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Petros Pharmaceuticals, Inc. (PTPI)·Q3 2021 Earnings Summary

Executive Summary

  • Record STENDRA prescriptions and tablets, with total milligrams sold up 6% QoQ; however, net sales declined 17% QoQ on elevated allowances (coupon redemptions, returns) following a larger discount to an online distributor and inventory approaching expiration .
  • Q3 net sales were $2.15M, down 38% YoY; gross margin improved to 85% driven by Prescription Medicines margin expansion to 97% despite lower net sales .
  • Adjusted EBITDA loss was $(1.87)M; net loss improved to $(1.70)M vs $(3.30)M YoY, helped by a $1.97M non-operating gain from derivative liability fair value change .
  • Strategic progress: OTC pathway label comprehension studies advancing; Hims & Hers exclusive marketing agreement expanding dosages; shelf-life extension to 4 years and wholesale inventory days reduced to ~25, expected to lower future returns .
  • Wall Street consensus (S&P Global) for Q3 2021 was unavailable; results cannot be benchmarked vs estimates this quarter (values unavailable via S&P Global).

What Went Well and What Went Wrong

What Went Well

  • Record STENDRA prescription and tablet sales with total milligrams sold rising 6% QoQ; momentum across Q1–Q3 with Q2 up 4% over Q1. “Petros continued its momentum during the third quarter with the number of prescriptions and tablets hitting record levels.”
  • Gross margin expanded sharply to 85% overall; Prescription Medicines margin reached 97% (from 71% YoY), indicating favorable mix and cost structure improvements .
  • OTC strategy progressed: pilot and pivotal-grade label comprehension studies completed/enrolled; management sees a significant market opportunity given no FDA‑approved OTC ED medications. “We believe that, if successful, this labeling could drive strong STENDRA growth for years…” .

What Went Wrong

  • Net sales declined 17% QoQ and Prescription Medicines net sales fell 47% YoY in Q3 due to higher sales allowances (greater coupon redemptions tied to a new discount and increased returns on products nearing expiration) .
  • Adjusted EBITDA loss widened to $(1.87)M from $(0.68)M YoY, reflecting lower net sales despite lower operating expenses .
  • Returns spike pressured net sales; segment net sales for Prescription Medicines dropped to $1.38M (from $2.59M YoY), highlighting the sensitivity to inventory aging and allowance dynamics .

Financial Results

Consolidated Metrics by Quarter

MetricQ1 2021Q2 2021Q3 2021
Net Sales ($USD)$4,075,606 $2,457,649 $2,145,169
Gross Profit ($USD)$3,432,220 $2,064,355 $1,826,011
Gross Margin (%)84% 84% 85%
Net Income (Loss) ($USD)$3,009,081 $(2,112,917) $(1,696,898)
EPS (Basic & Diluted) ($USD)$0.31 $(0.22) $(0.17)
Adjusted EBITDA ($USD)$(468,678) $(2,551,864) $(1,867,788)

YoY Comparison (Q3 2021 vs Q3 2020)

MetricQ3 2020Q3 2021
Net Sales ($USD)$3,464,695 $2,145,169
Gross Profit ($USD)$2,482,792 $1,826,011
Gross Margin (%)72% 85%
Net Loss ($USD)$(3,300,363) $(1,696,898)
EPS (Basic & Diluted) ($USD)$(0.96) $(0.17)

Segment Breakdown (Q3 2021)

SegmentNet Sales ($USD)Cost of Goods Sold ($USD)Segment Gross Margin (%)
Prescription Medicines$1,377,291 $45,254 97%
Medical Devices$767,878 $273,904 64%
Total$2,145,169 $319,158 85%

KPIs and Non-GAAP

KPIQ3 2021
Gross Billings ($USD)$8,531,008
Product Returns (impact) ($USD)$2,256,673
Coupon Redemptions (impact) ($USD)$2,896,935
Distribution Service Fees (impact) ($USD)$540,618
Wholesale Inventory Days on Hand~25 days
STENDRA Shelf-Life4 years (30%+ extension)
Cash Balance$8.1M at 9/30/2021

