Release Date: May 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ADHD portfolio revenue increased by 49% year-over-year, demonstrating strong sales force execution and effective leveraging of the Aytu RxConnect platform.
- Adjusted EBITDA improved by $7 million compared to the previous year, with a trailing 12-month company-wide adjusted EBITDA now exceeding $15 million.
- Gross margins for the Rx segment improved significantly to 74% from 61% in the previous year, driven by operational efficiencies and strategic outsourcing.
- The company has successfully managed the wind down of the consumer health segment with minimal impact on adjusted EBITDA, showing effective cost management.
- Aytu BioPharma Inc (AYTU, Financial) has maintained a stable cash balance, ending the quarter with $19.8 million, providing a solid financial foundation for ongoing operations.
Negative Points
- Net revenue in the third quarter declined by 21% to $18 million from $22.7 million in the prior year, primarily due to the ongoing wind-down of the Consumer Health segment.
- The pediatric portfolio net revenue decreased significantly due to payer changes, impacting the company's historically highest margin product group.
- Despite improvements, the company recorded a net loss of $2.9 million for the quarter, indicating ongoing challenges in achieving profitability.
- The company continues to face uncertainties in the ADHD market due to intermittent supply disruptions and patient access challenges, which could impact future performance.
- Aytu BioPharma Inc (AYTU) is still in the process of refinancing its $15 million term note, which matures in January 2025, posing a potential risk if not refinanced under favorable terms.
Q & A Highlights
Q: Can you discuss how the sales of the ADHD business continue to grow and how your conversations with the DEA have evolved?
A: Josh Disbrow, CEO, noted that communications with the DEA have been extremely productive, with increased dialogue and frequency of quotas. The DEA's transparency is at its highest, helping the industry meet demands efficiently. Aytu's ADHD products, Adzenys and Cotempla, have maintained solid supply levels without any stockouts, benefiting from these improved communications.
Q: What is your current promotional strategy with prescribers for ADHD products?
A: Josh Disbrow explained that the strategy focuses on both increasing the number of prescribers and deepening relationships with existing ones. The company leverages its RxConnect platform to ensure product availability and consistent pricing, which has been particularly effective given the ongoing market disruptions in ADHD medications.
Q: Can you elaborate on the initiatives and recovery in the pediatric multivitamin business?
A: Josh Disbrow mentioned that recent payer changes and strategic initiatives are expected to significantly recover the pediatric multivitamin business. While not providing specific guidance, he expressed confidence in regaining a substantial portion of the business, supported by improved coverage and access.
Q: How did the Change Healthcare cyber-attack impact Aytu BioPharma, and what was the sales impact?
A: Josh Disbrow acknowledged a minimal and transient impact from the cyber-attack, emphasizing the company's robust system that isn't reliant on any single vendor, which helped mitigate potential disruptions. He noted that while some revenue impact occurred, it was less than 10% and quickly resolved.
Q: Looking ahead to fiscal 2025, what are your expectations for Aytu BioPharma's performance?
A: Josh Disbrow projected continued positive EBITDA and revenue growth, with significant operational streamlining and cost reductions. He highlighted the transition out of the Grand Prairie facility, the wind-down of the consumer health segment, and improved terms for refinancing debt as key factors that will strengthen the company's financial health.
Q: What proportion of the 49% growth in ADHD revenue is attributed to market disruptions versus organic growth?
A: Josh Disbrow attributed the substantial growth primarily to organic factors and strong execution by the sales team, despite ongoing market disruptions. He emphasized the reliability and effectiveness of Aytu's ADHD products, which continue to gain traction even as market conditions begin to normalize.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
