NEXGEL, Inc. Q3 FY2025 earnings call

Contract Manufacturing - Pivotal in growth, increased demand from existing and new customers. Partnership with Cintas strong, SilverSeal in their kits. Clinical trial on hydrogels for laser hair removal near publication. Partnership with iRhythm for Zio monitor. New customer pipeline robust. ### Consumer Products - Logistical delays resolved, strong fourth quarter expected. New product launches including lip gloss, Kenco Derm expanding, Metagel's products doing well on Amazon, expanded Stada partnership with new products in December and early 2026.

Contract Manufacturing: Third quarter revenue totaled $907,000, a slight increase year over year and sequentially. Led by strong relationship with Cintas and SilverSeal product in their wound care kits. Partnership with iRhythm for hydrogels in Zio ECG heart monitor. Consumer Products: Revenue stable year over year and sequentially. Logistical delays resolved, strong fourth quarter expected. New product launches including lip gloss, Kenco Derm expanding into eczema solutions, Metagel's new offerings, and expanded partnership with Stada with new products planned.

Fourth quarter revenue expected to increase sequentially, Q4 to be record. Full year 2025 revenue between $12-$12.5 million, higher end considering strong consumer products holiday season. Adjusted EBITDA loss narrowing to close to breakeven in Q4.

Unforeseen logistical delays affecting product launches. Uncertainty with AbbVie's plans regarding the recycling device after impairment charge.

Q: Could you elaborate a little bit more on the logistical delays you mentioned? Like, how many days worth of sales did it end? And, I guess, how much could those sales have been worth?

A: So the total delay was varied on different products. A lot of it had to do with stuff getting stuck in customs and trying to create new ways of getting the product into the country because everything was sort of held up with the new regulations and changing. It probably impacted the existing products not too severely. But where it really mattered was we were hoping for a late August early release on the lip gloss as it results. It was only released on September 27, right at the very end of the quarter. And that happened with a couple of products. So, you're probably talking about $100,000 to $200,000, maybe depending on what it would've done during that period of time. So, not devastating, but it was frustrating at the time.

Q: I guess what kinda gives you confidence in that number now, especially, like, the top end of that number? Are you seeing any tailwinds or any data points that would suggest you could get there, or is it more just the seasonality you expect?

A: No. Actually, this is a great point, which is we appear to be and we are flat from third quarter last year to third quarter this year. But understand in third quarter last year and fourth quarter last year, we launched with two new customers on the contract manufacturing side that were quite large. So Q3 of last year was a record for us because Owens and Minor was onboarded. And for example, and I'll use this just as an example with round numbers, in Q4, we had very, very large sales, call it $400,000 from the initial orders of Cintas. Well, this year, the initial orders of Owens and the initial order of Cintas are replaced by repeat orders at about 50% of the size and volume. The reason we're flat is because the rest of the business is still growing, the rest of the customers are still growing. So without onboarding anybody new in Q3, yes, we're gonna have that drop, we maintained where we are. Well, in Q4, but we still have the growth offsetting it of the rest of the products. And we'll be shipping some new customers, like iRhythm. So we already kinda know that the fourth quarter will be a very large contract manufacturing quarter and will be up. What we're not as sure about is how big are the new products and the existing products gonna do during the holiday season. That's always the wildcard with the economy and everything else. So that's really, you know, we know it's gonna be fourth quarter is always the strongest. We know sales will also increase there. Just how much is difficult to tell.

Q: I know previously you talked about AbbVie and the restarting device. I know AbbVie took a large impairment charge on the recycling device recently. Do you know if they're still planning on launching a product and just what's kinda going on with that?

A: So it's really puzzling and very frustrating. On October 24, I received an email from AbbVie saying that they put in the RF and that we'd be receiving our first PO shortly, which I was hoping to announce on this call. And then I've heard from others that they've actually taken that charge. So I'm not sure where AbbVie stands. It might be the worst case of one hand not knowing what the other hand is doing that I've ever seen. But it is a frustrating situation trying to get to the bottom of it, but I am very concerned about it. And, honestly, I really don't know.

Q: What is the current order book like from the contract manufacturing side?

A: So it's strong. I don't wanna get into too much detail as to what it is, but all of the existing continue to order. We're seeing growth, you know, along the CAGRs of their growth of their medical devices across the entire segment. We've got a pretty robust and full pipeline of potential new customers, some of whom will be onboarding this quarter, next quarter. So we're very bullish on how our contract is going to grow over the next two or three quarters. At least we have visibility that far out.

Q: Are you still expecting to achieve a positive EBITDA by the end of the year? Or has that changed?

A: Yeah. We think so. If not, it's gonna be super close. But we think it's really gonna depend on the consumer products. We think that, you know, we were hoping to chop more off. I'll be honest with you. I was hoping to chop more off in Q3 than we did. But with what we see coming is a very strong fourth quarter in contract, as well as if we can get a very good quarter in terms of consumer products in Q4, I think we have a chance to get there. We'll see.