Strategic Execution and Operational Context
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Performance was primarily impacted by a voluntary recall of bio-identical hormone pellet inventory initiated in January, which created a $1.7 million revenue headwind.
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The recall acted as a significant operational distraction, forcing the sales force to focus on account servicing and inventory allocation rather than new growth initiatives.
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Management successfully expanded the sales team to approximately 120 personnel, completing a key 2026 strategic objective to increase commercial capacity.
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A more disciplined qualification process is shifting the sales pipeline toward higher-value OB/GYN and general practitioners to improve long-term revenue predictability.
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New practitioner training reached near-full capacity with over 200 trained in Q1, which management views as a leading indicator for future procedure volume.
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Vertical integration at Asteria Health was temporarily throttled, with the facility producing only 30% of shipped pellets in Q1 compared to over 50% in the prior quarter.
Outlook and Recovery Framework
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Management maintains full-year 2026 guidance, expecting revenue above $190 million based on an anticipated return to growth in the second half of the year.
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Supply continuity at Asteria Health is expected to be fully restored by the end of the second quarter through the implementation of a second production shift.
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Procedure revenue growth for the first half of 2026 is now expected to be moderately lower than previously forecast due to lingering recall effects.
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The 200+ practitioners trained in Q1 are expected to begin contributing meaningfully to financial performance following a typical six-month onboarding ramp.
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Gross margins are expected to remain under pressure in Q2 due to an elevated mix of higher-cost third-party supply while Asteria builds safety stock.
Non-Recurring Impacts and Risk Factors
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The voluntary recall resulted in approximately $1.5 million of incremental costs, including $1.1 million impacting gross profit and $0.4 million in SG&A.
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Cash and cash equivalents decreased to $5.3 million following the full repayment of share repurchase liabilities in January 2026.
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Inventory allocation measures currently limit customers to two or three weeks of supply, which may continue to impact practitioner scheduling confidence in the near term.
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Net income was impacted by a $2.1 million gain from the change in fair value of earn-out liabilities, significantly lower than the $10.7 million gain in the prior year period.
Q&A Highlights
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Clinic attrition trends and stabilization post-recall
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Management stated attrition has stabilized over several quarters but remains slightly higher than desired.
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Positive daily volume trends were observed immediately prior to the recall, suggesting underlying demand remains healthy despite the supply disruption.
Confidence in maintaining full-year guidance despite Q1 shortfall
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Confidence is driven by the belief that the headwind is a temporary supply issue rather than a shift in market demand.
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Management expects to capture pent-up demand in the coming months as inventory levels normalize and the expanded sales force begins to contribute.
Specific challenges in pellet production and sourcing
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Estrogen estradiol pellets are particularly difficult to produce because the process is highly manual and cannot be scaled as easily as testosterone pellets.
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Biote utilized third-party pharmacy partners to maintain patient care, which strained broader industry supply but helped mitigate the impact on Biote's network.
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