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biote Corp. (BTMD)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue was $46.8M (+4.4% y/y), with gross margin expanding to 71.4% (+~240 bps y/y); Adjusted EBITDA rose to $14.2M (30.2% margin), while GAAP net loss was $(5.8)M or $(0.06) diluted EPS .
  • Procedure revenue increased 6.6% as established clinics drove growth; nutraceutical revenue fell 11.3% due to a large distributor’s exit, with management expecting nutraceutical growth to resume in H2 2024 .
  • Guidance reaffirmed: FY 2024 revenue $200–$204M and Adjusted EBITDA $60–$63M, with results weighted to H2 on BioteRx rollout, nutraceutical channel transition, and Asteria integration benefits .
  • Capital allocation catalyst: definitive settlement and staged repurchase of founder’s 18.4M shares (first tranche $32.2M at $4.17/share) and cancellation of 3.9M unvested earnout shares; later agreement to repurchase ~8.3M shares from Ms. Donovitz and cancel ~4.0M earnout shares (total 26.7M shares repurchased, ~8.0M earnouts canceled) .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded to 71.4%, aided by product mix and cost management; Adjusted EBITDA grew 8% y/y with margin >30% .
  • Procedure revenue +6.6% y/y driven primarily by top-tier existing clinics; onboarding quality and pace improved via Quick Start program .
  • Strategic execution: BioteRx phased launch in February with positive patient/practitioner feedback; Asteria Health acquisition closed, advancing vertical integration and expected margin accretion in H2 2024 .
    • “We successfully launched BioteRx… greatly expanding our long-term growth opportunities.” — CEO Teresa Weber .
    • “We reaffirm previously reported guidance… performance to be weighted towards the second half.” — CFO Robert Peterson .

What Went Wrong

  • GAAP net loss $(5.8)M driven by $(12.1)M loss from change in fair value of earnout liability; diluted EPS $(0.06) .
  • Nutraceutical revenue down 11.3% y/y due to distributor exit; management cautioned consolidated gross margin could revert toward historical levels as nutraceutical sales resume growth in H2 .
  • Near-term integration cadence: potential slower Q2 uptake as Asteria licenses and clinic inventories transition, with acceleration expected H2 2024 .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$45.6 $45.7 $46.8
Diluted EPS ($)$0.24 $0.18 $(0.06)
Gross Profit Margin %68.9% 69.4% 71.4%
Operating Income ($USD Millions)$7.6 $5.5 $10.4
Adjusted EBITDA ($USD Millions)$14.0 $13.6 $14.2
Adjusted EBITDA Margin %30.8% 29.7% 30.2%
Net Income Margin %43.1% 26.4% (12.4)%

Segment breakdown (reported revenue categories):

MetricQ3 2023Q4 2023Q1 2024
Product Revenue ($USD Millions)$44.831 $44.935 $46.035
Service Revenue ($USD Millions)$0.726 $0.768 $0.769

KPIs:

MetricQ3 2023Q4 2023Q1 2024
Procedure Revenue ($USD Millions)N/A$34.9 $37.4
Cash and Equivalents ($USD Millions)$65.575 $89.002 $78.787

Notes:

  • Q1 y/y performance: Revenue +4.4%, procedure revenue +6.6%, adjusted EBITDA +8%, gross margin +~240 bps .
  • Nutraceutical revenue declined 11.3% y/y in Q1; expected to resume growth in H2 2024 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$200–$204 $200–$204 Maintained/reaffirmed
Adjusted EBITDA ($USD Millions)FY 2024$60–$63 $60–$63 Maintained/reaffirmed

Context:

  • Initial 2024 outlook (Jan 17): “> $200M revenue” and “> $60M Adjusted EBITDA” before narrowing into ranges in March; ranges maintained in May .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023)Previous Mentions (Q4 2023)Current Period (Q1 2024)Trend
BioteRx launch (therapeutic wellness)Commercial trials across ~30 providers; strong interest (sexual health, weight, preventive wellness) Nationwide launch planned Q1 2024; rollout methodical; modest 2024 impact, more in 2025 Phased launch began mid-February to first 100 providers; positive feedback; expansion to 500 in phase two Scaling through 2024; competitive strength now, revenue contribution later
Procedure revenue driversGrowth tempered by ASP discounts and GLP-1 demand diverting capacity Stability in procedure growth; optimization of top-tier providers +6.6% y/y; majority from existing top-tier clinics; Quick Start improving new clinic ramp Stable-to-improving cadence; H2 acceleration targeted
Nutraceutical distributionModerate growth; absence of promo impact Distributor exited; plan to bring Amazon channel in-house by end Q2 2024 Nutraceutical revenue −11.3%; margin uplift from lower nutraceutical mix near-term; growth to resume H2 Transition in H1; growth resumption H2
Asteria (vertical integration)N/AExpected closing by end of March; margin accretion in H2 2024; full integration by year-end Closed; licensing state-by-state; some Q2 lag; majority pellet production internal by year-end subject to licenses Integration progressing; H2 margin tailwind
Geographic expansion & trainingOptimization of territories; hybrid/online training explored Plan to accelerate onboarding; hybrid training viewed positively Expansion outside core markets “going very well”; more immersive training; Quick Start effective Broadening footprint; onboarding pace improving
Capital allocation: repurchases & litigationN/ASettlement to repurchase founder’s 18.4M shares at ~$4.17; $20M buyback program First $32.2M tranche repurchased; later additional agreement for ~8.3M shares at ~$7.23 avg and cancel ~4.0M earnouts Share count reduction; potential EPS accretion

