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RVL Pharmaceuticals plc (RVLPQ)·Q2 2023 Earnings Summary

Executive Summary

  • Q2 revenue was $8.258M (down 2% y/y) with gross margin of 76% (vs. 74% y/y); adjusted EBITDA loss improved to $(7.4)M (vs. $(11.8)M y/y) as SG&A fell 32% y/y to $13.9M .
  • Net loss widened to $(23.9)M due to a $13.9M non-cash impairment (arbaclofen ER) and fair-value debt/warrant effects; EPS was $(0.24) vs. $(0.14) y/y .
  • Management is pivoting marketing toward consumer activation (DTC) and launched the Elevate e-commerce platform; early data show ~15% increase in average prescription value and average vials per fill rising from ~40 to ~60 post-launch .
  • Liquidity tightened as cash fell to $19.2M (from $32.6M in Q1) while senior secured debt principal remained ~$70.7M; an Athyrium amendment was executed to add flexibility .
  • Potential catalysts: execution of DTC campaign and Elevate ramp, and outcomes from advanced BD discussions that could add revenue and synergies .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin expanded to 76% (from 74% y/y) on lower royalty expense; cost discipline drove SG&A down $6.3M y/y to $13.9M and R&D down to $0.5M .
    • Adjusted EBITDA loss improved 38% y/y to $(7.4)M; monthly total operating expense (TOE) run-rate was “solidly below $5M” ex-nonrecurring items/share-based comp .
    • Commercial foundation strengthened: cumulative 21,000 prescribers and 5,400 cumulative unique medical aesthetics practices ordering Upneeq; Elevate rollout ahead of plan, with ~2,000 accounts migrated and ~1,200 connected accounts early on .
    • Quote: “Driving consumer awareness is the next lever that may unlock meaningful growth for UPNEEQ” — CEO Brian Markison .

  • What Went Wrong

    • Net product sales dipped 2% y/y to $8.3M due to lower volume; management acknowledged streamlining had a modest unfavorable impact on sales in the quarter .
    • Net loss widened to $(23.9)M driven by a $13.9M non-cash impairment and $2.0M net non-operating expense; operating loss was $(22.0)M vs. $(15.1)M y/y .
    • Liquidity trend negative: cash declined to $19.2M from $32.6M in Q1 while senior secured debt principal maturities remained ~$70.7M, increasing balance sheet pressure .

Financial Results

MetricQ2 2022Q1 2023Q2 2023
Net Product Sales ($USD Millions)$8.448 $8.832 $8.258
Gross Margin (%)74% 74% (ex-licensing) 76%
SG&A ($USD Millions)$20.169 $16.198 $13.886
R&D ($USD Millions)$1.176 $0.626 $0.547
Impairment ($USD Millions)$0.000 $0.000 $13.900
Total OpEx ($USD Millions)$21.345 $16.824 $28.333
Total OpEx ex-impairment ($USD Millions)$21.345 $16.824 $14.400
Operating Loss ($USD Millions)$(15.124) $(10.291) $(22.021)
Net Loss ($USD Millions)$(12.106) $(11.612) $(23.889)
Diluted EPS ($)$(0.14) $(0.12) $(0.24)
Adjusted EBITDA ($USD Millions)$(11.754) $(8.655) $(7.391)

Actual vs. Consensus (Q2 2023):

  • Revenue: $8.258M vs. S&P Global consensus: Unavailable (S&P Global data not available for RVLPQ at query time).
  • EPS: $(0.24) vs. S&P Global consensus: Unavailable (S&P Global data not available for RVLPQ at query time).

Liquidity and Capitalization:

  • Cash & Equivalents: $32.6M (Q1 2023) → $19.2M (Q2 2023) .
  • Senior Secured Indebtedness: Principal maturities ~$70.7M at both March 31 and June 30, 2023 .
  • Current portion of debt (fair value) at 6/30/23: $57.748M (represents $70.666M principal) .

KPIs:

  • Cumulative unique medical aesthetics practices: 4,800 (Q1 2023) → 5,400 (Q2 2023) .
  • Cumulative unique prescribers: 19,900 (Q1 2023) → 21,000 (Q2 2023) .
  • Elevate early metrics (post-July launch): average prescription value up ~15%; average vials per fill increased from ~40 to ~60; ~2,000 accounts migrated (~30%), ~1,200 with connected accounts .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Operating Expenses (run-rate)Q3 2023No formal prior guidance“Comparable to Q2” (qualitative) N/A (no prior formal)
Total Operating Expenses (run-rate)Q4 2023No formal prior guidance“Ramp a bit” for DTC and seasonality (qualitative) N/A (no prior formal)
Marketing Mix2H 2023Field-centric focusShift toward consumer activation/DTC; creative in development Strategic shift
Platform Rollout2H 2023Planned Elevate rolloutElevate launched; conversions ahead of expectations Implemented

Management did not provide formal revenue/EPS/margin guidance for Q2 2023/future periods; commentary focused on expense cadence and go-to-market strategy .

