $4.8M gross from Feb 2024 warrant exercise .
  • Shares outstanding: 2.964M at 12/31/23; weighted‑average shares FY23: 2.157M .
  • Perceptive debt: fully paid off in March 2024 (after extending maturity to Mar 11, 2024 via 8th amendment) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/UpdateOutcome/Change
Net RevenueFY 2023“At least $25M” (Nov 9, 2023) Preliminary $20–$21M (Feb 15, 2024) Actual $19.6M; lowered vs prior target
Operating Expenses (GAAP)FY 2023Below FY22 (run-rate perspective) Preliminary $30–$31.5M (Feb 15, 2024) Actual $30.5M; achieved
Cash Flow from OperationsQ1 2024Expected positive CFO in 1Q24 (Nov 9, 2023) Not reiterated in Mar 28 release; mgmt highlighted 1Q demand rebound Status unclear/await update
Access/Policy Tailwind2024+—Biden‑Harris guidance may expand no‑cost access; could remove financial barriers for ~49M women Potential upside tailwind

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2023)Previous Mentions (Q3 2023)Current Period (Q4 2023)Trend
Gross margin trajectory58% GM; improving on mix and scale 63% GM; further improvement Not disclosed; gross profit down with lower revenue Soft in Q4 on volume/mix
Channel mix & Medicaid/gross‑to‑netExpanding telemedicine; Afaxys/MMCAP relationships Non‑retail +71% QoQ; inventory stabilized Higher Medicaid activity, returns reserve, larger non‑retail mix drove higher GTN Mix headwind in Q4
Demand trajectoryDemand +24% QoQ Demand +33% QoQ; record levels Demand –7% QoQ; but Jan record retail month, Feb > any Q4 month Rebound in 1Q24
Partnerships & accessFocus on 5 key states, telehealth growth Afaxys reach <20%; plan to expand Policy tailwind from no‑cost contraception guidance Access improving
Liquidity & capital structureATM in place; raised May 2023 —Warrant exercise $4.8M; Perceptive repaid; moved to OTC De‑risked debt; listing change

Management Commentary

  • “We believe we answered questions about our business model’s sustainability in 2023 by once again demonstrating meaningful year‑over‑year growth in net revenue, Twirla demand, and Twirla factory sales while simultaneously keeping operating expenses at responsible levels.” — Al Altomari, CEO .
  • On Q4 softness and outlook: management expects Twirla demand to rebound in Q1 2024, pointing to record January retail cycles and strong February totals; emphasized continued focus on partnerships to maximize Twirla growth and explore strategic opportunities .
  • Corporate update highlights: Perceptive debt repaid in March 2024; Nasdaq delisting and OTC transition not expected to impact operations; optimism on federal guidance expanding no‑cost contraception access .

Q&A Highlights

  • The company stated there would be no Q&A session and the call consisted of prepared remarks only .
  • Prepared remarks reiterated FY growth, explained Q4 gross‑to‑net pressures, and pointed to early 1Q demand rebound and balance sheet improvements .

Estimates Context

  • S&P Global (Capital IQ) consensus data for AGRX Q4 2023 was unavailable via our SPGI feed at the time of analysis; as a result, we cannot provide definitive “vs. consensus” comparisons for revenue or EPS. We will update if/when S&P coverage becomes available.
  • Several third‑party sites reported expectations around the period, but per policy we anchor estimate comparisons on S&P Global and therefore do not cite non‑SPGI figures .

Key Takeaways for Investors

  • Q4 was a reset on mix and gross‑to‑net; FY trends still point to underlying demand growth. Watch 1Q24 demand rebound to confirm normalization post‑Q4 .
  • OPEX discipline is real and durable; full debt payoff removes a financing overhang and increases flexibility for growth initiatives or strategic options .
  • Listing move to OTC may dampen liquidity and widen spreads; application for OTCQB could help, but equity access may remain a watch item .
  • Policy tailwind: federal guidance on no‑cost contraception could expand addressable reimbursed demand; timing/implementation is key .
  • Near‑term trading setup: confirm 1Q demand inflection and GTN normalization; any updates on returning to positive operating cash generation would be a catalyst .
  • Medium‑term thesis: leverage partnerships (Afaxys, telehealth) to deepen penetration while holding OPEX flat to expand gross profit dollars and approach breakeven; monitor payer mix and returns dynamics .

Sources (Primary)

  • Q4 2023 8‑K (Press release and financials): Agile Therapeutics Reports Fourth Quarter & Full Year 2023 Financial Results and Provides Corporate Update (Mar 28, 2024) .
  • Q3 2023 8‑K (Press release): Reports Third Quarter 2023 Financial Results (Nov 9, 2023) .
  • Q2 2023 8‑K (Press release): Reports Second Quarter 2023 Financial Results (Aug 9, 2023) .
  • Feb 15, 2024 8‑K: Nasdaq extension and preliminary FY23 update; Perceptive maturity extension .
  • Delisting press release (Mar 25, 2024) .
  • Earnings call format (no Q&A) .