Executive Summary / Key Takeaways

• Strategic Transformation Underway: Biote Corp. is undergoing a significant organizational restructuring and commercial realignment, spearheaded by new CEO Bret Christensen, to re-energize growth in its core hormone optimization business after recent disruptions.
• Technological Moat and Vertical Integration: The company leverages proprietary Clinical Decision Support Software (CDSS) with unique dosing algorithms and the BioteRx wellness platform, alongside vertical integration through Asteria Health, to differentiate its offerings and enhance profitability.
• Near-Term Headwinds, Long-Term Potential: While procedure revenue has faced headwinds from sales force distraction and elevated attrition following the CDSS launch and restructuring, strong growth in dietary supplements and strategic capital deployment underscore underlying value.
• Financial Discipline and Shareholder Value: Management is focused on improving financial performance through greater accountability and discipline, with recent actions like share repurchases and significant cash flow savings from amended settlement agreements demonstrating a commitment to shareholder value.
• Outlook for 2025: Biote reiterates its fiscal 2025 revenue guidance of above $190 million and adjusted EBITDA guidance of above $50 million, anticipating a "transition year" with high single-digit declines in procedure revenue offset by mid-teens growth in dietary supplements.

The Evolution of Wellness: Biote's Integrated Approach

Biote Corp., founded in 2012 and headquartered in Irving, Texas, has established itself as a specialized leader in the burgeoning field of therapeutic wellness and hormone optimization. The company's core mission revolves around training physicians and nurse practitioners in bioidentical hormone replacement pellet therapy, addressing hormonal imbalances in both men and women. This practitioner-centric model positions Biote within a large and underpenetrated total addressable market (TAM), where demand for personalized medicine and holistic wellness solutions continues to grow. The company's strategic journey, marked by a significant business combination in 2022 and subsequent acquisitions, has been instrumental in shaping its current competitive stance and strategic direction.

Biote's overarching strategy is to provide a comprehensive, end-to-end practice-building platform known as the "Biote Method." This platform extends beyond product supply, encompassing essential education, training, and certification for medical professionals. It integrates practice management and inventory management software, offers information on available hormone replacement therapy (HRT) products, and provides robust digital and point-of-care marketing support. This integrated ecosystem is designed to empower Biote-certified practitioners, enabling them to efficiently manage and grow their hormone optimization practices.

The company's technological differentiation is a cornerstone of its competitive moat. BioteRx, a proprietary wellness platform, streamlines product ordering and inventory management for practitioners, while also offering technical support and educational resources. A critical technological advancement came in September 2024 with significant improvements to Biote's proprietary Clinical Decision Support Software (CDSS). This enhanced software incorporates the latest evidence-based medical literature and features unique dosing algorithms. These algorithms provide tangible benefits by enabling highly individualized therapies, which is crucial for precise hormone delivery and superior patient outcomes. The CDSS is designed to give physicians greater comfort in incorporating pellet therapy and testosterone treatments into their practices, thereby broadening Biote's appeal beyond early adopters and helping to integrate hormone optimization into mainstream healthcare. This technological edge contributes directly to Biote's competitive standing, allowing it to offer a premium, science-based approach that differentiates it from competitors who often compete primarily on price.

In the competitive landscape, Biote faces both direct and indirect rivals. Direct competitors include larger pharmaceutical companies like AbbVie (ABBV), Pfizer (PFE), and Organon (OGN), which offer broader portfolios including hormone-related treatments. However, Biote's specialized, practitioner-centric platform and integrated support model contrast with the more product-focused strategies of these larger players. Biote's emphasis on customization and practice-building tools provides a unique value proposition, fostering stronger customer loyalty and potentially enabling faster adoption in niche practices. While larger rivals benefit from extensive R&D resources and global scale, Biote's agility and tailored solutions allow it to maintain a distinct market position. Indirect competitors include compounding pharmacies and telehealth platforms, which can offer alternative hormone solutions or general wellness services, potentially exerting pricing pressure due to lower operational costs. Biote counters these threats by emphasizing its comprehensive platform, rigorous training, and evidence-based approach, which it believes creates a notable gap in value compared to other offerings.

Strategic Evolution and Operational Focus

Biote's history reflects a dynamic evolution, from its founding in 2012 to its public debut in 2022 through a business combination with Haymaker Acquisition Corp. III. The year 2024 marked a period of strategic expansion, including the acquisition of intellectual property from Simpatra, LLC and assets from BioSana ID LLC. A pivotal move was the March 2024 acquisition of Asteria Health, a 503B manufacturer of compounded bioidentical hormones. This vertical integration was a strategic imperative to strengthen supply chain control, enhance operational efficiency, and reduce production costs. As of the third quarter of 2025, Asteria Health has secured 44 state licenses and is supplying over 50% of the pellets ordered by practitioners, demonstrating the tangible benefits of this integration.

However, strategic initiatives are not without their challenges. The phased launch of the enhanced CDSS in late 2024 and early 2025, while a critical long-term differentiator, temporarily distracted Biote's sales force. This led to a reduction in new clinic additions and a slight decline in procedure volumes, impacting procedure revenue in the near term. In response to these operational headwinds and to address inconsistent financial performance, Biote initiated a strategic organizational restructuring in May 2025. This realignment, under the leadership of new CEO Bret Christensen and Senior VP of Strategy and Commercial Operations Joey Lopes, aims to accelerate new provider wins, strengthen relationships with existing top-tier practitioners, and improve financial performance through greater accountability and discipline. The commercial team was effectively expanded by approximately 25% by transitioning support functions to active field sales positions, and sales compensation structures were updated to align incentives with new clinic growth and quick-start program revenue. Management expects to achieve its planned sales rep headcount for 2025, which is crucial for returning to procedure revenue growth.

