Q1 2024 Summary
Published Feb 5, 2025, 2:18 AM UTC- Strong procedure revenue growth driven by existing and new clinics: Procedure revenue increased by 6.6% year-over-year in Q1 2024, primarily due to growth in existing top-tier clinics and contributions from new clinics onboarded at a higher rate. The Quick Start program is performing better than it has since 2019, giving new practitioners a head start in providing hormone optimization treatments.
- Positive reception of BioteRx expanding long-term growth opportunities: The launch of BioteRx, a new suite of hormone and wellness therapies, has received very positive responses from both providers and patients. The initial rollout to 100 providers showed good results, and the second phase will focus on 500 new providers, indicating potential for significant growth in this segment.
- Strategic acquisition of Asteria Health enhances efficiency and manufacturing capabilities: The integration of Asteria Health is underway, aiming to strengthen control over the supply chain and achieve full vertical integration of manufacturing. This vertical integration is expected to lead to productivity gains in pellet manufacturing and improve the company's competitive position.
- Growth is heavily reliant on existing clinics rather than new ones, which may limit future expansion opportunities. According to CEO Teresa Weber, the primary growth of 6.6% year-over-year in procedures is from existing clinics, with new clinics contributing less significantly.
- Potential delays and uncertainties in integrating Asteria Health may impact expected efficiencies. The company acknowledged that obtaining state licenses for Asteria's operations could be challenging, especially in states like California, which may delay the full vertical integration and cost benefits anticipated from the acquisition.
- New product offerings (BioteRx) are expected to make only a nominal contribution to revenue in 2024, limiting short-term growth prospects. Teresa Weber stated that the new products will have a very nominal contribution on those new products in that we're getting a transaction fee. We're not actually manufacturing those products yet.
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Future Revenue Growth
Q: Is 6.6% procedure growth the bottom?
A: Management believes the 6.6% procedure growth seen in Q1 is consistent with expectations and is confident that growth will accelerate in the second half of the year. This acceleration is expected to be driven primarily by the core business gaining momentum rather than new products, with solid plans in place for improvements in Q3 and Q4. -
Margin Outlook and P&L Evolution
Q: How will margins evolve with new products and vertical integration?
A: While new products like BioteRx currently contribute nominally through transaction fees, management anticipates that over time, especially with vertical integration efforts like the Asteria acquisition, margins may improve as they bring production in-house. However, precise impacts on the P&L are not yet specified, and the company does not have immediate plans to execute a full integration. -
Asteria Acquisition Integration
Q: When will you shift production to Asteria facility?
A: Management expects to shift the majority of pellet production to the Asteria facility by year-end, pending state licenses and regulatory approvals. This shift should improve operational efficiencies without significant capital investments, though timelines may vary based on state-specific licensing processes. -
Procedure Growth Breakdown
Q: How much of 6.6% growth came from existing clinics vs new?
A: The majority of the 6.6% procedure growth in Q1 was from existing clinics, particularly top-tier clinics and efforts to elevate second-tier clinics. New clinics contributed to growth to a lesser extent, providing a base to build upon over the next 18 months, with the Quick Start program enhancing early engagement. -
New Product Rollout
Q: Feedback on 10 new products and rollout plans?
A: The initial rollout of 10 new BioteRx products to 100 clinics has been very positive, with both providers and patients responding well to the additional offerings and quick delivery. Management plans to expand to 500 additional providers in the next phase, systematically rolling out through 2024 to ensure consistent access, especially for popular products like GLP-1s. -
Expansion Outside Core Markets
Q: What's the pace of expansion outside core markets?
A: Geographic expansion is progressing well, with strong uptake in new markets and an experienced sales force targeting qualified providers. Management expects continued growth through the rest of the year, with results becoming evident in the second half of '24 and into '25 as new markets develop. -
New Product Pipeline
Q: Update on R&D and new product pipeline?
A: Management is developing new therapeutic wellness products targeting healthy aging, with efforts led by functional medicine expert Dr. Doreen Saltiel. The focus is on ensuring access in all 50 states and consistent delivery. While encouraged by progress, they note that the innovation process is ongoing and not immediate. -
New Clinic Adds
Q: How are new clinic adds this quarter versus past?
A: While specific numbers are not provided, the company is seeing higher-quality new customers and is coming off one of its best years since 2018 in onboarding new clients. The effective Quick Start program has contributed significantly to this success, with a strong focus on targeting and indexing qualified providers.