10-Q: Biote Corp. Q3 2025: Net Income Rebounds Amid Revenue Dip

Biote Corp. reported a significant swing to net income for the nine months ended September 30, 2025, despite a decline in total revenue for both the quarter and year-to-date periods.

Summary

• Total revenue for the three months ended September 30, 2025, decreased by $3.4 million (6.7%) to $48.0 million, compared to $51.4 million in the prior year period.
• Total revenue for the nine months ended September 30, 2025, decreased by $1.5 million (1.0%) to $145.8 million, compared to $147.4 million in the prior year period.
• Net income for the three months ended September 30, 2025, was $9.2 million, down from $12.7 million in the same period of 2024.
• Net income for the nine months ended September 30, 2025, significantly improved to $29.0 million, compared to a net loss of $3.4 million in the prior year period.
• Adjusted EBITDA for the three months ended September 30, 2025, was $12.9 million, a decrease from $16.2 million in the prior year.
• Adjusted EBITDA for the nine months ended September 30, 2025, was $41.8 million, a slight decrease from $43.1 million in the prior year.
• The company's total liabilities decreased from $224.6 million as of December 31, 2024, to $176.8 million as of September 30, 2025.
• Stockholders' deficit improved from $(102.2) million as of December 31, 2024, to $(65.5) million as of September 30, 2025.
• Cash and cash equivalents decreased to $28.0 million as of September 30, 2025, from $39.3 million as of December 31, 2024.
• A workforce reduction of approximately 15 employee roles (7.2% of the workforce) was completed in Q3 2025, incurring a one-time expense of $0.6 million.
• The AnazaoHealth Pharmacy Services Agreement was extended through December 31, 2027, with an option for a one-year extension.
• The company repurchased 1,011,767 shares of Class A common stock for $3.4 million during Q3 2025, with $11.0 million remaining in the repurchase program.
• Settlement agreements with former shareholders for Class V voting stock repurchases totaled $25.1 million in Q2 2025 and an additional $12.5 million (paid Oct 6, 2025) for Marci M. Donovitz's shares.
• A subsequent event includes an amendment to a settlement agreement with Dr. Gary S. Donovitz to repurchase 6.1 million Class V voting shares for $18.5 million on January 2, 2026, and dismiss pending legal matters.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While revenue declined for both the quarter and year-to-date, the significant swing to net income for the nine-month period and substantial reduction in total liabilities and stockholders' deficit are strong positives. Strategic moves like supply chain extensions and cost-cutting through workforce reduction are also favorable. However, the ongoing material weakness in internal controls and continued legal proceedings temper the overall positive outlook.

Positives

• Net income for the nine months ended September 30, 2025, significantly improved to $29.0 million, a substantial turnaround from a net loss of $3.4 million in the prior year period.
• Total liabilities decreased by $47.8 million, from $224.6 million at December 31, 2024, to $176.8 million at September 30, 2025, indicating improved financial health.
• Stockholders' deficit improved by $36.7 million, from $(102.2) million at December 31, 2024, to $(65.5) million at September 30, 2025.
• Cost of revenue decreased by $4.1 million (9.2%) for the nine months ended September 30, 2025, reflecting continued cost savings from the vertical integration of Asteria Health.
• The AnazaoHealth Pharmacy Services Agreement was extended through December 31, 2027, enhancing supply chain stability for bioidentical hormone pellets.
• Interest expense, net, decreased by $0.8 million for the three months ended September 30, 2025, due to a lower principal balance on the Term Loan and lower monthly interest rates.
• The company repurchased 1,011,767 shares of its Class A common stock for $3.4 million during the quarter, demonstrating a commitment to returning value to shareholders.
• Legal settlements, including the $5.0 million Right Value Litigation and the recent agreement with Dr. Gary S. Donovitz, are resolving significant outstanding legal matters.

