Biote Reports First Quarter 2023 Financial Results
New Initiative Targets Long-term Growth Opportunity in Men’s Health
Company Launches Warrant Exchange Offer and Consent Solicitation
Maintains 2023 Financial Guidance
First Quarter 2023 Financial Highlights, year-over-year:
-
Revenue of
$44.8 million , a 20.7% increase - Gross profit margin of 69.1%, a 220-basis point increase
-
Net loss of
$(21.4) million and GAAP loss per share of$(0.39) , primarily reflecting the impact of transaction-related items -
Adjusted EBITDA of
$13.1 million , a 12.4% increase1 -
Operating cash flow of
$13.0 million
“Biote generated solid financial performance in the first quarter of 2023, driven by an approximately 21% increase in revenue, as we continued to effectively serve patients who wish to age healthfully and feel their best,” said
“During the quarter, we launched a new initiative to accelerate our expansion into the large and growing men’s health market. Approximately 20 million men over age 45 suffer from low testosterone, yet only a small percentage currently receive treatment for this condition. To better address this significant unmet medical need, we are strengthening our focus on serving men’s healthcare practitioners throughout
2023 First Quarter Financial Review
Revenue for the first quarter of 2023 was
Gross profit margin for the first quarter of 2023 was 69.1% compared to 66.9% for the first quarter of 2022. The increase in gross profit margin reflected effective cost management.
Operating income for the first quarter of 2023 was
Net loss for the first quarter of 2023 was
Adjusted EBITDA for the first quarter of 2023 was
Warrant Exchange Offer
Today, the company launched an exchange offer (the “Offer”) and consent solicitation (the “Consent Solicitation”) relating to its outstanding warrants to acquire shares of Class A Common Stock (the “Warrants”). Pursuant to the offering, each warrant holder whose Warrants are exchanged will receive 0.23 shares of our Class A Common Stock for each warrant. Parties representing approximately 19.4% of the publicly traded Warrants and approximately 59.3% of the privately held Warrants have agreed to tender their Warrants in the Offer.
The Offer and Consent Solicitation are being made pursuant to a registration statement on Form S-4 (the “Prospectus/Offer to Exchange”), dated
The Company has engaged
2023 Financial Outlook
“We are maintaining our 2023 guidance as
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($ in millions) |
2023 |
|
|
Revenue |
|
|
|
Adjusted EBITDA |
|
Conference Call:
Discussion of Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results,
We present Adjusted EBITDA because it is a key measure used by our management to evaluate our operating performance, generate future operating plans and determine payments under compensation programs. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements of our assets;
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; and
- Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us.
In addition, Adjusted EBITDA is subject to inherent limitations as it reflects the exercise of judgment by Biote’s management about which expenses are excluded or included. A reconciliation is provided in the financial statement tables included below in this press release for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net income and our other GAAP results.
Important Additional Information Has Been Filed with the
The Offer described in this press release commenced on
No Offer or Solicitation
This press release shall not constitute an offer to exchange or the solicitation of an offer to exchange or the solicitation of an offer to purchase any securities, nor shall there be any exchange or sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. A registration statement on Form S-4 relating to the securities to be issued in the Offer has been filed with the
None of the Company, any of its management or its board of directors, or the Information Agent, the Exchange Agent or Roth makes any recommendation as to whether or not holders of Warrants should tender Warrants for exchange in the Offer or provide their consent pursuant to the Consent Solicitation.
About
Forward-Looking Statements
Except for historical information contained herein, this press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Some of the forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “hope,” “anticipate,” “believe,” “seek,” “target,” “continue,” “could,” “might,” “ongoing,” “potential,” “predict,” “would” and other similar expressions, are intended to identify forward-looking statements. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual results or developments to differ materially from those expressed or implied by such forward-looking statements, including but not limited to: the success of our dietary supplements to attain significant market acceptance among clinics, practitioners and their patients; our customers’ reliance on certain third parties to support the manufacturing of bio-identical hormones for prescribers; our and our customers’ sensitivity to regulatory, economic, environmental and competitive conditions in certain geographic regions; our ability to increase the use by practitioners and clinics of the Biote Method at the rate that we anticipate or at all; our ability to grow our business; the significant competition we face in our industry; our limited operating history; our ability to protect our intellectual property; the heavy regulatory oversight in our industry; changes in applicable laws or regulations; the inability to profitably expand in existing markets and into new markets; the possibility that we may be adversely impacted by other economic, business and/or competitive factors, including recent bank failures; and future exchange and interest rates. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of Biote’s Annual Report on Form 10-K for the year ended
_________________________
1 Please see the “Reconciliations of Adjusted EBITDA” table below for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income, and additional information about Adjusted EBITDA.
2 Please see the “Reconciliations of Adjusted EBITDA” table below for a reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income, and additional information about Adjusted EBITDA.
