Third Quarter 2026 Earnings Conference Call - BIOTE CORP

Explicit Guidance:

• Maintains full-year 2026 guidance: Revenue above $175 million; Adjusted EBITDA above $25 million.

Business-Segment Outlook:

• Procedure Revenue: Aiming to restore growth following a 15.1% decline in Q3 2026 due to the January 2026 voluntary recall; return to growth expected to progress "more slowly than anticipated."
• Dietary Supplements: Anticipates continued growth in the e-commerce channel.
• Gross Margin: Expects further sequential improvement in the coming quarters as the mix shifts from lower-margin third-party pellets to internally manufactured pellets via Asteria Health (which now supplies >50% of shipped pellets vs. 30% in Q2 2026). Targets returning to "pre-recall" gross margin profiles as volume ramps.
• Sales Force: Upgraded 50+ sales reps to drive "hungry" prospecting and face-to-face engagement; expects the full impact of this cultural shift and analytics adoption to normalize growth over time.

Market and Competitive Outlook:

• Demand Trends: Early evidence of stabilization in underlying demand with "modest average daily procedure volume increases" observed through Q3 and into October; however, "sustained improvement" remains a work in progress.
• Strategic Focus: Future growth dependent on three levers: new customer growth (lifeblood of the model), same-store sales expansion, and minimizing attrition.
• Competition: Observing "competitive wins" and the ability to win back larger customers from competitors in regions where sales rep activity and analytics have been upgraded.
• Consumer Behavior: No notable shifts in end-consumer health behaviors or spending patterns observed to date.

Macro / Industry Outlook:

• Regulatory/Supply: Recovery of the supply chain via Asteria Health is central to margin recovery and volume restoration; the return to pre-recall supply levels is viewed as a prerequisite for margin normalization.
• Economic Environment: No immediate impact from broader macroeconomic shifts on consumer spending in the targeted health space noted.

Strategic Initiatives:

• Organizational Transformation: Ongoing upgrade of commercial organization and culture change, including increased data analytics usage for targeting and accountability.
• Clinic Support: Enhanced onboarding efficiency and targeted support to accelerate new clinic productivity and retention.
• Clinical Education: Expansion of clinical resources and evidence-based education (led by Dr. Bajaj) to deepen practitioner engagement and trust.
• Timeline: These initiatives are expected to yield results over the "long term," with specific regional successes in "same-store sales" and retention noted as duplicatable in the second half of the year and moving forward.

Risks and Headwinds to Outlook:

• Growth Velocity: Return to revenue growth is proceeding slower than anticipated due to the residual effects of the voluntary recall and the time required to develop new sales pipelines and change sales culture.
• Execution Risk: Continued reliance on consistent execution of face-to-face interactions and data-driven targeting; failure to retain practitioners or onboard new clinics quickly enough could delay margin and revenue recovery.
• Operational Complexity: Transitioning from legacy sales reps to upgraded teams requires time to realize full productivity benefits.

Management Tone on the Future:

• Confidence Level: Cautiously optimistic regarding stabilization ("encouraging trends") but explicitly acknowledges the current trajectory is "more slowly than anticipated."
• Priority Focus: Emphasis remains on "long-term performance" via clinic retention, practitioner engagement, and procedure consistency rather than short-term fixes.
• Hedges: Reiterated that the culture change and organizational upgrades "take time" to reach a "normalized level," hedging expectations for immediate rapid growth.

Miscellaneous:

• Cash Position: As of September 30, 2026, cash and cash equivalents were $8.9 million.
• Margins: Gross margin improved 231 basis points sequentially in Q3 2026 due to the shift back to internally manufactured pellets.