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AYTU BIOPHARMA, INC (AYTU)·Q3 2025 Earnings Summary

Executive Summary

  • AYTU delivered a strong Q3 2025: net revenue $18.45M (+32% YoY) and adjusted EBITDA $3.94M, with positive operating income ($2.42M) and net income $3.99M; diluted EPS from continuing operations was $0.20 .
  • Results materially beat thin Wall Street consensus: revenue $18.45M vs $13.74M* and EPS $0.20 vs -$0.17*, driven by ADHD (+11% seq) and Pediatric (+27% seq) portfolio growth and improved gross-to-net management; coverage remains limited (only 1 estimate)* .
  • Gross margin was 69% (vs 74% YoY, vs 66% in Q2) as high-cost ADHD inventory from the shuttered TX facility worked through; management expects margins to normalize to low-to-mid 70% as inventory clears .
  • Management reiterated cost discipline (OpEx down 13% YoY) and noted cash of $18.2M with receivables collections of ~$19M in April, strengthening near-term liquidity; CFO indicated breakeven ~ $15M quarterly revenue (operational) and ~$13.1M for operating cash breakeven .

Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Revenue growth broad-based: ADHD net revenue +25% YoY to $15.4M; Pediatric +77% YoY to $3.1M; sequential ADHD +11%, Pediatric +27% .
  • Operating leverage: OpEx (ex amortization and restructuring) down to $9.5M (-$1.3M YoY), producing $2.4M operating income and $3.9M adjusted EBITDA .
  • CEO on strategy: “The multi-year, strategic realignment… is beginning to fully manifest in our financial performance” and the RxConnect platform drove GTN improvements; “we utilized the opportunity to further improve the balance sheet” .

What Went Wrong

  • Gross margin compression YoY to 69% (from 74%), due to higher-cost ADHD inventory from the closed Grand Prairie, TX facility; expected to normalize as inventory sells through .
  • Derivative warrant liabilities gain ($2.26M) materially lifted GAAP net income, obscuring underlying EPS quality; last year’s comparable also had a $1.02M gain .
  • Prior year Pediatric payer issues reduced the baseline; while recovery is underway, management does not expect a full return to historical ~$25M annual Pediatric run-rate .

Financial Results

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD)$16.574M $16.221M $18.452M
Gross Profit ($USD)$11.985M $10.786M $12.806M
Gross Margin %72% 66% 69%
Operating Income ($USD)$(0.930)M $(1.695)M $2.421M
Net Income ($USD)$1.474M $0.788M $3.994M
Diluted EPS - Continuing ($USD)$(0.20) $(0.28) $0.20
Adjusted EBITDA ($USD)$1.931M $1.273M $3.943M

Segment breakdown

Segment Net Revenue ($USD)Q3 2024Q2 2025Q3 2025
ADHD Portfolio$12.326M $13.816M $15.389M
Pediatric Portfolio$1.729M $2.400M $3.059M
Other$(0.030)M $0.005M $0.004M
Total Net Revenue$14.025M $16.221M $18.452M

KPIs and balance sheet indicators

KPIQ1 2025Q2 2025Q3 2025
Operating expenses (ex amortization/restructuring)$11.2M $10.2M $9.5M
Cash and cash equivalents$20.108M $20.398M $18.173M
Accounts receivable, net$23.159M $25.403M $35.825M
Revolving credit facility (current)$4.270M $4.012M $10.028M
Debt (non-current)$10.430M $9.983M $9.535M
Adjusted EBITDA$1.931M $1.273M $3.943M

Results vs. Estimates (S&P Global)

MetricQ3 2025 ActualQ3 2025 Consensus# of Estimates
Revenue ($USD)$18.452M $13.739M*1*
Primary/Diluted EPS - Continuing ($USD)$0.20 -$0.17*1*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue/EBITDA guidanceOngoingNone provided None provided Maintained
Gross margin trajectoryFY25Normalize as high-cost ADHD inventory sells through over coming quarters Expect GM to improve toward low- to mid-70% range Quantified/clarified
Operating expense optimizationAnnual run-rate≥ $2.0M annual savings beyond prior reductions Additional ~$2.0M annual reductions reiterated Maintained
Breakeven revenue levelsOngoingNot disclosed~$15M revenue/qtr for operational breakeven; ~$13.1M for operating cash breakeven New insight