Earnings Call Themes & Trends

TopicQ4 2022 MentionsQ1 2023 MentionsQ2 2023 (Current)Trend
DTC/Consumer ActivationEmphasis on building category; focus on e-commerce and telemedicine Expect July rollout of new e-commerce portal; multi-channel strategy; strong prescriber momentum Shift to consumer as next growth lever; creative development for branded DTC campaign Increasing focus on DTC to drive awareness
Elevate e-commercePlanned rollout referenced “July rollout of Elevate” expected to broaden reach Launched; ~15% higher avg Rx value; vials per fill 40→60; ~2,000 accounts migrated; ahead of plan Executed and scaling
Expense DisciplineSG&A down y/y in Q4’22 SG&A down 32% y/y; leverage improved SG&A down to $13.9M; TOE < $5M/month run-rate (ex-nonrecurring/share comp) Continued efficiency with selective spend ramp in Q4
Business DevelopmentBD and leveraging footprint highlighted —Strategic review “advanced”; discussing targets to accelerate Upneeq and add synergies Near-term BD optionality
Macro/Headwinds——Underpenetration limits macro headwind impact; Elevate subscription expected to mitigate Limited macro sensitivity near-term

Management Commentary

  • “Driving consumer awareness is the next lever that may unlock meaningful growth for UPNEEQ… exceptionally low level of consumer awareness” — Brian Markison, CEO .
  • “Our future marketing mix will shift to the consumer to complement our personal selling efforts” — Brian Markison, CEO .
  • “As we entered July, we formally launched… Elevate… average prescription has increased about 15%… average bill size from about 40 vials to about 60 vials” — James (J.D.) Schaub .
  • “Second quarter monthly TOE spend was solidly below $5 million… well short of the $7 million benchmark we had set” — Michael DePetris, CFO .
  • “We are in advanced discussions with… companies that we could potentially partner with or acquire to support growth and integrate with meaningful cost synergies” — Brian Markison, CEO .

Q&A Highlights

  • BD Strategy and Funding: Management is evaluating both product and service assets to drive Upneeq, seeking revenue-accretive targets and cost synergies; funding mix (cash/stock/debt) to be optimized for shareholder value .
  • DTC vs. B2B2C: Team plans efficient, digitally focused DTC (programmatic, paid search) and sees B2B2C via Elevate as critical for refill capture; emphasis on ROAS and test/learn gating before ramping spend .
  • Expense Outlook: Q3 opex comparable to Q2; Q4 opex to ramp modestly with DTC and seasonality, with expectation that promotional spend drives sales given responsiveness .
  • Elevate Economics: Pricing optimization and subscriptions increased average fill size and should be margin-accretive; platform enables ongoing pharmacy refills while preserving practice margin .
  • Macro: Underpenetration and subscription options expected to limit impact of broader economic headwinds on demand .

Estimates Context

  • We attempted to retrieve S&P Global consensus (EPS and Revenue) for Q2 2023; data were unavailable for RVLPQ at query time due to missing mapping, so no estimate comparison could be made. As a result, we anchor analysis to company-reported results and management commentary for Q2 2023 [GetEstimates attempt error].

Key Takeaways for Investors

  • Near-term narrative pivot: consumer activation and Elevate are central to reigniting top-line growth; early Elevate data (higher avg prescription value and fill size) support unit economics improvement potential .
  • Cost discipline is tangible (SG&A down 32% y/y; monthly TOE < $5M), improving adjusted EBITDA trajectory despite flat-to-down revenue this quarter .
  • Liquidity tighter (cash $19.2M vs. $32.6M in Q1) with ~$70.7M senior secured debt principal outstanding; Athyrium amendment provides flexibility but underscores a need for growth reacceleration or capital actions .
  • BD optionality is a meaningful catalyst; management indicates advanced discussions that could add revenue, expand portfolio relevance at shared call points, and drive synergies .
  • KPIs still expanding (prescribers and practice counts), suggesting category build continues; unlocking consumer awareness (currently ~1% aided awareness per research) is the key lever to accelerate adoption .
  • Trading lens: headlines around DTC campaign launch/creative, Elevate adoption metrics, and any BD deal announcements are likely stock-moving catalysts; conversely, further cash burn or delays in consumer ramp would be risks .

Notes:

  • All figures are company-reported GAAP or non-GAAP as cited. Adjusted EBITDA is non-GAAP as defined by the company and reconciled in filings .
  • No formal revenue/EPS guidance provided for Q2 2023; management commentary indicates Q3 opex flat to Q2 and Q4 modestly higher with DTC activation .