Aytu BioPharma, Inc. (NASDAQ:AYTU) Q1 2023 Earnings Call Transcript

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We’ve got the ability to bring in additional products and really have that 1,000 or so pharmacy network go to work for us. And it’s a huge boon for the company. There’s a fair amount of secret sauce in there which we don’t talk a lot about, but that’s by design. There’s a lot that goes on beyond the scenes, behind the scenes rather to really drive that leverage and it continues to show proved positive that. When you put products on this platform and drive it through the network, they grow and a testament to that is the Poly-Vi-Flor, Tri-Vi-Flor line, Karbinal and of course the ADHD, which has been on the original Neos RxConnect platform and all are showing tremendous growth. So it’s great to see that. We’re getting that leverage.

Roger Weiss: Very good. And real quick, you talked about the pharmaceutical side. On the consumer health side, obviously, we’ve seen great advances there, but kind of what changes need to be made to enable it to generate positive adjusted EBITDA?

Josh Disbrow: Yes, great question. And I’d say really not a lot of changes. It’s just more time continuing shift the business as we’re doing. As I mentioned in my prepared comments, we made a strategic shift from the direct mail campaign and the product — like the supplements that we sell through direct mail in favor of the OTC medicines that are almost entirely sold through Amazon and our online platform. While that is a lower gross margin product line, that is a much higher net contribution margin product line and that’s by design. You have much more efficient sales and marketing spend on that segment than you do in the direct mail segment. There’s really not as much human touch. We don’t involve call centers. We don’t do any direct mailings that calls high variable spend on the sales and marketing line.

We really let the Amazon platform do its job and we’re continuing to refine how we work through the Amazon platform while we continue to build out our own websites. And of course, with the advent of the C’rcle Health line, we will have a concerted very significant effort to rebrand the products under the C’rcle Health family name and ultimately drive more and more through that. And that will drive significant annuity value as we’re able to capture more consumer information, capture the consumer’s direct contact information such we’re able to drive higher levels of adherence, higher levels of pull through and ultimately a higher annuity value for those OTC medicines. And so that’s been a tremendous growth engine for the company. And if we can just continue to shift more and more to that side of the house, it will drive the positive EBITDA margin that will be much more predictable and we think in scale.

We think that’s a really solid growth engine for the company. We do think that consumer health can become EBITDA positive in the relative near term. It’s just we need a little bit more time to continue that shift over time.

Operator: Okay. Thank you. There appear to be no further questions in the queue. So I will hand it back to Mr. Disbrow for any closing comments he may have.

Josh Disbrow: Great. Thanks very much. I appreciate the questions. And again, just want to reiterate the fact that I am just so incredibly proud of this team, how hard everyone has worked. The entire organization has put a lot of thought, a lot of diligence and a lot of great effort into achieving as important milestone. Super proud to be reporting our first ever positive EBITDA quarter, super proud to be reporting yet again in all-time high in revenue. Obviously, the Rx business continues to really grow, continues to really be healthy, solid positive EBITDA margin on that side of the business and consumers not too far behind. So, thanks to everyone. Appreciate everyone’s participation in the call today. Looking forward to updating you next quarter on the December quarter, which will be in February, so until then thanks very much and have a great afternoon and rest of your day.

Operator: Thank you. Ladies and gentlemen, this does conclude today’s conference call. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation.

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