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OI

OptiNose, Inc. (OPTN)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 revenue of $14.9M grew 26% YoY and exceeded OptiNose’s prior guidance of ~$13.0M; average net revenue per Rx rose 63% YoY to $227 due to co-pay program changes, hub services, and a one-time Change Healthcare disruption impact .
  • FDA approved XHANCE for chronic rhinosinusitis without nasal polyps on March 15, expanding TAM up to 10x; management launched a specialist-focused campaign with 75 reps and expects FY 2024 net revenue of $85–$95M and average net revenue per Rx >$230 .
  • Operating discipline continued: Q1 SG&A+R&D of ~$21.7M vs $24.5M YoY; FY 2024 GAAP OpEx guided to $95–$101M with ~$6M SBC .
  • Balance sheet strengthened via $55M registered direct offering; post-offering cash of ~$100M expected to fund operations and debt service through 2025, with positive GAAP income from operations targeted for FY 2025 .
  • Stock catalysts: new indication ramp, payer/formulary updates (e.g., Express Scripts addition), revenue per Rx durability post-Q1 one-time boost, and execution versus FY 2024 guidance .

What Went Well and What Went Wrong

What Went Well

  • XHANCE net revenue beat internal guidance ($14.9M vs ~$13.0M); average net revenue per Rx increased 63% YoY to $227, reflecting co-pay program changes and hub implementation .
  • New indication approval materially expands market; CEO: “We estimate that the new indication grows the total addressable market by up to ten times…” .
  • Commercial launch readiness: 75 reps, ~35K sales calls planned in Q2, +50% samples, 1.5M HCP impressions and ~50K engagements; focus on profitable prescriptions .

What Went Wrong

  • Total prescriptions declined ~23% YoY as the company intentionally reduced unprofitable scripts, raising investor questions about underlying volume trends despite revenue growth .
  • Average net revenue per Rx benefited from a one-time Change Healthcare disruption; management expects this to be isolated to Q1, implying normalization risk for subsequent quarters .
  • Payer coverage operationalization pace varies; addition of chronic sinusitis to prior authorization forms is progressing but may take weeks to months across plans, adding timing uncertainty to the ramp .

Financial Results

MetricQ3 2023Q4 2023Q1 2024
Revenue ($USD Millions)$19.8 $19.9 $14.9
Net Loss ($USD Millions)$(9.3) $(10.0) $(14.1)
Diluted EPS ($USD)$(0.08) $(0.09) $(0.12)
Loss from Operations ($USD Millions)$(1.7) $(2.5) $(8.1)
SG&A + R&D ($USD Millions)$19.3 $20.2 $21.7
Avg Net Revenue per Rx ($USD)$236 $250 $227
Cash and Cash Equivalents ($USD Millions)$66.8 $73.7 $51.6

Margins vs prior periods and estimates:

  • EBIT Margin % (Operating Income Margin): Q3 2023, Q4 2023, Q1 2024 — Values retrieved from S&P Global.
  • Net Income Margin %: Q3 2023, Q4 2023, Q1 2024 — Values retrieved from S&P Global.
  • EBITDA Margin %: Q3 2023, Q4 2023, Q1 2024 — Values retrieved from S&P Global.
    Note: S&P Global consensus estimates for EPS/Revenue were unavailable for OPTN this quarter; therefore, estimate comparisons are limited. Values retrieved from S&P Global*.

Segment breakdown: Not applicable (single-product focus on XHANCE) .

KPIs

KPIQ3 2023Q4 2023Q1 2024
Avg Net Revenue per Rx ($)$236 $250 $227
Operating Expenses (SG&A+R&D, $M)$19.3 $20.2 $21.7
Cash & Cash Equivalents ($M)$66.8 $73.7 $51.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
XHANCE Net Revenue ($)FY 2024N/A$85.0–$95.0M Introduced
Avg Net Revenue per Rx ($)FY 2024~ $220 > $230 Raised
GAAP Operating Expenses ($)FY 2024N/A$95.0–$101.0M; ~$6.0M SBC Introduced
Net Income from Operations (GAAP)FY 2025Positive Positive Maintained
Peak-Year Net Revenue ($)Long-term≥ $300M ≥ $300M Maintained
LiquidityThrough 2025Going-concern risk noted YE23 Post-offering cash ~$100M; sufficient through 2025 Improved

