biote (BTMD) Q1 2026 earnings review
Turnaround Remains Elusive as Core Business Plunges Further
Biote's 'transition year' of 2025 has spilled over into 2026 with no signs of a bottom. Despite management's optimism about leading indicators and a fully staffed sales team, the core procedure business deteriorated further, dropping 13.2% YoY. A voluntary product recall at the Asteria Health facility compounded the misery, forcing the company to rely on higher-cost third-party suppliers and crushing gross margins to 68.9%. With rising SG&A expenses meeting falling sales, Adjusted EBITDA collapsed 36.6%. While dietary supplements grew 19%, it wasn't enough to mask the core deterioration. Management promises a second-half recovery, but current financial trajectories point strictly downwards.
🐂 Bull Case
The company is nearing its target of approximately 120 sales reps. If their training translates into new clinic additions, the promised H2 2026 recovery might finally materialize.
The supplements segment surged 19.1% YoY to $11M. This division provides a consistent, high-margin buffer against the ongoing core business decline.
🐻 Bear Case
This marks the fifth consecutive quarter of decelerating growth for the core business, culminating in a 13.2% drop in Q1. The product recall exacerbates an already ugly trend.
Management is spending heavily on the commercial rebuild while revenue shrinks. Consequently, Adjusted EBITDA margins plummeted from 28.1% to 19.4%.
⚖️ Verdict: 🔴
Bearish. Management is asking investors to look past another terrible quarter on the promise of H2 growth. But with margins compressing, the core product recalled, and expenses rising, the execution risk remains exceptionally high.
Key Themes
Core Procedure Revenue in Freefall
The company's core engine is stalling faster. Procedure revenue dropped 13.2% YoY to $31.3M, marking the fifth consecutive quarter of deceleration (from -3.6% in 25Q1). While management blames the voluntary product recall for the Q1 weakness, the trend was already ugly (-13.0% in 25Q4). The narrative of a 'transition year' is stretching thin, and the promised H2 recovery requires a dramatic reversal of momentum.
Recall Disrupts Supply Chain and Margins
A voluntary recall of hormone pellets from Asteria Health severely impacted profitability. Biote was forced to source replacement products from third-party suppliers at higher costs, causing gross margin to drop 540 basis points YoY to 68.9%. This unwinds the primary benefit of their 503B vertical integration effort and introduces near-term supply continuity risks.
Investing Heavily into a Shrinking Top Line
Biote is aggressively expanding its sales force to orchestrate a turnaround. Consequently, SG&A expenses rose to $27.8M despite an 8.3% decline in total revenue. This toxic combination of falling sales and rising expenses caused operating income to plummet 67% YoY to $3.2M, and Adjusted EBITDA dropped 36.6% to $8.7M. Management is paying a high price for growth that has yet to arrive.
Supplements Provide Crucial Buffer
The dietary supplements segment remains the only functioning growth lever, accelerating to 19.1% YoY growth ($11.0M). Driven by e-commerce, this segment continues to perform well against tough comparables and provides a vital, alternative revenue stream while the clinical procedure side of the business attempts to restructure.
Sales Force Expansion Nearing Completion
Management noted they are nearing their stated goal of approximately 120 sales representatives. Leading indicators, such as the number of newly trained practitioners and new clinic growth, are reportedly 'moving in the right direction.' The success of the entire company hinges on these new reps generating volume in the second half of the year.
Other KPIs
Down 83% from $15.8M a year ago. Notably, this quarter's net income was heavily propped up by a $2.1M non-cash gain from the change in fair value of earnout liabilities. Without this paper gain, the company barely broke even.
Decelerating significantly from $6.5M in Q1 2025. This reflects the severe drop in operating profitability, mitigated slightly by favorable working capital movements (Accounts Payable increased by $1.4M). The cash balance sits at just $5.3M (down from $24.1M at year-end), largely due to the $18.5M final settlement payment on the founder's share repurchase liability.
Guidance
Stable. With FY25 revenue ending at approximately $192.3M, this implies a flat to slightly down year. Procedure revenue is expected to grow in H2, but H1 will be 'moderately lower' due to the ongoing recall impacts.
Decelerating. Compared to ~$53.6M generated in FY25, this implies a massive ~29% drop in profitability. Management is heavily front-loading investments in the commercial organization, betting entirely on a top-line reacceleration to eventually restore margins.
Key Questions
Visibility into H2 Recovery
Given the 13.2% drop in Q1 procedure revenue, what specific, quantifiable leading indicators (like training throughput or new clinic starts) give you confidence in an H2 recovery?
Margin Impact of the Recall
How much of the 540 bps gross margin compression was strictly due to the recall versus structurally higher third-party costs, and when do you expect the Asteria facility to resume full production?
Liquidity and Capital Allocation
With the cash balance falling to $5.3M after the share repurchase payout, and operating cash flow shrinking, how are you viewing capital allocation and liquidity needs for the remainder of the year?