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/Q4Not provided Not provided Maintained (no formal guidance)
Gross MarginFY/Q4Not provided Not provided Maintained (no formal guidance)
OpExFY/Q4Not provided Not provided Maintained (no formal guidance)
Returns/AllowancesNear-termN/AManagement expects Stendra® returns to decline due to lower wholesale inventory days and longer shelf-life Qualitative positive
OTC Strategy MilestonesMulti-quarterN/ALabel comprehension studies completed/enrolled; continuing with FDA OTC pathway Progressing

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3 2021)Trend
COVID/macro impactsManagement noted uncertainty and fluctuating results; recovery benefited demand in 2021 Allowance-driven net sales pressure despite demand momentum Mixed: demand up, revenue net of allowances down
OTC pathway for STENDRAConsulting spend and R&D tied to OTC strategy; pivotal-grade study planning Pilot label comprehension completed; Phase 2 enrolled; large market opportunity highlighted Advancing regulatory path
Sales allowances/returnsSignificant reserves and reductions under ASC 606; returns policy and estimates detailed Elevated coupon redemptions, returns from inventory nearing expiration; expectation of decline ahead Near-term headwind, improving setup
Customer concentrationQ2: top customers represented sizable gross sales share Continued reliance on online/telehealth channels; Hims & Hers exclusivity expansion Strategic channel expansion
Financial leverage/derivativeDerivative liability fair value changes materially affected P&L; debt service dynamics $1.97M fair value gain improved net loss in Q3 Non-operating volatility persists
Product performanceQ1–Q2: STENDRA demand recovery, margins strong Record prescriptions/tablets; total mg sold +6% QoQ; Prescription margin 97% Positive operational momentum

Management Commentary

  • “Petros continued its momentum during the third quarter with the number of prescriptions and tablets hitting record levels… total milligrams sold… increasing 6% over the prior quarter. Prescription Medications segment gross sales increased 46% quarter over quarter… however, net sales declined 17%… impacted by greater coupon redemptions… and product returns… approaching expiration.” — Fady Boctor, President and Chief Commercial Officer .
  • “We continue to make progress… particularly with our objective of obtaining over-the-counter status for STENDRA… completed the enrollment of our pivotal-grade label comprehension study… we believe the market opportunity is significant… there are no FDA approved erectile dysfunction medications… available without a prescription.” — Fady Boctor .
  • “We have improved our wholesale inventory levels to 25 days on hand… down from an average of 40… and… extend[ed] shelf life by over 30% to 4 years… [which] should result in lower product returns in future periods.” — Fady Boctor .

Q&A Highlights

  • No Q3 2021 earnings call transcript was found in our document catalog; Q&A details are unavailable for this period (no transcript returned by search) (catalog scope).

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2021 EPS and revenue was unavailable due to data access limits at time of analysis; therefore, we cannot assess beats/misses versus consensus this quarter (S&P Global estimates unavailable).

Key Takeaways for Investors

  • Operational demand metrics are strong: record prescriptions/tablets and +6% QoQ total milligrams sold; this underpins the STENDRA franchise despite near-term net sales headwinds from allowances .
  • Margin profile is compelling: overall gross margin at 85% and Prescription Medicines at 97% highlight attractive unit economics even at lower net sales .
  • Near-term revenue optics are likely to improve as returns normalize with shorter wholesale inventory days and longer product shelf-life; monitor allowance trends in Q4/Q1 .
  • OTC pathway is a medium-term growth catalyst; successful OTC designation could materially expand market access and drive multi-year growth .
  • Non-operating items (derivative liability fair value changes) continue to affect reported earnings; focus on Adjusted EBITDA for operating trend, which was $(1.87)M in Q3 .
  • Channel partnerships (e.g., Hims & Hers) and telehealth presence are strategic positives; watch for dosage and distribution expansion effects on volumes vs net pricing .
  • Liquidity at $8.1M plus October 2021 capital raise (~$5.3M net) provides runway; track cash usage and working capital as allowances normalize .