8-K: Biote Corp. Reports Mixed Second Quarter Results, Procedure Revenue Growth Accelerates

Biote Corp. announced its second quarter 2024 financial results, showing a sequential increase in procedure revenue growth but a net loss, while reaffirming its full-year financial guidance.

Summary

• Biote Corp. reported second quarter 2024 revenue of $49.2 million, slightly down from $49.3 million in the same period last year.
• Procedure revenue increased by 7.8% year-over-year, and also showed a sequential increase from 6.6% in the first quarter to 7.8% in the second quarter.
• Dietary supplement revenue decreased by 32.2% due to the transition of their e-commerce business and the comparison to a significant seasonal promotion in the prior year.
• The company reported a net loss of $(10.5) million, or $(0.19) per share, compared to a net loss of $(13.1) million, or $(0.25) per share, in the second quarter of 2023.
• Adjusted EBITDA was $12.7 million, down from $14.5 million in the prior year, primarily due to increased investments in sales and marketing and higher legal expenses.
• Gross profit margin was 68.9%, which included a $1.2 million inventory step-up related to the acquisition of Asteria Health; excluding this, the margin would have been 70.9%.
• Biote has grown new clinics by approximately 30% in the first half of the year.
• The company has introduced BioteRx to approximately 600 clinics and plans to continue its rollout through 2025.
• Biote reaffirmed its 2024 financial guidance for revenue between $200-$204 million and Adjusted EBITDA between $60-$63 million.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to the sequential growth in procedure revenue and reaffirmation of full-year guidance, but tempered by the net loss and decrease in Adjusted EBITDA.

Positives

• Procedure revenue growth accelerated sequentially, indicating strong demand for Biote's core services.
• Gross profit margin improved year-over-year, demonstrating effective cost management and a favorable product mix.
• The company is successfully expanding its network of clinics, with a 30% growth in new clinics in the first half of the year.
• The rollout of BioteRx is progressing well, with positive responses from both patients and practitioners.
• Biote reaffirmed its full-year financial guidance, suggesting confidence in future performance.

Negatives

• Total revenue was slightly down compared to the same quarter last year.
• Dietary supplement revenue decreased significantly by 32.2%.
• The company reported a net loss of $(10.5) million, although this was an improvement from the $(13.1) million loss in the prior year.
• Adjusted EBITDA decreased from $14.5 million to $12.7 million year-over-year.
• Operating income decreased due to increased investments in sales and marketing and higher legal expenses.

Risks

• The company faces challenges in the dietary supplement market, with a significant decrease in revenue.
• Increased investments in sales and marketing and higher legal expenses are impacting profitability.
• The company is still reporting a net loss, indicating ongoing challenges in achieving profitability.
• The company is exposed to risks related to the success of its dietary supplements, reliance on third parties for hormone manufacturing, and regulatory changes.

Future Outlook

Biote management reiterated their 2024 financial guidance for revenue between $200-$204 million and Adjusted EBITDA between $60-$63 million, expecting improved procedure revenue growth in the second half of the year.

Management Comments

• Terry Weber, Biote Chief Executive Officer, stated that Biote's second quarter procedure revenue grew 7.8% from the prior-quarter period, increasing sequentially from the 6.6% rate reported in the first quarter of 2024.
• Ms. Weber also mentioned that they are pleased with the positive response from both patients and practitioners to BioteRx.
• Ms. Weber concluded that based on their solid first half performance and their expectation for accelerated growth in the second half of the year, they are reiterating their 2024 financial guidance.

Industry Context

Biote operates in the growing market of preventive health and hormone optimization, where personalized medicine and therapeutic wellness are gaining traction. The company's focus on expanding its clinic network and introducing new products like BioteRx aligns with industry trends towards more patient-centric and holistic healthcare solutions.

Comparison to Industry Standards

• Biote's procedure revenue growth of 7.8% is a positive sign, but it is important to compare this to other companies in the personalized medicine and hormone therapy space.
• Companies like Sesen Bio and Veru Inc. are also focused on similar areas, but their financial performance and growth rates may vary significantly.
• Biote's gross profit margin of 68.9% is relatively strong, but it is important to compare this to industry benchmarks for medical device and healthcare service providers.
• The net loss of $(10.5) million highlights the challenges in achieving profitability in this sector, which is common for growth-stage companies.
• Biote's Adjusted EBITDA margin of 25.9% is a key metric to watch, as it indicates the company's operational efficiency and profitability potential.

Legal Proceedings

• Biote reached a definitive settlement in the company's litigation with Dr. Gary S. Donovitz, Biote's founder, to resolve litigation.
• Biote also reached a definitive settlement with Marci M. Donovitz, a stockholder of Biote, to resolve litigation.

Stakeholder Impact

• Shareholders may be concerned about the net loss but encouraged by the procedure revenue growth and reaffirmed guidance.
• Employees may be impacted by the company's growth initiatives and investments in sales and marketing.
• Customers (patients) should benefit from the continued rollout of BioteRx and the expansion of the clinic network.
• Practitioners will benefit from the continued education and training provided by Biote.

Next Steps

• Biote will continue to roll out BioteRx over the remainder of this year and into 2025.
• The company will focus on delivering personalized medicine for its growing patient population.
• Biote will continue to make investments consistent with its growth strategy, while anticipating that overall operating expenses will moderate in the second half of 2024.
• The company expects improved procedure revenue growth in the second half of 2024.

Key Dates

Keywords

Biote, Hormone Optimization, Preventive Health, BioteRx, Procedure Revenue, Adjusted EBITDA, Financial Results, Net Loss, Gross Profit Margin, Clinic Expansion