Executive Summary / Key Takeaways

• Biote Corp. is positioning itself as a differentiated provider in the hormone optimization and therapeutic wellness market through its comprehensive practice-building platform, proprietary technology, and strategic vertical integration.
• Recent financial performance reflects a transition period, with Q1 2025 revenue growing 4.7% year-over-year driven by strong dietary supplement sales (up 25.5%) and increased service revenue (up 156%), offsetting a 3.6% decline in core procedure revenue impacted by operational transitions and competitive pressures.
• The strategic acquisition of Asteria Health has begun yielding tangible benefits, contributing to a significant 300 basis point improvement in gross profit margin to 74.3% in Q1 2025, demonstrating the potential for enhanced profitability through vertical integration.
• The rollout of the enhanced Clinical Decision Support Software (CDSS), while causing temporary disruption to new clinic additions and procedure volumes in late 2024 and early 2025, is viewed by management as a critical long-term competitive differentiator and enabler for attracting a broader range of practitioners and expanding treatment options.
• Management maintains its 2025 guidance of $202 million to $208 million in revenue and $59 million to $64 million in Adjusted EBITDA, anticipating a reacceleration of procedure revenue growth (2-4% target) and continued supplement growth (5-10% target) driven by a recent commercial restructuring and the full adoption of strategic initiatives, despite acknowledging potential risks to the procedure growth target.

Setting the Scene: A Differentiated Approach in a Growing Market

Biote Corp., founded in 2012, operates in the dynamic and increasingly recognized market for hormone optimization and therapeutic wellness. Unlike traditional pharmaceutical companies that primarily focus on drug manufacturing and distribution, Biote has carved out a unique niche by developing a comprehensive, end-to-end practice-building platform – the Biote Method. This platform is designed to train, certify, and support physicians and nurse practitioners in delivering bioidentical hormone replacement pellet therapy and related wellness solutions.

The company's strategic positioning centers on empowering healthcare providers to integrate hormone optimization and therapeutic wellness into their practices effectively. This includes not just providing access to bioidentical hormone pellets and a complementary line of dietary supplements, but also offering extensive education, training, practice management software (BioTracker), and marketing support. This integrated approach aims to create a loyal network of Biote-certified practitioners, fostering recurring revenue streams through procedure-based fees and product sales.

The competitive landscape is varied, encompassing large pharmaceutical players like AbbVie (ABBV), Pfizer (PFE), and Organon & Co. (OGN), which offer hormone therapies, as well as generic manufacturers like Endo International (ENDO). While these larger entities possess vast R&D capabilities, global distribution, and significant financial scale, Biote differentiates itself through its focus on the practitioner-patient relationship and its specialized practice-building support. Competitors often compete on price or broad market reach, whereas Biote emphasizes a science-based, personalized approach delivered through its trained network. Indirect competitors include telehealth platforms and supplement companies, offering alternative, often less personalized, solutions. Biote's model, while smaller in scale compared to pharma giants, aims for deeper integration into clinical workflows and higher practitioner engagement, creating a competitive moat around its certified network.

The Engine of Differentiation: Technology and Innovation

Central to Biote's strategy and competitive edge is its proprietary technology platform, particularly its Clinical Decision Support Software (CDSS). This software is designed to move beyond standard treatment protocols, offering highly individualized precision patient care. The enhanced version of the CDSS, rolled out in late 2024, incorporates updated algorithms and expands recommendations across Biote's growing product portfolio, including hormone optimization, therapeutic wellness, and dietary supplements.

The tangible benefits of this technology, as articulated by the company, include the ability to treat a broader range of patients, from their early 40s up to 100 years old, by tailoring dosing and recommendations based on specific patient needs and lab results. The software makes recommendations across the entire product suite, offering practitioners a comprehensive view of available options. Management highlights that this level of detailed guidance for complex patient cases is unique in the industry and significantly enhances what a practitioner can offer. This not only improves patient care but also broadens the appeal of the Biote Method to a wider range of healthcare providers, including those in mainstream medicine and academic settings, thereby expanding the potential market opportunity and strengthening Biote's competitive moat against less integrated offerings.