Financial Tables
|
Consolidated Balance Sheets (In Thousands) (Unaudited) |
||||||||
|
|
|
|
||||||
|
|
2023 |
|
|
|
2022 |
|
||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash |
$ |
87,608 |
|
$ |
79,231 |
|
||
| Accounts receivable, net |
|
7,646 |
|
|
6,948 |
|
||
| Inventory, net |
|
9,623 |
|
|
11,183 |
|
||
| Other current assets |
|
2,579 |
|
|
3,816 |
|
||
| Total current assets |
|
107,456 |
|
|
101,178 |
|
||
| Property and equipment, net |
|
1,307 |
|
|
1,504 |
|
||
| Capitalized software, net |
|
5,206 |
|
|
5,073 |
|
||
| Operating lease right-of-use assets |
|
1,983 |
|
|
2,052 |
|
||
| Deferred tax asset |
|
3,183 |
|
|
1,838 |
|
||
| Total assets |
$ |
119,135 |
|
$ |
111,645 |
|
||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable |
$ |
5,063 |
|
$ |
4,112 |
|
||
| Accrued expenses |
|
6,252 |
|
|
6,274 |
|
||
| Term loan, current |
|
6,250 |
|
|
6,250 |
|
||
| Deferred revenue, current |
|
2,078 |
|
|
1,965 |
|
||
| Operating lease liabilities, current |
|
217 |
|
|
165 |
|
||
| Total current liabilities |
|
19,860 |
|
|
18,766 |
|
||
| Term loan, net of current portion |
|
110,719 |
|
|
112,086 |
|
||
| Deferred revenue, net of current portion |
|
1,018 |
|
|
926 |
|
||
| Operating lease liabilities, net of current portion |
|
1,855 |
|
|
1,927 |
|
||
| TRA liability |
|
6,250 |
|
|
— |
|
||
| Warrant liability |
|
5,722 |
|
|
4,104 |
|
||
| Earnout liability |
|
57,520 |
|
|
32,110 |
|
||
| Total liabilities |
|
202,944 |
|
|
169,919 |
|
||
| Commitments and contingencies (See Note 18) | ||||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, |
|
— |
|
|
— |
|
||
| Class A common stock, |
|
2 |
|
|
1 |
|
||
| Class B common stock, |
|
— |
|
|
— |
|
||
| Class V voting stock, |
|
4 |
|
|
5 |
|
||
| Additional paid-in capital |
|
— |
|
|
— |
|
||
| Accumulated deficit |
|
(48,532 |
) |
|
(44,460 |
) |
||
| Accumulated other comprehensive loss |
|
(12 |
) |
|
(5 |
) |
||
| biote Corp.’s stockholders’ deficit |
|
(48,538 |
) |
|
(44,459 |
) |
||
| Noncontrolling interest |
|
(35,271 |
) |
|
(13,815 |
) |
||
| Total stockholders’ deficit |
|
(83,809 |
) |
|
(58,274 |
) |
||
| Total liabilities and stockholders’ deficit |
$ |
119,135 |
|
$ |
111,645 |
|
||
|
Consolidated Statements of Operations (In Thousands, except per share values) (Unaudited) |
||||||||
|
Three Months Ended |
||||||||
|
|
2023 |
|
|
|
2022 |
|
||
| Revenue: | ||||||||
| Product revenue |
$ |
44,155 |
|
$ |
36,758 |
|
||
| Service revenue |
|
688 |
|
|
385 |
|
||
| Total revenue |
|
44,843 |
|
|
37,143 |
|
||
| Cost of revenue (excluding depreciation and amortization included in selling, general and administrative, below) | ||||||||
| Cost of products |
|
13,027 |
|
|
11,657 |
|
||
| Cost of services |
|
850 |
|
|
620 |
|
||
| Cost of revenue |
|
13,877 |
|
|
12,277 |
|
||
| Selling, general and administrative |
|
23,085 |
|
|
15,103 |
|
||
| Income from operations |
|
7,881 |
|
|
9,763 |
|
||
| Other income (expense), net: | ||||||||
| Interest expense |
|
(2,426 |
) |
|
(359 |
) |
||
| Loss from change in fair value of warrant liability |
|
(1,618 |
) |
|
— |
|
||
| Loss from change in fair value of earnout liability |
|
(25,410 |
) |
|
— |
|
||
| Other income |
|
773 |
|
|
10 |
|
||
| Total other expense, net |
|
(28,681 |
) |
|
(349 |
) |
||
| Income (loss) before provision for income taxes |
|
(20,800 |
) |
|
9,414 |
|
||
| Income tax expense |
|
630 |
|
|
64 |
|
||
| Net income (loss) |
|
(21,430 |
) |
|
9,350 |
|
||
| Less: Net loss attributable to noncontrolling interest |
|
(14,625 |
) |
|||||
| Net loss attributable to biote Corp. stockholders |
|
(6,805 |
) |
|||||
| Other comprehensive income: | ||||||||
| Foreign currency translation adjustments |
|
— |
|
|
6 |
|
||
| Other comprehensive income |
|
— |
|
|
6 |
|