Negatives

• Total revenue decreased by $3.4 million (6.7%) for the three months ended September 30, 2025, and by $1.5 million (1.0%) for the nine months ended September 30, 2025.
• Revenue from pellet procedures decreased by $4.0 million for the three months and $8.5 million for the nine months, attributed to a slowdown in new clinic additions, clinic attrition, and lower procedure volumes from existing clinics.
• Net income for the three months ended September 30, 2025, decreased by $3.4 million to $9.2 million, compared to $12.7 million in the prior year period.
• Adjusted EBITDA decreased for both the three-month ($3.3 million decrease) and nine-month ($1.3 million decrease) periods ended September 30, 2025.
• Selling, general and administrative expenses increased by $2.2 million (9.3%) for the three months and $2.6 million (3.6%) for the nine months, driven by increased marketing, consulting fees, and annual marketing event expenses.
• Cash and cash equivalents decreased by $11.3 million from December 31, 2024, to September 30, 2025.
• Net cash provided by operating activities decreased by $5.3 million for the nine months ended September 30, 2025, primarily due to increased cash used for inventory and accounts payable.
• A material weakness in internal control over financial reporting, related to technical accounting personnel and IT general controls, has not yet been remediated as of September 30, 2025.

Risks

• The success of dietary supplements to attain significant market acceptance among clinics, practitioners, and their patients is not guaranteed.
• Customers' reliance on certain third parties to support the manufacturing of bioidentical hormones for prescribers poses a supply chain risk.
• Sensitivity to regulatory, economic, environmental, and competitive conditions in certain geographic regions could adversely affect the business.
• The ability to increase the use by practitioners and clinics of the Biote Method at the anticipated rate or at all is uncertain.
• Significant competition in the industry could impact market share and pricing.
• The company has a limited operating history, which may make it difficult to evaluate its future prospects.
• The ability to protect intellectual property is crucial for the business model.
• Heavy regulatory oversight in the industry could lead to increased compliance costs or restrictions.
• Changes in applicable laws or regulations could negatively impact operations.
• The inability to profitably expand in existing markets and into new markets could hinder growth.
• Adverse impacts from other economic, business, and/or competitive factors are possible.
• Future exchange and interest rates could affect financial performance.
• International trade policies, including tariffs, sanctions, and trade barriers, may adversely affect business, financial condition, results of operations, and prospects, particularly regarding sourcing estradiol from China and trocars from Pakistan.
• Ongoing uncertainty regarding trade policies may complicate shortand long-term strategic planning and increase legal and operational risks internationally.

Future Outlook

The company believes its current cash position, anticipated cash generated from operations, and available revolving loans are sufficient to fund operations and debt service obligations for at least the next 12 months. It expects operating and capital expenditures to increase as it executes corporate growth plans. The company continues to monitor global economic conditions, including inflation and interest rates, which could impact future operating costs and financing availability. The company is well-positioned to continue meeting product demands through its direct manufacturing capabilities and extended vendor agreements while focusing on expanding its Biote-certified clinic network.

Management Comments

• Our business model has been successful, remains differentiated, and is well positioned for future growth by virtue of our historical performance over the past 13 years.
• With the Second Amendment in place and through our existing direct manufacturing capabilities, we believe we are well-positioned to continue meeting the product demands of our current Biote-practitioners while focusing on expanding our Biote-certified clinic network.
• We believe that our current cash position, coupled with anticipated cash generated from operations and the capacity under our revolving loans, is sufficient to fund our operations and our debt service obligations for at least the next 12 months.

Industry Context

Biote Corp. operates in the therapeutic wellness and hormone optimization space, a growing segment of healthcare. The company's focus on vertical integration, exemplified by the acquisition of Asteria Health, aims to strengthen control over its supply chain and enhance operational efficiency, a common strategy in industries facing supply chain disruptions. The extension of the AnazaoHealth Pharmacy Services Agreement further stabilizes its product supply, which is critical in a market reliant on specialized compounded medications. The increase in e-commerce activity for dietary supplements aligns with broader industry trends of direct-to-consumer sales and digital marketing in health and wellness.

