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biote Corp. (BTMD)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 delivered double-digit revenue growth and margin expansion: revenue $51.4M (+12.8% QoQ, +12.8% YoY), gross margin 70.5% (+160 bps YoY), and Adjusted EBITDA $16.2M with a 31.5% margin; diluted EPS was $0.33, aided by a $7.2M gain from earnout fair value changes .
  • Management cut FY2024 guidance to revenue $197–$201M and Adjusted EBITDA $58–$61M, citing temporary procedure volume headwinds from clinical decision support software (CDSS) workflow changes and hurricane-related clinic closures; they expect reacceleration in 2025 .
  • Vertical integration (Asteria Health) is improving cost structure and resilience: ~30 state licenses, ~50% of volume converted, and gross margin gains attributed to manufacturing integration .
  • Dietary supplements returned to YoY growth (+21.7%), helped by an Amazon channel transition; BioteRx continues to expand, now enrolled at >1,100 clinics, but remains a modest direct revenue contributor in 2024 .
  • Near-term stock reaction catalysts: guidance reduction (temporary headwinds), visible gross margin improvement from vertical integration, and management’s confidence in procedure growth reacceleration in 2025 .

What Went Well and What Went Wrong

What Went Well

  • Margin improvement and profitability: gross margin rose to 70.5% (+160 bps YoY), Adjusted EBITDA increased to $16.2M (31.5% margin) on improved sales and cost management .
  • Strategic execution: vertical integration via Asteria drove cost savings; CDSS enhancements broaden patient coverage and strengthen competitive moat (“true game changer”) .
  • Dietary supplements rebound: nutraceutical revenue grew 21.7% YoY as distribution transition and Amazon improvements took hold .
    • “By leveraging our proprietary patient dataset and algorithms, we believe we have further strengthened Biote’s competitive advantages in the marketplace.” — CEO Teresa Weber .

What Went Wrong

  • Temporary procedure disruption: CDSS workflow changes and hurricanes created short-term headwinds; management cut FY2024 guidance accordingly .
  • Earnout/warrant fair value effects distort GAAP comparability: Q3 net income included a $7.2M earnout fair value gain (vs. $17.5M last year), impacting YoY EPS comparability .
  • SG&A elevated in H1 and moderated in H2; while aligned to growth investments, it pressured Q2 profitability (Adjusted EBITDA margin 25.9% vs. 29.5% prior year) .

Financial Results

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$45.6 $46.8 $49.2 $51.4
Gross Profit Margin %68.9% 71.4% 68.9% 70.5%
Operating Income ($USD Millions)$7.6 $10.4 $6.2 $12.2
Net Income ($USD Millions)$19.6 $(5.8) $(10.5) $12.7
Diluted EPS ($USD)$0.24 —$(0.19) $0.33
Adjusted EBITDA ($USD Millions)$14.0 $14.2 $12.7 $16.2
Adjusted EBITDA Margin %30.8% 30.2% 25.9% 31.5%

Segment and KPI detail:

  • Product vs Service revenue (reported):
    MetricQ3 2023Q3 2024
    Product Revenue ($USD Millions)$44.8 $49.8
    Service Revenue ($USD Millions)$0.726 $1.578
  • Procedure revenue and nutraceuticals:
    KPIQ3 2023Q3 2024
    Procedure Revenue ($USD Millions)—$37.9
    Dietary Supplement Revenue YoY Growth (%)—+21.7%
  • Operating cash and cash:
    KPIQ2 2024Q3 2024
    Cash from Operations YTD ($USD Millions)$17.3 (Q2 run-rate) $32.9 YTD
    Cash & Cash Equivalents ($USD Millions)$26.4 (Q2-end) $38.2 (Q3-end)

Non-GAAP notes:

  • Adjusted EBITDA excludes stock-based compensation, litigation expenses, legal settlements, transaction/M&A costs, and fair value adjustments (earnout, warrant) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2024$200–$204 $197–$201 Lowered
Adjusted EBITDA ($USD Millions)FY 2024$60–$63 $58–$61 Lowered