Operational stability was further bolstered by the extension of the AnazaoHealth Pharmacy Services Agreement through December 31, 2027, with an option for a one-year extension. This ensures continued access to third-party manufacturing capabilities alongside Biote's growing internal capacity. The company also actively engages its practitioner network through events like the annual "Sun, Sea and Biote" marketing event, which hosted over 800 attendees in September 2025. Such events reinforce Biote's leadership in evidence-based hormone optimization and foster strong relationships within its provider community.

Financial Performance and Liquidity

Biote's financial performance in the first nine months of 2025 reflects a period of strategic transition and operational adjustments. For the three months ended September 30, 2025, total revenue decreased by 6.7% year-over-year to $48.0 million. This was primarily driven by a $4.0 million decline in pellet procedure revenue and a $0.6 million decrease in service revenue, attributed to fewer new clinic additions, clinic attrition, and lower procedure volumes from existing clinics. Conversely, dietary supplement revenue demonstrated resilience, increasing by 8.4% to $11.2 million, largely due to heightened activity on the company's Amazon e-commerce platform. For the nine months ended September 30, 2025, total revenue saw a modest 1% decrease to $145.8 million, with an $8.5 million decline in pellet procedures partially offset by a $5.3 million increase in dietary supplements revenue.

Profitability metrics show the positive impact of vertical integration. Gross profit margin improved by 150 basis points year-over-year to 71.8% in Q3 2025, reflecting cost savings from Asteria Health's manufacturing capabilities and effective cost management. The cost of pellet procedures decreased by 22.7% in Q3 2025, outpacing the 10.4% decline in related revenue, further highlighting these efficiencies. Selling, general, and administrative (SG&A) expenses increased by 9.3% to $26.2 million in Q3 2025, primarily due to the timing shift of the annual marketing event and increased investments in sales and marketing to drive new customer growth. Net income for Q3 2025 was $9.2 million, with diluted earnings per share of $0.22. Adjusted EBITDA for the quarter was $12.9 million, resulting in an adjusted EBITDA margin of 26.9%.

The company maintains a solid liquidity position. As of September 30, 2025, cash and cash equivalents stood at $28.0 million, complemented by $50 million available under its Revolving Loans. Cash flow from operations for the nine months ended September 30, 2025, was $27.6 million, though it decreased by $5.3 million year-over-year primarily due to increased inventory and accounts payable. Biote has also strategically deployed capital to enhance shareholder value. In Q3 2025, the company repurchased approximately 1 million shares of its Class A common stock at an average price of $3.28 per share. Furthermore, recent amendments to settlement agreements with Marci M. Donovitz and Dr. Gary S. Donovitz are expected to yield substantial cash flow savings of approximately $7.5 million and $11.1 million, respectively, while also resolving pending litigation and extending Dr. Donovitz's non-compete agreement.

Outlook and Risk Assessment

Biote reiterates its fiscal 2025 revenue guidance of above $190 million and adjusted EBITDA guidance of above $50 million. This outlook anticipates a "transition year" where the benefits of strategic initiatives will take time to materialize. Management forecasts a high single-digit decline in procedure revenue for the full year, reflecting the lingering impact of slower new clinic additions and elevated attrition rates experienced in late 2024 and early 2025. This is expected to be partially offset by continued mid-teens growth in dietary supplement revenue, although growth in this segment is projected to moderate in the second half of 2025 due to tougher year-over-year comparisons following the successful onboarding of the Amazon e-commerce channel in late 2024. The fourth quarter is also expected to be impacted by fewer business days and holiday-related slowdowns.

Despite the positive strategic trajectory, several risks warrant investor attention. The elevated attrition rate, which stood at around 8% in Q3 2025 compared to a historical 5%, remains a challenge that management is actively addressing through enhanced sales force coverage and improved value propositions. Competition, particularly from price-focused rivals, continues to be a factor influencing market share. Macroeconomic headwinds, including inflation, high interest rates, and potential trade policy impacts on raw material costs (e.g., estradiol from China, trocars from Pakistan), could affect operational expenses and profitability. Legal proceedings, while some have been settled, still present ongoing uncertainties and potential costs. Furthermore, the company has disclosed a material weakness in its internal controls over financial reporting, related to insufficient technical accounting personnel and IT general controls, which remains unremediated as of September 30, 2025. While remediation efforts are underway, this poses a risk to financial reporting accuracy until fully resolved.

Conclusion

Biote Corp. stands at a pivotal juncture, actively transforming its commercial organization and leveraging its technological advantages to reignite growth. The company's commitment to a practitioner-centric, integrated platform, underpinned by proprietary CDSS and the BioteRx system, provides a strong foundation for long-term differentiation in the hormone optimization and therapeutic wellness market. While recent financial performance has reflected the disruptive, albeit necessary, changes in its sales force and the rollout of new technologies, management's decisive actions, including strategic acquisitions, organizational restructuring, and prudent capital deployment, signal a clear path toward improved operational efficiency and shareholder value.

The reiterated 2025 guidance acknowledges the near-term challenges as Biote navigates this transition, but the underlying strategic initiatives—focused on accelerating new provider wins, maximizing value from top-tier clinics, and instilling financial discipline—are designed to capitalize on a healthy and underpenetrated market. Investors should monitor the effectiveness of the commercial realignment, the stabilization of attrition rates, and the continued ramp-up of vertical integration through Asteria Health. Biote's ability to execute on its technological roadmap and strengthen its competitive moat will be crucial in translating its strategic vision into sustained revenue growth and enhanced profitability in the years ahead.