Sign in

You're signed outSign in or to get full access.

AB

AYTU BIOPHARMA, INC (AYTU)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 revenue was $16.2M, down vs Q2 FY24 ($18.7M) and slightly below Q1 FY25 ($16.6M); gross margin fell to 66% on high-cost ADHD inventory from the shuttered Grand Prairie facility .
  • Net income was $0.8M (basic EPS $0.13; diluted EPS $(0.26)) driven by a $3.0M derivative warrant gain from a lower stock price; adjusted EBITDA was $1.3M (7th straight positive) .
  • ADHD revenue was $13.8M (down YoY; up 16% sequential on an adjusted basis excluding a $3.3M Q1 one-time) and Pediatric revenue rebounded to $2.4M (+86% QoQ), with first simultaneous sequential RX growth in both portfolios since late 2022 .
  • Management reiterated at least $2M annualized OpEx savings, gross margin normalization toward low-to-mid 70% as high-cost inventory sells through, and continued pursuit of tuck-in BD; expects revenue and adjusted EBITDA growth from current levels as it strives for positive cash flow .
  • Consensus estimates (S&P Global) were unavailable at query time, so we cannot quantify beats/misses this quarter.*

What Went Well and What Went Wrong

What Went Well

  • Pediatric portfolio re-accelerated: net revenue rose 86% sequentially to $2.4M as coverage and distribution broadened; management cited organic drivers, not one-time effects .
  • ADHD pricing/gross-to-net improved sequentially: on ~99k scripts, ADHD net revenue was $13.8M vs an apples-to-apples $11.9M in Q1 ex one-time rebate, reflecting stronger net price realization .
  • Profitability optics improved: seventh consecutive quarter of positive adjusted EBITDA ($1.3M) and second straight quarter of net income, supported by cost controls and a $3.0M derivative warrant gain .

What Went Wrong

  • Gross margin compression to 66% (from 78% YoY) due to higher-cost ADHD inventory as production transitioned out of the Grand Prairie facility; normalization expected after sell-through .
  • YoY revenue decline to $16.2M (from $18.7M) driven by lower ADHD sales YoY amid normalized stimulant supply and tough comps, partially offset by Pediatric growth .
  • Operating income swung to a $1.7M loss from $3.1M income in Q2 FY24; adjusted EBITDA declined YoY to $1.3M from $5.5M as lower revenue and gross margin pressure outweighed OpEx savings .

Financial Results

Consolidated P&L snapshot

MetricQ2 FY24Q1 FY25Q2 FY25
Revenue ($M)$18.748 $16.574 $16.221
Gross Profit ($M)$14.603 $11.985 $10.786
Gross Margin (%)78% 72% 66%
Selling & Marketing ($M)$5.218 $5.659 $5.272
General & Administrative ($M)$4.800 $5.125 $4.449
R&D ($M)$0.521 $0.426 $0.522
Amortization of Intangibles ($M)$0.918 $0.921 $0.921
Restructuring Costs ($M)$— $0.784 $1.317
Operating Income (Loss) ($M)$3.146 $(0.930) $(1.695)
Net Income (Loss) ($M)$(0.220) $1.474 $0.788
Basic EPS ($)$(0.04) $0.24 $0.13
Diluted EPS ($)$(0.04) $(0.15) $(0.26)
Adjusted EBITDA ($M)$5.459 $1.931 $1.273

Segment net revenue

MetricQ2 FY24Q1 FY25Q2 FY25
ADHD Portfolio ($M)$16.572 $15.264 $13.816
Pediatric Portfolio ($M)$2.145 $1.293 $2.400
Other ($M)$0.031 $0.017 $0.005
Total Net Revenue ($M)$18.748 $16.574 $16.221

KPIs

KPIQ2 FY24Q1 FY25Q2 FY25
ADHD prescriptions (approx)~111,000 ~99,000 >99,000
Cash & Equivalents ($M)—$20.108 $20.398

Estimates vs Actuals (S&P Global)

  • S&P Global consensus data were unavailable at query time; estimate comparisons could not be produced this quarter.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue trajectoryFY25Rx revenue expected to be ahead of FY24 Expect revenue growth from current levels Maintained
Adjusted EBITDA trajectoryFY25Adjusted EBITDA expected to be ahead of FY24 Expect adjusted EBITDA growth from current levels Maintained
Gross margin outlookMulti-quarterRx GM ~75% post inventory transition GM to normalize to low–mid 70% as high-cost inventory sells through Maintained/clarified
OpEx savingsRun-rate≥$2.0M annualized savings communicated in Q1 FY25 ≥$2.0M annualized savings; incremental G&A cuts to flow through from Q3/Q4 Maintained
Cash flowMulti-quarterDrive toward positive cash flow Strive for positive cash flows Maintained
Dividends—None mentionedNone mentioned—

