ImmuCell Corporation Q1 FY2026 earnings call

Strategic Focus Update

• In late 2025, Immucel revised its corporate strategy to prioritize the First Defense line of calf scour preventative products, exiting development of the Retain subclinical mastitis product to refocus resources on this high-potential core market.
• The company updated its corporate governance in Q1 2026, installing a smaller independent board with 3 new members that bring specialized animal health and functional expertise to support the focused growth strategy.

Market Share and Growth Traction

• Calf scours is the leading cause of death for pre-weaning calves, creating an estimated $1 billion annual economic burden in the U.S. The overall U.S. calf scours prevention biologics category grew 11% YoY in Q1 2026, and Immucel captured nearly 80% of total category dollar expansion in the quarter.
• Between 2021 and Q1 2026, Immucel's share of U.S. category spend expanded from 29.1% to 35.2%, and its share of animals treated grew from 15% to 18.1%. The higher share of spend versus treatment share reflects the company's premium pricing positioning for its differentiated products.
• The domestic U.S. addressable market is estimated at over $200 million, with the total international TAM at least five times larger; roughly 55% of U.S. calves still receive no biological scours prevention, leaving significant room for further growth.

Manufacturing Performance and Capacity Expansion

• Monthly manufacturing output reached a record of over 450,000 units in Q1 2026, up from 380,000 units per month in 2025, 344,000 in 2024, and 252,000 in 2023. Higher output and improved yield drove gross margin expansion alongside better price realization.
• Key improvements that enabled higher yield and output included more aligned production and sales planning, balanced workflows, added planned overtime for critical process steps, reduced process waste, and small capital investments to eliminate throughput bottlenecks.
• The company secured a $2 million settlement with a former contract manufacturer, which will be funded to a major capacity expansion of its colostrum processing plant. The expansion will repurpose equipment originally purchased for Retain and add advanced processing and drying technology; final plans are still being finalized.

Commercial and International Expansion

• The company expanded U.S. sales coverage to 3 new territories (up from the previously planned 2) to capitalize on strong domestic market momentum. Hired a new international business development executive with deep dairy industry experience to transition from a reactive to a disciplined strategic approach to global expansion, with rigorous market prioritization to build a sustainable foundation for long-term international growth.

Overall product sales for Q1 2026 reached $10.4 million, a 28.4% increase from the prior-year record quarter. Domestic sales grew 35.7% YoY to $9.7 million, accounting for 93.3% of total revenue. International sales declined 30.2% YoY to $600,000, making up the remaining 5.8% of total revenue. TriShield, the company's flagship calf scour preventative product, grew 38.5% YoY and was the primary driver of overall revenue growth. Gross margin reached 45% of product sales in Q1 2026, up from 41.6% in Q1 2025, even after a 2.4% headwind from the shift of legacy retained asset costs to cost of goods sold. Net income totaled $1.9 million (34% YoY growth), with operating expenses of $2.7 million, up from $2.2 million in Q1 2025.

Management did not release explicit numerical full-year 2026 guidance, but reaffirmed confidence in its focused growth strategy and re-stated its core priorities for 2026:

• Continue ongoing continuous yield improvement at existing manufacturing facilities to keep pace with customer demand.
• Execute the major colostrum processing plant capacity expansion to support long-term demand growth, with additional details to be shared on future earnings calls once plans are finalized.
• Maintain disciplined investment in commercial expansion (domestic sales territory expansion and international market prioritization) to capture untapped market share, with no change to stated long-term growth targets from prior calls.

• Historical core challenge for Immucel has been manufacturing capacity constraints and product availability, which the company is still working to resolve to stay ahead of demand through 2026. • The company faces ongoing contamination risk in its manufacturing processes that requires active mitigation to maintain output and product quality. • International expansion, while large in total potential, carries execution risk and requires significant time and investment to succeed, with no guarantee of near-term returns. • Yield improvement is an incremental, ongoing process with no single major fix, so progress may be slower than expected, limiting near-term output growth.

Q: Frank Gasker asked for details on the First Defense bulk product, its seasonality, target market, and competitive positioning relative to existing Immucel products. / A: First Defense bulk is a lower-cost non-USDA approved product that uses the company's core First Defense colostrum technology with a different manufacturing process, allowing a lower price point for customers. It is designed for group feeding operations, where producers can add it to bulk water, colostrum, or milk instead of individual calf dosing. It was launched in the second half of 2025 and is still in an early launch phase as of Q1 2026.

Q: George Milos asked what key operational improvements drove Q1 yield gains, and what the company's maximum current capacity is with existing facilities. / A: Key improvements over the past 4-6 months included SKU-level alignment of sales and production planning to balance workflows, planned overtime for critical process steps, intentional reduction of process waste, and small capital investments to eliminate bottlenecks. Management does not have a fixed maximum capacity number, and is focused on continuous incremental percentage yield improvement, while actively planning for a major new capacity expansion funded by the $2 million contract manufacturer settlement.

Q: George Milos asked what drove the sharp rebound in TriShield sales in Q1 2026 after a dip during 2025. / A: Past TriShield sales trends were heavily distorted by backorder dynamics, where sales depended on available product rather than actual customer demand. The underlying long-term trend shows growing customer adoption of TriShield, which is the company's flagship premium product. Strong Q1 demand for the higher-priced TriShield is also supported by rising calf values, which have made customers less price-sensitive for premium prevention products.

Q: Frank Gasker asked what drove the decision to expand the U.S. sales force by one additional territory beyond the original plan, and how growth is split between the dairy and beef calf segments. / A: The company added a third territory (a long-vacant open region in the western U.S.) to accelerate growth, as the company has observed that more direct customer contact to explain the product's differentiation from competing vaccines drives higher adoption. Growth is strong across both dairy (Immucel's traditional core) and beef segments, as rising calf values in both sectors make investment in First Defense prevention attractive for producers. Territories are prioritized based on the size of the potential calf population, untreatment rate, and expected speed of return on sales investment.