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
RxConnect platform & GTN optimizationReset ADHD prescriptions above pre-shortage levels; leveraged RxConnect to improve affordability and access Significant GTN improvements across savings offers/rebates; >85% scripts through RxConnect network Strengthening
ADHD market supply dynamicsMarket normalizing post-stimulant shortages; Q2 ADHD revenue -17% YoY, +16% seq after adjustment ADHD revenue +25% YoY; +11% seq, organic growth as market stabilizes Normalized, growth resuming
Pediatric payer/coverageReturn-to-growth plan implemented; +54% seq in Q1; +86% seq in Q2 +77% YoY; +27% seq; expanded Medicaid coverage and prescriber diversification Recovery continuing
Manufacturing transition & COGSHigh-cost inventory from TX facility temporarily depresses margin; liquidation expected Margin 69% vs 74% YoY; expect low-to-mid 70% as inventory clears Improving ahead
Tariffs/macroNot highlightedMinimal tariff impact (U.S. manufacturing); monitoring fluoride policy changes and FDA study chatter Neutral to modest optionality
R&D/pipeline strategyClinical programs suspended; focus on Rx business Continued focus on commercial portfolio; exploring in-licensing/acquisitions in CNS Consistent
Business development (BD)Not specifiedTarget commercial-ready CNS assets aligned to psychiatry/pediatrics; valuations high, cash usage disciplined Active evaluation

Management Commentary

  • CEO: “The multi-year, strategic realignment to focus on our profitable prescription pharmaceutical business… is beginning to fully manifest in our financial performance.”
  • CEO on portfolios: “ADHD net revenue was up 25%… Sequentially… up 11%… Pediatric portfolio net revenue increased 77% YoY and 27% sequentially.”
  • CFO: “We expect to see our ADHD gross margins expand… with continued revenue growth, gross profit margins improve towards the low- to mid-70% range.”
  • CEO on BD: “Sweet spot… CNS space… commercial stage or ready to be marketed… aligned with RxConnect and payer strategy.”

Q&A Highlights

  • Organic quality of the quarter: No one-time stocking or transitory effects in ADHD or Pediatric; growth was organic and optimization-driven .
  • Sustainability: Management expects to maintain and grow ADHD levels; pediatric trajectory improving, but not back to historical ~$25M annually—“halfway back” is realistic .
  • BD pipeline: Gating factor is fit (CNS call-point, RxConnect leverage); valuations elevated; disciplined cash use; near- to mid-term asset addition targeted .
  • Macro/tariffs/regulatory: Tariff impact de minimis given U.S. manufacturing; monitoring fluoride policy and possible FDA study—limited near-term impact .
  • Breakeven math: ~$15M quarterly revenue for breakeven operations; ~$13.1M for operating cash breakeven at Q3 gross margin and OpEx levels .

Estimates Context

  • Q3 revenue beat: $18.45M actual vs $13.74M consensus*, a ~34% upside; diluted EPS (continuing) $0.20 vs -$0.17*, a major beat. Coverage was limited (1 estimate)*, implying estimates likely need upward revision for revenue, EBITDA, and EPS based on RxConnect-driven GTN improvements and portfolio momentum .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Profit inflection with operating income and strong adjusted EBITDA: operating discipline plus GTN improvements are driving margin expansion; watch high-cost inventory liquidation for GM lift toward low-to-mid 70% .
  • Portfolio breadth is working: ADHD growth resumed amid normalized market; pediatric recovery progressing with expanded Medicaid coverage and prescriber diversification .
  • Quality-of-earnings note: Derivative warrant gain ($2.26M) boosted GAAP net; adjusted EBITDA and operating income metrics provide cleaner operational signals .
  • Liquidity and collections: $18.2M cash at quarter end and ~$19M receivables collected in April support near-term flexibility for debt paydown and BD .
  • Breakeven framework: With OpEx ~ $9.5M (cash OpEx $9.3M), current margin profile implies ~$15M revenue for operational breakeven and ~$13.1M for cash breakeven, helpful for modeling .
  • BD catalysts: Management actively evaluating CNS assets that fit RxConnect and psychiatry/peds call points; potential accretive acquisition/in-licensing could be a medium-term catalyst .
  • Risk monitor: Policy changes around fluoride and payer coverage could affect pediatric; derivative liability volatility can swing GAAP EPS; maintain focus on sustained margin normalization and organic script trends .
Note: No additional Q3-specific press releases beyond the earnings 8-K were identified in the period; prior quarter materials were fully reviewed for trend context **[1385818_0001437749-25-016832_aytu20250213_8k.htm:1]** **[1385818_0001437749-25-003563_aytu20241121_8k.htm:1]** **[1385818_0001437749-24-034898_aytu20240909_8k.htm:1]**.