NEXGEL, Inc. Q1 FY2025 earnings call

• Revenue for Q1 was slightly higher than guidance, totaling $2.81 million, up 121% y-o-y. Gross margin normalized to 42.4%, aligning with historical range. - Contract manufacturing played a pivotal role in growth, with demand from existing and new customers; AbbVie's RESONIC machine launch delayed but NEXGEL remains exclusive supplier of gel pads. - Consumer products: Medagel, Kenkoderm, and Silly George expanding product lines; partnership with STADA expanding beyond Histasolv. - Tariffs: Impact on Silly George products from China is manageable at current levels, but monitoring for potential escalations and considering manufacturing transition to Texas if needed.

Revenue for the first quarter was $2.81 million, a 121% year-over-year increase. Contract manufacturing revenue increased 58% year-over-year, led by increased demand from existing customers and new global corporations like Cintas and Owens & Minor. Consumer branded products increased 189% year-over-year, led by Silly George. Medagel will expand its product line with new offerings, Kenkoderm will double its product portfolio, and Silly George will launch new beauty products. The partnership with STADA is progressing well, with Histasolv exceeding projections.

• Guidance for $13 million in revenue in 2025 remains unchanged. - AbbVie's impact on revenue is minor and not expected to affect guidance. - Plans to launch another product with STADA in Q4 2025 and several more in 2026 beginning in Q1.

• Tariffs: Potential significant increase in tariffs on Silly George products from China could impact margins; manufacturing transition to Texas is a mitigation strategy. - AbbVie Launch Delays: RESONIC machine launch delay is out of NEXGEL's control, but product launch is expected eventually.

Q: How much did you bake into revenue from AbbVie's launch and does delay affect guidance?

A: We did not bake in a tremendous amount for AbbVie as revenue from them was minor; delay should not impact our $13 million guidance projection.

Q: Details on STADA product launch in 4Q 2025?

A: The first product with STADA was Histasolv, a digestive enzyme; we plan to launch another digestive enzyme in 4Q 2025, a third in Q1 2026, with synergies with Medagel offerings.

Q: Tariffs and manufacturing transition to Texas?

A: We have a clean room in Texas with capacity to transition manufacturing if tariffs escalate; current tariffs are manageable but monitoring for potential reescalation.

Q: Silly George revenue and market share?

A: Slight Q1 decline due to seasonality, but expecting growth in Q3/Q4 with new products; still gaining market share.

Q: Cash reserves and EBITDA positivity?

A: Current cash reserves are sufficient; aim to be EBITDA positive soon, and we prefer to avoid debt until achieving EBITDA positivity.