Evolus Inc., whose flagship neurotoxin product, Jeuveau, competes with Botox in the aesthetics industry, says it should be able to survive a recession, as sales are booming for its frown line-treating product.
The Newport Beach-based company (Nasdaq: EOLS) last week reported second-quarter revenue jumped 42% to $37.2 million, topping the average analyst estimate of $36.5 million.
“We are very pleased to report another record quarter that reflected above-market growth, increased market share, and disciplined operating expense management,” Evolus Chief Executive David Moatazedi said in a statement.
“Our lead sales and marketing metrics demonstrated growing brand awareness and the continued strong adoption of Jeuveau,” he said.
In the two trading sessions after last week’s results, shares fell 27% to around $9.58 and market cap around $537 million. The company reported an adjusted loss of 38 cents a share, which was wider than the Zacks consensus for a 24-cent loss.
Evolus said it incurred higher operating expenses in the quarter because of higher product cost of sales, increased personnel costs and increases in commercial activities, such as $2 million for a licensing agreement with a 3D printing company.
The company said it can reach “the upper end” of its full-year sales guidance range of $143 million to $150 million, which while it equates to a year-over-year growth rate approaching 50%, is still lower than the average analyst estimate for $150.6 million.
After Jeuveau’s release in 2019, Allergan and its South Korean manufacturer, Medytox Inc., filed lawsuits against Evolus and its manufacturing partners and in late 2020 won a U.S. trade ruling that imposed a 21-month import ban on Evolus.
Shares of Evolus, which went public in 2018 at a stock price of $12, fell to around $3 in 2020.
The two sides settled last year. Evolus agreed to pay royalties and $35 million in cash. It also issued 6.8 million shares to Medytox, which now owns 15.5% of Evolus and is the company’s single largest shareholder.
Jeuveau and Botox face increasing competition. Another Newport Beach-based company, Hugel America Inc., in June reported its South Korean parent firm named as chairman Brent Saunders, who previously served as chairman and CEO of Allergan from 2015 until its 2020 acquisition by AbbVie Inc. for $63 billion.
The company’s Irvine-based division now operates under the Allergan Aesthetics name.
While Allergan historically has catered to older clients with its Botox offering for aesthetic uses, Evolus is setting its sights on millennials in their 20s and 30s, who make up about 40% of its customer base, officials say.
Evolus said it added 590 new customer accounts in the second quarter, bringing the total base since launch to more than 8,100 purchasing customers with a reorder rate that continues to run above 70%.
During the second quarter, Evolus ran a total of 750 individualized co-branded marketing campaigns across the United States that generated more than 250 million media impressions.
In July, Evolus launched its largest promotional campaign to date called “Switch Your Tox and Love Evolus Forever.”
Evolus is predicting better things in the coming months.
It plans to launch its product in Europe in the current quarter with a different name, Nuceiva.
The company recently completed patient enrollment in its Phase II “extra strength” Jeuveau clinical study to provide a “multi-strength neurotoxin, giving customers and consumers increased treatment options.”
It also expects its gross margin “to step up meaningfully” to 68% to 71% in the fourth quarter when a royalty payment to Allergan will end. The company reported a second-quarter adjusted gross profit margin of 55.4%.
“We remain confident that Evolus can continue to grow at a faster pace than the toxin market and gain share by leveraging our unique business model focused on the cash-pay aesthetic market and targeting the millennial consumer using our cost-effective digital platform,” Moatazedi said.
The company says it has enough cash, $84.5 million, to “fund current operations through cash flow breakeven.”