Third Quarter 2026 Earnings Conference Call - EVOLUS INC

Financial Performance:

• Third-quarter revenue reached $78 million, representing 13% year-over-year growth.
• Year-to-date (first nine months) revenue grew 14% to $235.2 million.
• Achieved fourth consecutive quarter of positive adjusted EBITDA ($1.2 million in Q3, up $4.2 million YoY).
• Year-to-date adjusted EBITDA improved by $23 million to $6.4 million, compared to a $16.5 million loss in the prior period.
• Adjusted gross margin was 66.1% in Q3; reported gross margin was 65%.
• Non-GAAP operating expenses decreased 2.5% year-to-date despite revenue growth, demonstrating operating leverage.
• Ended the quarter with $41.7 million in cash and cash equivalents; $120 million in non-dilutive financing capacity remains available.
• No material tariff impact expected on Juvveau inventory following September guidance; inventory levels to normalize gradually.

Guidance and Future Outlook:

• Reaffirmed full-year 2025 revenue guidance of $330 million to $337 million (11-13% growth).
• Updated full-year non-GAAP operating expense guidance to $210 million–$213 million (midpoint down $2.5 million), excluding the $1.5 million option payment for the hair growth program.
• Reaffirmed full-year adjusted gross margin guidance of 67%–67.5% and adjusted EBITDA margin of low-to-mid single digits.
• Full-year outlook implies a sequential revenue step-up in Q4 due to seasonality and commercial activity.
• Long-term 2028 objectives: Revenue target of $450 million–$500 million with adjusted EBITDA margins of 13%–15%.
• Pipeline launch timeline: Evelisse Sculpt expected Q4 2026 FDA approval and Q1 2027 launch; Evelisse Lips PMA submission anticipated Q4 2026 with launch in early 2028; Profilo (skin quality) approval expected ~2030.

Business Segments and Product Lines:

• Global toxin (Juvveau) revenue grew approximately 11% in Q3 and year-to-date, growing above market rates.
• Hyaluronic acid (HA) business (Evelisse/Estéem) grew nearly 40% in Q3 and over 50% year-to-date, now comprising 10-12% of full-year revenue.
• Customer base expanded to over 19,000 accounts, adding 500+ new purchasing accounts in Q3.
• Avalis Rewards membership grew 23% YoY to 1.6 million consumers; patient repeat rate stands at approximately 70%.
• Portfolio strategy now includes three pillars: established toxins (Juvveau), evolving HA fillers (Evelisse/Estéem), and new skin quality category (Profilo partnership with IPSA).
• International expansion includes exclusive rights to the Evelisse portfolio in all markets where Jouveau and Nusiva are sold, plus new partnerships for Estéem in Canada, Australia, and New Zealand.
• Early-stage option agreement secured for procedure-based injectable hair growth, targeting a three-month treatment interval and local delivery.

Market and Competitive Landscape:

• Operating in a healthy global aesthetics market; consumers prioritizing beauty despite broader economic softness.
• U.S. aesthetics category strengthening, partially driven by GLP-1 therapy adoption creating new treatment needs (e.g., post-weight loss skin laxity).
• Market share gains observed in both toxin and HA fillers; Evelisse growing over 40% while the HA market growth was flat to single digits.
• Management views competitors' moves into skincare as complementary rather than a direct threat to their injectable-focused strategy.
• Aesthetic practices increasingly prefer comprehensive product portfolios to reduce the number of vendor partners.

Risks and Challenges:

• Regulatory attention: Received an FDA "untitled letter" regarding a single social media post; no warning letter issued, no business impact, and the post has been removed.
• Inventory management: Previously elevated inventory levels due to tariff uncertainty, though expected to normalize without cash flow impact.
• Pipeline execution: Delays in regulatory approvals for Sculpt or Lips could impact the 2027/2028 launch timeline.
• Market competition: Intense competition in the injectable space requires continuous clinical education and product differentiation.

Management Commentary and Tone:

• Tone is highly confident, emphasizing "financial discipline," "commercial execution," and "pipeline expansion" as key priorities.
• Management highlights a shift from a single-product company to a diversified "global performance beauty company."
• Strong emphasis on operating leverage, noting the ability to grow revenue while flattening or slightly reducing non-GAAP operating expenses.
• Management expressed confidence in the long-term value of the portfolio strategy, citing the ability to cross-sell complementary brands within existing clinic relationships.
• Reiterated commitment to capital-efficient growth, particularly regarding the IPSA partnership (no upfront payments) and the hair growth option structure.

Analyst Questions and Answers:

• FDA Letter: Clarified the FDA correspondence was an "untitled letter" regarding one post, not a warning, with no operational impact.
• Account Penetration: Confirmed that bundled offerings (Juvveau + Evelisse) are accelerating adoption in high-value accounts; a portfolio growth rebate program showed strong participation in mid-year.
• Market Trends: Q4 revenue is expected to see a historical 25-30% sequential step-up; filler market expected to remain healthy into 2027.
• Competition: Discussed a competitor's skincare acquisition, reaffirming focus on injectables where they have a distinct platform advantage.
• Sculpt Launch: Confirmed Q4 2026 approval anticipation and Q1 2027 launch activities; noted significant injector interest in a mid-phase product to complete the portfolio.

Other Key Points:

• Total cumulative customer base now exceeds 19,000, representing roughly two-thirds of the U.S. injectable market.
• The "Avalis Rewards" program drives significant consumer loyalty, with 70% of patients returning for repeat treatments.
• The hair growth program is structured as a risk-mitigated option based on human data rather than animal data before full acquisition commitment.
• International alignment strategy ensures consistent multi-product offerings across all geographies where the company operates.
• No revenue contribution from Evelisse Sculpt is assumed for 2026 guidance; focus remains on current product momentum and 2028 financial targets.