Biote is also actively pursuing further innovation to enhance its platform and product offerings. This includes expanding wellness lab panels to utilize advanced technologies like liquid chromatography and mass spectrometry for greater accuracy and sensitivity. The BioteRx platform, initially conceived as a marketplace for therapeutic wellness products, is being broadened to include offerings in areas like body composition, sexual wellness, non-pellet hormone optimization, and thyroid/autoimmune conditions. While the direct revenue contribution from BioteRx is currently minor, its strategic importance lies in providing a single platform for practitioners to access a wide range of products, enhancing the value proposition of the Biote Method. Future R&D is also focused on developing formulations for specific patient needs, such as assisting patients transitioning off GLP-1s. These initiatives are aimed at enabling practitioners to deliver a higher level of holistic, personalized medicine and further differentiate Biote in the marketplace.

Strategic Evolution and Operational Execution

Biote's recent strategic initiatives are squarely focused on overcoming operational headwinds and accelerating growth by leveraging its core assets and integrated capabilities. Recognizing a slowdown in new clinic additions and some softness in procedure volumes following the CDSS rollout, management approved an organizational restructuring plan in May 2025. This plan includes reorganizing the commercial team, transitioning support functions to field sales roles to increase the sales force by approximately 25%, streamlining sales leadership, and updating compensation structures. The strategic intent is to improve commercial accountability and discipline, directly targeting accelerated new provider wins and enhanced engagement with existing top-tier clinics.

Vertical integration, primarily through the acquisition of Asteria Health in March 2024, is another critical pillar of Biote's strategy. This move was aimed at gaining greater control over the supply chain for bioidentical hormone pellets, enhancing manufacturing efficiency, and reducing production costs. The integration has progressed, with the company having obtained approximately 30 state licenses for Asteria and converting around 50% of its pellet volume through the facility by the end of Q3 2024. This vertical integration has already demonstrated its financial benefit, contributing to the significant improvement in gross profit margin seen in Q1 2025. Biote plans to continue expanding Asteria's state licenses and production capabilities, including potentially manufacturing other therapeutic products like GLP-1s in 2025, further leveraging this strategic asset.

The BioteRx platform continues to be expanded, adding new states and therapeutic offerings. While not a major revenue driver currently, its role as a comprehensive marketplace for practitioners is seen as essential for enhancing the competitive offering and providing a channel for future product introductions.

Financial Performance and Liquidity

Biote's financial performance in Q1 2025 reflects a period of transition, marked by strategic investments and operational adjustments. Total revenue grew 4.7% year-over-year to $49.0 million. This growth was primarily fueled by a strong 25.5% increase in dietary supplement revenue to $9.3 million, benefiting from the shift to the e-commerce channel, and a significant 156% increase in service revenue to $2.0 million, driven by technology fees from the BioteRx platform. However, core pellet procedure revenue experienced a 3.6% decline to $36.0 million, impacted by the slowdown in new clinic additions and workflow adjustments related to the CDSS rollout.

Despite the mixed revenue performance, profitability showed strength, particularly at the gross margin level. Cost of revenue decreased, contributing to a gross profit margin of 74.3% in Q1 2025, a notable 300 basis point improvement compared to the prior year period. This enhancement is directly attributed to cost savings realized from the vertical integration of Asteria Health. While this margin is competitive with or exceeds some larger pharmaceutical players (e.g., OGN TTM 58%), it remains below the higher margins seen by R&D-heavy giants like ABBV (TTM 70%) and PFE (TTM 74%), reflecting differences in business models and product types.