Drivers cited: residual Q4 procedure impact from CDSS training support and hurricane-related clinic closures delaying procedures into early 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024)Previous Mentions (Q2 2024)Current Period (Q3 2024)Trend
Clinical Decision Support Software (CDSS)Planned proprietary CDSS to tailor care; launch BioteRx and innovation center concept Preparing major enhancements and algorithm updates; broadened panels and dosing precision CDSS enhancements launched; temporary workflow disruption; rebound underway; competitive “game changer” Near-term headwind, long-term positive
Vertical Integration (Asteria Health)Acquisition closed; focus on licenses, productivity gains; capital-light Integration progressing; conversion phased; margin impact baked into guidance ~30 licenses; ~50% volume converted; ~100 bps margin improvement; ongoing expansion Strengthening margin/supply chain
Dietary Supplements / AmazonTransition of e-commerce; expected H2 growth -32.2% YoY (lap promo); distribution change; H2 growth expected +21.7% YoY; Amazon improvements driving growth Rebound and accelerating
GLP-1 Regulatory / OfferingBioteRx formulary; future 503(B) internal options Platform includes GLP-1s on shortage; future production line considered Offering tirzepatide/semaglutide where allowed; immaterial to overall business Managed exposure, low revenue impact
Hurricanes / Macro——Helene/Milton clinic closures impacted procedures (Q3–Q4 timing) Transitory timing effect
New Clinics / QuickStartLaunch of QuickStart; 30% YoY new clinics; H2-weighted ~600 BioteRx enrolled; strong onboarding; H2 inflection expected >1,100 BioteRx clinics; continued network expansion; top-tier focus Structural growth driver

Management Commentary

  • “We are confident our updated Clinical Decision Support software represents a key competitive differentiator for Biote… we expect some residual impact to procedure revenue in the fourth quarter of 2024.” — Teresa Weber, CEO .
  • “Third quarter gross profit margin was… a 160 basis point increase… reflected cost savings from the vertical integration of Asteria Health.” — Robert Peterson, CFO .
  • “We anticipate procedure revenue growth will reaccelerate in 2025.” — Teresa Weber, CEO .
  • “We now forecast 2024 revenue of $197 million to $201 million and adjusted EBITDA of $58 million to $61 million.” — Robert Peterson, CFO .
  • “BioteRx… is a modest contribution from BioteRx in 2024… minor contribution expected in 2025.” — Teresa Weber, CEO .

Q&A Highlights

  • BioteRx scope and economics: Contribution is modest in 2024–2025; functions as a platform/marketplace with transaction fees; focus on expanding internal manufacturing over time .
  • Amazon channel: Distribution transition “going according to plan” with line-of-sight to accelerated growth into Q4 and 2025; no major mix shift expected near term .
  • Asteria integration: ~30 state licenses; ~50% volume converted; margin improvement observed; continued expansion expected, with some state outliers (e.g., California) potentially slower .
  • Hurricanes/CDSS impact quantification: ~2.5 percentage points headwind to YoY procedure growth in Q3; demand and loyalty remain solid; recovery visible, requires continued training support .
  • GLP-1 offering: Provided where drug shortages exist; competitive access for providers; immaterial to the broader business .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2024 EPS/Revenue/EBITDA was unavailable at time of analysis due to data access limitations; comparisons to consensus cannot be provided. Values retrieved from S&P Global were unavailable.
  • Given the FY2024 guidance reduction and stated Q4 residual headwinds, near-term sell-side estimates are likely to adjust lower for Q4 and FY2024, with 2025 revisions hinging on CDSS adoption normalization and continued margin benefits from vertical integration .

Key Takeaways for Investors

  • Q3 showed resilient topline and margin execution: revenue $51.4M, gross margin 70.5%, Adjusted EBITDA $16.2M (31.5%) — evidence that cost savings and mix can offset temporary operational headwinds .
  • Near-term caution: FY2024 guidance trimmed due to CDSS workflow and hurricane closures; expect lingering Q4 impact before reacceleration in 2025 .
  • Structural margin tailwinds: vertical integration (Asteria) is expanding state coverage and internalized production (~50% volume), contributing to incremental margin improvement .
  • Nutraceuticals inflecting positively: +21.7% YoY growth and Amazon channel control suggest improving mix and cash generation as transition matures .
  • BioteRx enhances moat but remains a small direct revenue driver near term; potential upside longer term as more products move in-house and provider adoption deepens .
  • GAAP comparability remains noisy due to fair value adjustments (earnout/warrant); focus on Adjusted EBITDA/margins and cash flow to assess underlying trajectory .
  • Tactical positioning: watch Q4 procedure trends, CDSS training progress, Asteria license additions, and Amazon storefront metrics for early signs of 2025 acceleration .