Management Changes

Corporate Governance

Legal Proceedings

• Right Value Litigation: Settled for an aggregate of $5.0 million. $3.5 million paid on February 28, 2025, with the remaining $1.5 million due by February 17, 2026. This resolves claims of breach of contract, fraud, and declaratory judgment.
• Yosaki and Mioko Trusts Litigation: Lawsuit alleging breaches of fiduciary duties, aiding and abetting, and unjust enrichment was dismissed on March 15, 2025. Plaintiffs appealed to the Delaware Supreme Court on April 15, 2025, with oral argument on October 8, 2025; no ruling yet.
• Cindy Latch Litigation: Lawsuit alleging misappropriation of name, image, and likeness. A temporary injunction was reversed on April 15, 2025. A motion for partial summary judgment was filed on May 23, 2025, with no ruling yet. Trial is scheduled for April 27, 2026.
• Gary S. Donovitz / NIL Litigation: Multiple lawsuits in Texas and Delaware alleging misappropriation of name, image, and likeness. A settlement agreement was executed on November 3, 2025, to dismiss all pending legal matters between the parties with prejudice, in conjunction with a share repurchase agreement.

Related Party Transactions

• Consulting agreement with Ms. Teresa S. Weber (former CEO) for strategic advisory services, with payments of $0.06 million during Q3 2025 and $0.2 million during the nine months ended September 30, 2025.
• Purchases of dietary supplements inventory from a vendor in which the company's founder holds a minority interest, totaling $0.3 million during Q3 2025 and $0.4 million during the nine months ended September 30, 2025.

Stakeholder Impact

• Shareholders: Impacted by the ongoing share repurchase program, which aims to return value. The significant reduction in stockholders' deficit and net income turnaround for the nine-month period are positive for equity value, despite revenue declines. Legal settlements reduce uncertainty.
• Employees: Affected by the organizational restructuring plan, which resulted in a workforce reduction of approximately 15 roles (7.2% of the workforce).
• Customers (Biote-certified practitioners/clinics): Benefit from the extended AnazaoHealth agreement, ensuring stable supply of bioidentical hormone pellets. The decrease in new clinic additions and lower procedure volumes from existing clinics indicate challenges in customer acquisition and retention.
• Suppliers: The extension of the AnazaoHealth Pharmacy Services Agreement provides continued business for a key supplier. New inventory purchase commitments indicate ongoing demand for products.
• Creditors: The reduction in total liabilities and improved net income for the nine-month period enhance the company's creditworthiness. Compliance with all financial covenants of the Term Loan is maintained.

Next Steps

• Continue to execute corporate growth plans designed to elevate growth, achieve strategic objectives, and further advance patient health and wellness.
• Remediate the identified material weakness in internal control over financial reporting by designing and implementing effective controls.
• Monitor global economic conditions, including inflation and interest rates, and their potential impact on operating costs and financing.
• Expand the Biote-certified clinic network.
• Resolve remaining legal proceedings, including the Yosaki and Mioko Trusts appeal and the Cindy Latch litigation trial scheduled for April 27, 2026.
• Make the lump sum payment of $18.5 million to Dr. Gary S. Donovitz on January 2, 2026, as per the amended settlement agreement.
• Make the remaining $1.5 million payment to Right Value by February 17, 2026.

Key Dates

Recommendation

Biote Corp. presents a mixed financial picture. While the company achieved a significant turnaround to net income for the nine-month period and substantially reduced its total liabilities and stockholders' deficit, revenue continues to decline for both the quarter and year-to-date. Strategic initiatives like vertical integration and supply chain extensions are positive, and the resolution of several legal disputes reduces uncertainty. However, the persistent material weakness in internal controls and the ongoing challenge of revenue growth, particularly in pellet procedures, warrant caution. A 'hold' recommendation is appropriate for a seasoned investor, suggesting a wait-and-see approach to observe consistent revenue stabilization and the full remediation of internal control deficiencies before making a more aggressive investment decision.

Keywords

hormone optimization, bioidentical hormone replacement therapy, pellet therapy, dietary supplements, SEC filing, 10-Q, financial results, biote method, healthcare technology, medical practice management, corporate governance, litigation, share repurchase, internal controls, Asteria Health, AnazaoHealth