Executive Summary

Net revenue was $14.436M in Q3 2024, up from $10.117M in Q3 2023, but down from $16.370M in Q2 2024 . Preliminary press indicated Q3 total product net sales of $12–$14M and ZTlido net sales of $11–$13M (final reported net revenue came in at the top end of that range) .
Net loss narrowed sharply to $(4.388)M from $(35.529)M in Q3 2023, aided by a non‑cash $18.108M gain from remeasurement of derivative warrant liabilities; operating loss was $(19.917)M .
Liquidity remains tight: cash and cash equivalents ~ $0.077M at quarter-end; negative working capital of $241.7M; management raised “substantial doubt” about going concern. Subsequent actions included issuing $50M of Tranche B senior secured convertible notes, retiring the eCapital revolver, and selling an 8% royalty on ZTlido/SP-103 for $5M .
No formal FY guidance; Street consensus from S&P Global was unavailable at the time of this report; comparisons to estimates are therefore not provided.

What Went Well and What Went Wrong

What Went Well
- Revenue growth vs. prior year and strong preliminary product sell-through: Q3 net revenue rose to $14.436M vs. $10.117M y/y; press preliminaries indicated total product net sales of $12–$14M and ZTlido net sales of $11–$13M, suggesting healthy underlying demand .
- Gross margin held strong; cost of revenue was $3.768M on $14.436M revenue (implied gross margin ~74%), supporting attractive product economics at scale .
- Non-cash derivative gains materially improved bottom line versus last year ($18.108M gain on warrant liabilities) .
What Went Wrong
- Sequential revenue decline: Q3 net revenue fell from $16.370M in Q2 2024 to $14.436M, reflecting channel dynamics and higher rebates/net adjustments in the model .
- Operating leverage remains challenging: SG&A of $29.734M and R&D of $2.349M drove a $(19.917)M operating loss; accrued rebates and fees rose to $141.709M, pressuring working capital .
- Legal/regulatory overhangs: District court found no infringement in the ZTlido patent case; the company is appealing, adding uncertainty to the ZTlido IP moat .

Financial Results

Metric	Q3 2023	Q2 2024	Q3 2024
Net Revenue ($M)	10.117	16.370	14.436
Cost of Revenue ($M)	3.392	4.390	3.768
Gross Profit ($M)	6.725 (calc from rev/cogs)	11.980 (calc)	10.668 (calc)
Gross Margin (%)	66.5% (calc)	73.2% (calc)	73.9% (calc)
R&D ($M)	4.072	2.004	2.349
SG&A ($M)	40.431	24.598	29.734
Operating Income ($M)	(38.805)	(15.623)	(19.917)
Net Income ($M)	(35.529)	(37.582)	(4.388)
Diluted EPS ($)	(0.63)	(0.31)	(0.03)

Segment/Product KPIs (disclosed items)

Preliminary product sell-in (Q3 2024):
- ZTlido net sales range: $11.0–$13.0M
- Total product net sales range: $12.0–$14.0M

Working Capital / Balance Sheet Indicators

KPI	Q2 2024	Q3 2024
Cash & Cash Equivalents ($M)	6.888	0.077
Accounts Receivable, net ($M)	38.004	31.580
Accrued Rebates & Fees ($M)	125.063	141.709
Total Debt, current + LT ($M)	29.033 + 75.370 (Oramed FV) + 17.306 (revolver)	14.332 + 69.946 (Oramed FV) + 84.636 current debt (timing mix)

Note: Subsequent to Q3, the company issued $50M Tranche B senior secured convertible notes (2-year maturity, $1.09 initial conversion; later adjusted to $1.04), repaid the eCapital facility, and sold an 8% royalty on ZTlido/SP‑103 for $5M net, providing liquidity relief and partial Oramed note offset .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Company guidance	FY/Q3 2024	None disclosed	No formal guidance; preliminary Q3 product net sales provided (Total $12–$14M; ZTlido $11–$13M)	N/A

Earnings Call Themes & Trends

(Transcript not available in repository; themes sourced from filings/press.)