Selling, general, and administrative expenses increased 16.4% year-over-year to $26.7 million in Q1 2025, driven by higher marketing spend, increased professional fees (audit, tax, legal), and higher bad debt expense. This increase outpaced revenue growth, leading to a slight decrease in operating income to $9.7 million from $10.4 million in Q1 2024. Adjusted EBITDA also saw a slight decrease, coming in at $13.8 million (28.1% margin) compared to $14.2 million (30.3% margin) in the prior year.

Net income in Q1 2025 was significantly impacted by non-operating items, including a $10.7 million gain from the change in fair value of earnout liabilities, resulting in a net income of $15.8 million ($13.7 million attributable to Biote Corp. stockholders). This compares favorably to a net loss of $5.7 million in Q1 2024, which included a $12.1 million loss from earnout liability changes.

From a liquidity standpoint, Biote maintains a solid position. As of March 31, 2025, cash and cash equivalents stood at $41.7 million.

The company generated $6.5 million in cash flow from operations in Q1 2025, building on a strong $45.2 million generated in fiscal year 2024.

Biote has access to a $50.0 million revolving credit facility, which remained undrawn as of March 31, 2025, and is in compliance with its debt covenants. The company utilized significant cash in Q2 2024 for share repurchases related to litigation settlements ($32.2 million and $30 million tranches paid), with a remaining liability for 14.4 million shares to be repurchased over the next three years. A separate $20 million share repurchase program had $14.4 million remaining as of Q1 2025. Management believes its current liquidity, operational cash flow, and revolving loan capacity are sufficient to meet its obligations for at least the next 12 months, including funding future share repurchases.

Outlook and Risks

Biote maintains its previously issued financial guidance for 2025, projecting revenue between $202 million and $208 million and Adjusted EBITDA between $59 million and $64 million. This outlook anticipates a reacceleration of procedure revenue growth, targeting an increase of approximately 2% to 4% from 2024 levels, and continued growth in dietary supplement revenue, expected to increase by 5% to 10%. For the second quarter of 2025, the company expects revenue and Adjusted EBITDA to be similar to slightly higher than the prior year period, noting a one-time restructuring charge of $0.6 million to $0.8 million will be incurred in Q2 2025.

The guidance is predicated on the assumption that the temporary disruption from the CDSS rollout is largely in the past and that the recent commercial restructuring will effectively drive new clinic additions and improve overall sales productivity. Management believes patient demand and practitioner loyalty remain strong and that attrition will stabilize. They also anticipate continued benefits from the vertical integration of Asteria Health contributing to margin strength.

However, achieving the targeted 2% to 4% procedure revenue growth is acknowledged as potentially challenging, requiring the planned strategic actions to be executed successfully. Key risks that could impact this outlook include the residual effects of the CDSS transition on practitioner adoption and workflow, ongoing competitive pressures (including price competition from other market participants), potential impacts from the termination of the AnazaoHealth manufacturing agreement (though mitigated by vertical integration), and the outcomes of pending litigation. Additionally, the company continues to work on remediating a previously identified material weakness in internal control over financial reporting, which could pose operational risks if not fully addressed. International trade policies and tariffs, particularly concerning sourcing of materials like estradiol and trocars, also present potential cost and supply chain risks.

Conclusion

Biote Corp. is navigating a pivotal period, leveraging its unique practice-building platform, enhanced technology, and strategic vertical integration to drive future growth in the hormone optimization and therapeutic wellness market. While recent performance has been impacted by operational transitions and competitive dynamics, the company's ability to improve gross margins through vertical integration and the strategic potential of its enhanced CDSS and expanding BioteRx platform offer a compelling investment thesis. The recent commercial restructuring signals a focused effort to reaccelerate new clinic growth, a critical driver in its annuity-based model. Investors should monitor the success of these strategic initiatives in translating into renewed procedure revenue growth and the company's ability to effectively manage ongoing competitive and operational risks, including the full remediation of internal control weaknesses and the impact of litigation outcomes. The maintained 2025 guidance reflects management's confidence in the underlying market demand and the long-term value of its differentiated approach and integrated capabilities.