||
| Comprehensive income (loss) |
$ |
(21,430 |
) |
$ |
9,356 |
|
||
| Net loss per common share | ||||||||
| Basic |
$ |
(0.39 |
) |
|||||
| Diluted |
$ |
(0.39 |
) |
|||||
| Weighted average common shares outstanding | ||||||||
| Basic |
|
17,585,045 |
|
|||||
| Diluted |
|
17,585,045 |
|
|||||
|
Consolidated Statements of Cash Flows (In Thousands) (Unaudited) |
||||||||
|
Three Months Ended |
||||||||
|
|
2023 |
|
|
|
2022 |
|
||
| Operating Activities | ||||||||
| Net income (loss) |
$ |
(21,430 |
) |
$ |
9,350 |
|
||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation and amortization |
|
538 |
|
|
502 |
|
||
| Bad debt expense |
|
30 |
|
|
30 |
|
||
| Amortization of debt issuance costs |
|
195 |
|
|
55 |
|
||
| Provision for obsolete inventory |
|
— |
|
|
60 |
|
||
| Non-cash lease expense |
|
69 |
|
|
58 |
|
||
| Shares issued in settlement of litigation |
|
1,199 |
|
|
— |
|
||
| Share-based compensation expense |
|
2,170 |
|
|
— |
|
||
| Loss from change in fair value of warrant liability |
|
1,618 |
|
|
— |
|
||
| Loss from change in fair value of earnout liability |
|
25,410 |
|
|
— |
|
||
| Deferred income taxes |
|
103 |
|
|
— |
|
||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable |
|
(728 |
) |
|
(1,344 |
) |
||
| Inventory |
|
1,560 |
|
|
377 |
|
||
| Other current assets |
|
1,238 |
|
|
(1,445 |
) |
||
| Accounts payable |
|
857 |
|
|
2,089 |
|
||
| Deferred revenue |
|
205 |
|
|
145 |
|
||
| Accrued expenses |
|
(22 |
) |
|
(2,847 |
) |
||
| Operating lease liabilities |
|
(20 |
) |
|
(61 |
) |
||
| Net cash provided by operating activities |
|
12,992 |
|
|
6,969 |
|
||
| Investing Activities | ||||||||
| Purchases of property and equipment |
|
(62 |
) |
|
(262 |
) |
||
| Purchases of capitalized software |
|
(318 |
) |
|
(220 |
) |
||
| Net cash used in investing activities |
|
(380 |
) |
|
(482 |
) |
||
| Financing Activities | ||||||||
| Principal repayments on term loan |
|
(1,562 |
) |
|
(1,250 |
) |
||
| Proceeds from exercise of stock options |
|
420 |
|
|
— |
|
||
| Distributions |
|
(3,093 |
) |
|
(2,735 |
) |
||
| Capitalized transaction costs |
|
— |
|
|
(1,577 |
) |
||
| Net cash used in financing activities |
|
(4,235 |
) |
|
(5,562 |
) |
||
| Effect of exchange rate changes on cash and cash equivalents |
|
— |
|
|
13 |
|
||
| Net increase in cash and cash equivalents |
|
8,377 |
|
|
938 |
|
||
| Cash and cash equivalents at beginning of period |
|
79,231 |
|
|
26,766 |
|
||
| Cash and cash equivalents at end of period |
$ |
87,608 |
|
$ |
27,704 |
|
||
| Supplemental Disclosure of Cash Flow Information | ||||||||
| Cash paid for interest |
$ |
2,230 |
|
$ |
304 |
|
||
| Cash paid for income taxes |
|
2,232 |
|
|
1 |
|
||
| Non-cash investing and financing activities | ||||||||
| Capital expenditures and capitalized software included in accounts payable |
$ |
94 |
|
$ |
271 |
|
||
|
Reconciliation of Adjusted EBITDA to Net (Loss) Income (In Thousands) (Unaudited) |
||||||||
|
Three Months Ended |
||||||||
|
|
||||||||
|
|
2023 |
|
|
|
2022 |
|
||
| Net income (loss) |
$ |
(21,430 |
) |
$ |
9,350 |
|
||
| Interest expense |
|
2,426 |
|
|
359 |
|
||
| Income tax expense |
|
630 |
|
|
64 |
|
||
| Depreciation and amortization |
|
538 |
|
|
502 |
|
||
| Loss from extinguishment of debt |
|
— |
|
|
— |
|
||
| Other non-operating items |
|
(773 |
) |
|
(10 |
) |
||
| Share-based compensation expense | ` |
|
2,170 |
|
|
— |
|
|
| Transaction-related expenses |
|
— |
|
|
708 |
|
||
| Litigation and other |
|
2,518 |
|
|
691 |
|
||
| Loss from change in fair value of warrant liability |
|
1,618 |
|
|
— |
|
||
| Loss from change in fair value of earnout liability |
|
25,410 |
|
|
— |
|
||
| Adjusted EBITDA |
$ |
13,107 |
|
$ |
11,664 |
|
||
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