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2023 and Q4 2023)Current Period (Q1 2024)Trend
Indication/RegulatorysNDA accepted; PDUFA Dec 16 (Q3) and Mar 16 (Q4) timelines FDA approved chronic sinusitis indication Mar 15; TAM up to 10x Positive resolution
Payer CoverageExpect contracts to contemplate expanded label; net pricing stable post-approval (Q3/Q4) Chronic sinusitis added to PA forms gradually; timing varies by plan Gradual improvement
Co-pay/Hub & Rx ProfitabilityCo-pay revisions increased avg net $/Rx (Q3/Q4) One-time Change Healthcare disruption boosted Q1 avg net $/Rx; hub live since Jan Structural gains with one-time tailwind
Sales Force/Launch ExecutionAlignment for CS; 75 territories (Q4) 75 reps; ~35K calls; +50% samples; 1.5M HCP impressions, ~50K engagements Accelerating launch
R&D/Clinical EvidenceReOpen results basis of approval; efficacy across symptoms/opacification (Q3/Q4) Publication in JACI: In Practice; reinforces efficacy and AECRS reduction Strengthened evidence
Capital/LiquidityYE23 going-concern disclosure (Q4) $55M offering; covenants amended; cash runway through 2025 Risk reduced

Management Commentary

  • “We are proud that in March… XHANCE was approved by the FDA as the first prescription medication… for chronic rhinosinusitis who do not have nasal polyps… We estimate that the new indication grows the total addressable market by up to ten times…” – CEO Ramy Mahmoud .
  • “Based on… revisions to our co-pay assistance program and implemented new hub services… estimated XHANCE average net revenue per prescription for Q1 2024 was $227… a 63% increase YoY… Change Healthcare… had a favorable effect… expected to be isolated to first quarter 2024.” – Jonathan Neely .
  • Launch tactics: 75 reps, ~35K calls, +50% samples, non-personal promotion to ~22K prescribers, 1.5M impressions, ~50K engagements; speaker programs to reach ~1,000 HCPs .
  • Liquidity: “Post-offering cash and cash equivalents of ~$100 million… sufficient to fund operations and debt service obligations through 2025.” – CEO .
  • Profitability path: “We believe… positive income from operations (GAAP) for full year 2025… peak year net revenues of at least $300 million…” – CEO .

Q&A Highlights

  • Average revenue per Rx cadence: Management does not expect a “really significant” sequential increase from Q1; full-year guidance raised to >$230 per Rx reflects structural improvements, while the Change Healthcare boost was one-time .
  • Payer coverage timeline: Plans are adding chronic sinusitis to PA criteria over weeks to months; not a contracting renegotiation but process updates; ramp expected through 2024 .
  • Prescription volumes: YoY decline ~23% tied to pruning unprofitable scripts; revenue still up 26% YoY, focus remains on profitable prescription growth .
  • Primary care contribution and sales force expansion: Primary care is not a near-term focus; sales expansion will be analytics-driven based on ROI of specialist launch efforts .
  • Samples: Not full 30-day doses; intended to bridge initiation while prescriptions are filled .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2024 EPS/Revenue was unavailable for OPTN due to missing mapping; therefore, formal estimate comparisons are not available this quarter. Values retrieved from S&P Global*.
  • Relative to company’s prior guidance, Q1 revenue of $14.9M exceeded ~$13.0M guided on Mar 7, demonstrating early launch traction and pricing/mix improvements .

Key Takeaways for Investors

  • Near-term: Q1 revenue beat internal guidance; watch Q2/Q3 trajectory as payer processes catch up and the one-time Change Healthcare tailwind fades .
  • Pricing/mix: Structural improvements (co-pay revisions, hub services) lifted average net revenue per Rx; durability into H2 will drive margin quality .
  • Launch execution: Specialist-focused tactics are robust; tracking prescriber activation and repeat use will be critical for sustained growth .
  • Payer/formulary catalysts: Express Scripts national formularies addition improves access; monitor broader PBM/insurer updates .
  • Guidance watch: FY 2024 $85–$95M net revenue and >$230 net $/Rx set a clear bar; any acceleration from coverage wins could push toward the high end .
  • Balance sheet: $55M raise and covenant amendments mitigate going-concern risk; runway through 2025 supports operational execution to reach positive GAAP operating income in FY 2025 .
  • Medium-term thesis: Expanded label materially increases TAM; peak net revenue ≥$300M from specialist audience alone suggests attractive operating leverage if uptake scales as planned .