Management Commentary

  • “Adjusted EBITDA increased 8%, outpacing revenue growth, and we generated an adjusted EBITDA margin in excess of 30%.” — CEO Teresa Weber .
  • “We reaffirm previously reported guidance… performance to be weighted towards the second half of the year.” — CFO Robert Peterson .
  • “BioteRx… is progressing well, with both patients and practitioners responding favorably… we plan to continue to expand BioteRx throughout our network.” — CEO Teresa Weber .
  • “We believe Asteria Health advances our strategic objectives… enabling Biote to develop innovative wellness therapies.” — CEO Teresa Weber .
  • “Gross profit margin… was favorably impacted by lower nutraceutical sales… as nutraceutical sales resume growth… consolidated gross profit margin should revert to historical levels.” — CFO Robert Peterson .

Q&A Highlights

  • Mix of growth drivers: ~three-quarters of procedure growth from existing clinics; strategy to lift second-tier clinics into top tier; higher-quality new customer adds from improved targeting and Quick Start .
  • BioteRx rollout cadence: 10 products launched mid-February to 100 providers; phase two targeting ~500 providers; GLP-1 demand prevalent; 2024 revenue contribution modest (transaction fee model), greater potential post full integration .
  • Asteria integration: aim for majority pellet production internal by year-end subject to licensing; Q2 slower uptake due to timing and clinic inventory bleed-down .
  • Guidance cadence: H1 impacted by nutraceutical transition and promotions; H2 acceleration expected via procedure focus, new customer onboarding, nutraceutical retail channel shift (Amazon in-house) .
  • Geographic expansion: strong uptake in new markets; training enhancements to accelerate ramp .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2024 EPS and revenue was unavailable at the time of writing due to data access limits. Management reaffirmed FY 2024 guidance ($200–$204M revenue; $60–$63M Adjusted EBITDA), implying H2-weighted trajectory that may anchor street models toward back-half acceleration and margin benefits from Asteria integration .
  • As nutraceutical sales resume and mix normalizes, consolidated gross margin is expected to revert toward historical levels, which may temper current margin uplift in consensus margin assumptions .

Key Takeaways for Investors

  • H2-weighted setup: Reaffirmed FY guidance and repeated H2 acceleration call as nutraceutical channel transition completes, BioteRx scales, and Asteria integration contributes margin — a potential catalyst path for estimate stability and back-half upward revisions .
  • Margin dynamics: Near-term gross margin uplift (71.4% in Q1) benefited from lower nutraceutical sales; management expects reversion toward historical levels as nutraceuticals resume growth, while Asteria integration offers offsetting margin accretion in H2 .
  • Procedure growth durability: +6.6% y/y in Q1 driven by existing clinics with targeted efforts to elevate second-tier providers; onboarding quality improving via Quick Start, supporting H2 cadence .
  • BioteRx is strategic, not yet financial: Positive early adoption and competitive positioning in therapeutic wellness; modest 2024 revenue model (transaction fees) with greater potential as vertical integration and licensing mature .
  • Share count reduction: Founder share repurchase (first tranche $32.2M) and subsequent agreement to repurchase ~8.3M shares from Ms. Donovitz/cancel ~4.0M earnouts reduce overhang and may be EPS-accretive over time .
  • Cash and flexibility: $78.8M cash at Q1 with operating cash generation; supports integration, repurchases, and selective investments in training/technology .
  • Risks to monitor: Licensing pace for Asteria across states; nutraceutical channel execution; gross margin reversion as mix normalizes; GLP-1 demand impact on clinic capacity .

Appendix: Additional Data Points

  • Subsequent event (Q1 press): Settlement with founder to repurchase 18.4M shares at $4.17/share average; first tranche $32.2M completed April 26; cancelation of 3.9M unvested earnout shares .
  • Additional PR (June 20): Binding term sheet with Ms. Donovitz to repurchase ~8.3M shares over three years at ~$7.23 average and cancel ~4.0M earnout shares; combined with founder agreement totals 26.7M shares repurchased and ~8.0M earnout shares canceled .