Topic	Previous Mentions (Q1–Q2 2024)	Current Period (Q3 2024)	Trend
Product performance (ZTlido, ELYXYB, GLOPERBA)	Q2: Net revenue up y/y with ZTlido +16% and ELYXYB +49% gross product sales; GLOPERBA launched in June	Q3 prelim ranges point to sustained ZTlido/product momentum; reported net revenue at $14.436M	Improving y/y; mixed seq. vs Q2
Working capital/rebates	Rising accrued rebates/fees; careful netting impacting reported revenue	Accrued rebates/fees increased to $141.709M; continued pressure on cash conversion	Deteriorating
Liquidity/financing	FSF $10M deposit (later satisfied via product delivery); Oramed note remeasurement; revolver usage	Post‑Q3: $50M Tranche B notes, eCapital payoff, 8% royalty sale to raise cash/offset Oramed note	De‑risking near‑term cash
Legal/regulatory	GLOPERBA patent settlement with Takeda finalized (May)	ZTlido litigation adverse district-court decision; appeal filed (Sept)	Mixed: gout label settled; ZTlido appeal
Cost structure	SG&A moderation in Q2 with focus on spend	SG&A rose Q/Q to $29.734M; operating loss $(19.917)M	Mixed/volatile

Management Commentary

“ZTlido...gross sales in the range of $22.0 million to $26.0 million...for the first time,” driven by expansion across target segments; management expected improving sales trends for ELYXYB and GLOPERBA as awareness broadens (July 1, 2024 press) .
“We believe the non‑opioid pain management prescription market is adopting our products rapidly...Scilex also plans to reduce R&D and other administrative expenses...and...invest in expanding commercial and production activity,” (April 16, 2024) .
Preliminary Q3 ranges reiterated in October 8 press: ZTlido net $11–$13M; total product net $12–$14M .

Q&A Highlights

Earnings call transcript for Q3 2024 was not available in the document repository. In lieu of Q&A, the 10‑Q and 8‑K filings clarify:
- Liquidity priorities: refinance/extend Oramed obligations; retire eCapital revolver; monetize royalty streams to support operations .
- Legal posture: appealing ZTlido patent ruling to the Federal Circuit .
- Working capital dynamics: elevated accrued rebates and fees materially affect reported net revenue and cash .

Estimates Context

Wall Street consensus (S&P Global) for Q3 2024 was unavailable at the time of this analysis; as such, we do not present beat/miss versus estimates.

Key Takeaways for Investors

Revenue momentum vs. last year continues, but sequential softness and large rebate accruals complicate quarter-to-quarter optics; monitor net revenue vs. product sell‑in signals (e.g., ZTlido ranges) .
Gross margins remain attractive; the profit bridge is dominated by SG&A intensity and non‑cash fair‑value items; sustainable SG&A discipline is key to narrowing operating losses .
Liquidity is the critical swing factor: post‑Q3 financing/royalty actions reduce near‑term pressure and amortization burdens but add convert/royalty overhang; watch covenants, amortization deferrals, and cash balances .
IP outcome on ZTlido appeal is an important medium‑term catalyst for competitive positioning and valuation; timing and outcome remain uncertain .
Product portfolio breadth (ELYXYB/GLOPERBA) provides incremental growth pillars; execution on awareness and access will determine scale benefits in 2025 .
Working capital normalization (receivables collections vs. rebate accrual growth) is pivotal to cash generation; track accrued rebates & fees trajectory and AR trends .
With S&P consensus unavailable, expectations are less anchored; updates on sell‑through, cash runway, and litigation could drive volatility around updates and filings.

Supporting Detail: Additional Disclosures and Events

Nasdaq minimum bid price deficiency notice received Nov 1, 2024; company maintains listing during compliance period and may consider options (e.g., reverse split) if needed .
Subsequent financing details: Tranche B notes at $50M, 2‑year maturity, initial $1.09 convert (adjusted to $1.04 post‑December RDO); issuance of investor/placement agent warrants; net proceeds used to partially repay Oramed note and retire eCapital revolver .
Royalty sale: Scilex Pharma sold 8% of global net sales on ZTlido/SP‑103 for $5M (split between Oramed and investors), with corresponding security arrangements; Oramed’s portion reduced its note exposure .

Notes: All numbers are as reported in company filings. Where preliminary ranges were furnished (not filed) under Item 2.02 of Form 8‑K, they are treated as preliminary and unaudited .

Scilex Holding Co (SCLX)·Q3 2024 Earnings Summary