Third Quarter 2026 Earnings Conference Call - BIOTE CORP

Explicit Guidance:

• FY2026 Revenue: Maintained guidance of > $175 million.
• FY2026 Adjusted EBITDA: Maintained guidance of > $25 million.
• Gross Margins: Anticipate further sequential improvement in Q4 2026 and beyond, driven by the transition of pellet supply mix back to internally manufactured Asteria Health products (expected to supply >50% of shipped pellets) and operational efficiencies from vertical integration.
• SG&A Efficiency: No specific targets provided for 2027; management states it is "too early to talk about 27" regarding cost savings, though efficiency will be "consistently" evaluated.
• Cash Flow: No specific forward guidance on operating cash flow or free cash flow provided, aside from Q3 FY2026 actuals ($3.7 million).

Business-Segment Outlook:

• Procedure Revenue: Return to growth is progressing more slowly than anticipated; focus remains on stabilizing underlying demand and restoring long-term growth. Expected drivers include:
  • New Customer Growth: Prioritized as the "lifeblood" for future operations; focus on rapid onboarding and early productivity for new clinics.
  • Same-Store Sales: Aiming to increase revenue from existing clinics; success in one specific region via sales force upgrades is viewed as "duplicatable" across all regions.
  • Attrition Management: Critical focus area to mitigate losses, driven by increased face-to-face sales rep activity and data-driven accountability.
• Dietary Supplements: Continued growth expected, primarily driven by the e-commerce channel (grew 7.3% in Q3).
• Sales Force & Culture:
  • Upgraded ~50 new sales reps and territory managers; transitioning from legacy staff to "hungry sales reps" to drive prospecting and face-to-face interactions.
  • Leveraging data and analytics to identify clinics needing support, coach sales teams, and hold reps accountable.
  • Expected to see benefits from these cultural changes over the second half of 2026 and moving forward.

Market and Competitive Outlook:

• Demand Trends: Recent improvement in procedure volume provides early evidence of stabilization; average daily procedure volumes showed modest increases throughout Q3.
• Competitive Wins: Actively pursuing growth through expanding the clinician base and recapturing competitive accounts, particularly in high-competition regions via improved sales rep engagement.
• Consumer Behavior: No noticeable shifts in end-consumer health or spending behavior observed; consumer demand remains strong.

Macro / Industry Outlook:

• Economic Impact: No material impact from macroeconomic conditions or shifts in consumer spending noted as of the call.
• Regulatory/Industry Environment: No specific comments on new regulations, tariffs, or rates affecting the business outlook.

Strategic Initiatives:

• Supply Chain: Asteria Health has returned to pre-recall production levels; expected to supply >50% of shipped pellets by Q4 FY2026 (up from 30% in Q2), improving mix and margins.
• Clinical Education & Support: Expanding resources under Dr. Kamal Bajaj (CMO) to reinforce practitioner trust, including ongoing clinical education, science-based content evolution, and in-person training events (e.g., Nashville event).
• Organizational Restructuring: Upgrading organization culture and sales productivity; shifting from foundational corporate work to deeper data-driven operational improvements.

Risks and Headwinds to Outlook:

• Recall Aftermath: The voluntary recall in January 2026 continues to delay improvements in attrition and new clinic starts, causing slower-than-expected growth.
• Cultural Transition: Upgrading the sales force and shifting culture takes time; growth realization is expected to be gradual.
• Execution Risk: Success relies on consistent execution by new sales reps and the ability to replicate regional wins (e.g., same-store sales growth in one region) across the entire network.
• General Forward-Looking Risks: Management cites risks regarding future performance, regulatory processes, and macroeconomic conditions that could cause actual results to differ materially from expectations.

Management Tone on the Future:

• Cautiously Optimistic: Management expresses hope for a return to growth but admits progress is "slower than anticipated."
• Focus on Fundamentals: Emphasis is placed on the "three things" required for an annuity model: new customer growth, same-store sales, and minimizing attrition.
• Confidence in Process: Strong confidence that the new data-driven approach, face-to-face engagement, and sales upgrades are effective, citing specific regional successes as proof of concept.
• Long-Term Focus: Repeatedly frames current actions as necessary to "restore long-term procedure revenue growth," acknowledging that "normalized growth" requires time to materialize.

Miscellaneous:

• Non-GAAP Measures: Reiteration that Adjusted EBITDA and margins are primary metrics for performance, reconciled in the earnings release.
• Balance Sheet: Cash and cash equivalents stood at $8.9 million as of Sept 30, 2026.