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY24, Q1 FY25)Current Period (Q2 FY25)Trend
ADHD market normalization & compsSupply shortages boosted prior results; baseline reset higher; script units up; cautious on gross-to-net variability ~99k scripts; sequential net revenue up 16% ex Q1 one-time; per-script net price improved Stabilizing volumes; sequential improving net price
Pediatric payor coverage & distributionPayer changes pressured volumes; early Q1 signs of recovery; expanding coverage and promotion $2.4M (+86% QoQ); gains driven by Medicaid/commercial coverage and broader footprint; no one-time effects Recovery underway; momentum building
Manufacturing transition & gross marginFacility closure; Rx GM 75% in FY24; normalization expected post sell-through GM 66% on high-cost inventory; normalization expected in coming quarters Short-term GM headwind; medium-term normalization
Cost optimizationOpEx reductions; refi improved interest costs; ≥$2M annual savings plan Reiterated ≥$2M annual savings; ~12 headcount reduction late Q2; more benefits in Q3–Q4 Savings flowing through from Q3
Seasonality & RxConnectDeductible resets pressure gross-to-net early year; RxConnect supports access Expect greater RxConnect price protection usage in Q3; GTN improves as year progresses Typical seasonal GTN pattern
Legal/regulatoryGovernance changes (split Chair/CEO); litigation ongoing Shareholder litigation now “behind us” per 10-Q notes and management Reduced overhang
Business development (BD)Platform leverage; tuck-ins contemplated Active BD under CDA; focus on CNS/pediatrics; small/no upfronts preferred Gradual, disciplined BD approach

Management Commentary

  • “We successfully returned both our ADHD and Pediatric portfolios to positive sequential prescription growth… first such occurrence… since late-2022… Our goal remains firmly focused on generating positive cash flows and increasing stockholder value.” — CEO Josh Disbrow .
  • “ADHD net revenue was up 16% sequentially on an apples-to-apples basis… our per script net price actually increased sequentially.” — CEO Josh Disbrow .
  • “Gross margin… 66%… primarily related to increased cost of sales… higher cost [ADHD] inventory… expected to be liquidated in the coming quarters… resulting in a normalization of gross profit percentage.” — Press release .
  • “We expect… at least $2.0 million in cost savings annually beyond the expense reductions we have already achieved.” — CEO Josh Disbrow .
  • “We continue to expect net revenue and adjusted EBITDA growth from current levels as we strive for positive cash flows.” — CEO Josh Disbrow .

Q&A Highlights

  • ADHD revenue scalability: Management views $16–$17M quarterly ADHD revenue as feasible with market growth and share gains as normalization continues .
  • Pediatric rebound drivers: No one-time effects; growth primarily from antihistamine (Karbinal ER); multivitamins believed to have bottomed; broader commercial coverage and distribution cited .
  • Medicaid/commercial coverage: Expanded coverage across multiple states without supplemental rebates; improved margins; diversified geography reduces reliance on any single state .
  • Cost savings cadence: Additional ~$2M annualized savings mainly from G&A and vendor reductions; benefits to start showing in Q3–Q4; ~12 net headcount reduction late in Q2 .
  • BD pipeline: Active under NDA/CDA; targeting CNS and pediatric assets with small/no upfronts and near-term accretion; disciplined balance-sheet approach .
  • Legal overhang: Management indicated shareholder litigation matters are now resolved as per 10-Q footnotes and outcomes .

Estimates Context

  • S&P Global consensus estimates for Q2 FY25 (revenue, EPS, EBITDA) were unavailable at query time due to a data access limit, so we cannot present beats/misses this quarter.*
  • Given the qualitative updates (ADHD sequential net price improvement, Pediatric rebound, GM headwind from high-cost inventory), we expect Street models to: (i) raise Pediatric revenue run-rates, (ii) trim near-term gross margin assumptions (Q3 seasonal GTN pressure), and (iii) reflect OpEx savings ramp in Q3–Q4 .

Key Takeaways for Investors

  • Pediatric recovery is real and organic, led by Karbinal ER and broadened coverage/distribution; this diversifies revenue away from ADHD concentration .
  • ADHD net revenue quality improved sequentially (higher net per script) despite flat scripts; suggests gross-to-net and pricing discipline are working .
  • Near-term gross margin pressure (66%) should ease as high-cost legacy inventory sells through; watch for GM improvement starting after next few quarters .
  • Cost structure is tightening further (≥$2M annualized OpEx cuts), with most benefits landing in Q3–Q4; this lowers revenue breakeven and supports cash flow goals .
  • Seasonality matters: Q3 typically sees heavier RxConnect support due to deductible resets, temporarily pressuring gross-to-net before improving later in the year .
  • Legal overhang appears diminished; governance/process enhancements and case resolutions lower risk profile .
  • Optionality from tuck-in BD remains, but management is disciplined on cash; small CNS/pediatric additions leveraging RxConnect/sales force could be accretive .

* Estimates from S&P Global were unavailable at the time of request due to access limits; therefore, beats/misses versus consensus could not be determined this quarter.

Citations:

  • Q2 FY25 8-K press release and financials:
  • Q2 FY25 earnings call transcript:
  • Q1 FY25 8-K press release and financials:
  • Q4 FY24 earnings call transcript:
  • Legal/other Q2-period 8-K: