BTMD - BIOTE: MAKING INROADS INTO THE PREVENTIVE HEALTH CARE INDUSTRY
BIOTE: MAKING INROADS INTO THE PREVENTIVE HEALTH CARE INDUSTRY
Biote Corp. (NASDAQ: BTMD) is a leading solutions provider in preventive health care through the delivery of personalized hormone therapy. The Company has developed a comprehensive platform for Biote-certified practitioners to establish and operate a customized hormone optimization program in their practices. Biote-certified practitioners seek to optimize imbalances in their patients’ hormone, vitamin, and mineral levels and prescribe bioidentical hormone therapies and recommend dietary supplements to accomplish this end.
Biote Corp. (NASDAQ: BTMD)
Market Cap: $67.23M; Current Share Price: $6.19
Data by YCharts
The Company
Biote operates a high-growth practice-building business within the hormone optimization space, similar to a franchise model. The Biote Method provides certified practitioners with the following components developed explicitly for practitioners in the hormone optimization space: Biote Method education, training, and certification, practice management software, inventory management software, and information regarding available Hormone Replacement Therapy (HRT) products, as well as digital and point-of-care marketing support.
The Company also sells a complementary Biote-branded line of dietary supplements. It generates revenues by charging the Biote-partnered clinics fees associated with the support Biote provides for HRT and the sale of Biote-branded nutritional supplements.
The following vital factors indicate that Biote is well-positioned for significant growth soon.
- Rapidly expanding industry
As of 2020, the total U.S. market opportunity for HRT products, available in various forms, exceeded $7 billion and is expected to grow 7% annually through 2026. Growth in this field is expected to be fueled by “aging” demographics and expanding consumer demand for medical information and treatment options to address hormonal imbalances.
By 2030, over 1.2 billion women, 14% of the global population, will be in menopause or post-menopause. Yet, despite the growing number of women experiencing menopause, they remain an underserved population.
One key driver of this unmet medical need is more knowledge and experience in treating physicians. For many practitioners, the last time they received meaningful instruction on treating menopause and andropause was during medical school.
To capitalize on this ample and underserved market opportunity, Biote has developed a highly differentiated practice-building platform to enable practitioners to treat the hormone imbalance symptoms experienced by their patients. The Biote Method aims to bridge the gaps in education and treatment options while improving the efficiency of practitioners’ business operations and the hormone health of their aging patient base. Thus Biote is well-equipped to serve this rapidly growing market and grow along with it.
- Impressive Track Record
The Company has an experience of over 11 years, with over 3 million hormone optimization procedures performed by Biote-certified practitioners to date, including approximately 300,000 active patients.
Biote’s practitioner instructors are among the nation’s most experienced hormonal therapy clinical experts, including multiple HRT modalities, such as creams, gels, patches, pills, injections, and compounded bioidentical hormone pellets. Biote is contracted with and provides comprehensive support to over 6,400 practitioners – the retention rate amongst Biote-certified practitioners is also very high and stands above 90%.
Additionally, Biote has a track record of consistently achieving accelerated and highly profitable growth. Their four-year revenue CAGR from 2016-2020 was 22%.
For FY22, the Company delivered record results – it reported revenues of $165.0 million, an increase of 18.3% from $139.4 million in FY21. Continued procedures and dietary supplement revenue growth drove the increase. The gross profit margin for FY22 was 66.9% compared to 65.0% for FY21. The increase in gross profit margin was primarily due to a more favorable product mix. Adjusted EBITDA for FY22 was $50.1 million compared to $40.2 million for FY21. The 24.6% increase in Adjusted EBITDA was primarily driven by revenue growth and the business model’s positive operating leverage.
The Company is expected to continue with these impressive growth rates – for FY23, management has provided revenue guidance in the $190-$200 million range and EBITDA in the $56-$60 million range.
Moreover, the management seems committed to building long-term shareholder value through profitable growth – in early January this year; the Company completed a secondary offering of Biote Class A common stock – this transaction significantly increased the liquidity of its publicly traded shares and broadened institutional ownership.
Cash and cash equivalents at the end of FY22 stood at about $79.2 million, compared to $26.8 million at the end of FY22.
- Effective Business Model
The Company has developed a comprehensive platform for Biote-certified practitioners to establish and operate a personalized hormone optimization program in their practices. It provides partnered clinics with up-to-date scientific education delivered by highly experienced practitioner instructors.
The Company further provides Biote-certified practitioners with the clinical mentorship, practice support resources, inventory management tools, and marketing capability necessary to operate an efficient hormone optimization practice. Biote-certified practitioners can access FDA-registered outsourcing facilities that supply hormone optimization therapies should practitioners determine that treatment is appropriate for their patients. Further, the Company’s practice management software allows Biote-certified practitioners to efficiently order, track and manage hormone optimization product inventory, and meet other administrative requirements. The BioTracker software is integrated with the outsourcing facilities’ software to facilitate ordering and inventory control.
The high-growth business model offered by the Company features a predictable, annuity-like revenue stream characterized by high margins, strong profitability, and substantial free cash flow conversion. This compelling value proposition for healthcare providers is why Biote has a 90% clinic retention rate.
In other words, Company’s differentiated, scalable business model features attractive economics and strong free cash flow generation. This in turn drives clinic success, and retains existing and attracts new practitioners, thereby contributing to the Company’s popularity and future success.
- Planned Geographic Expansion
Since Biote’s initial founding in Texas, the Company has considerably scaled. During the year ended December 31, 2022, Biote conducted over 64% of its business in Texas, Oklahoma, New Mexico, Colorado, Arkansas, Louisiana, Mississippi, Alabama, Georgia, and Florida. In 2022, Biote also grew the size of its sales force by approximately 50% to over 120 customer-facing representatives.
In 2023, Biote plans to expand field sales and support staff to add liaisons in critical locations, add new geographies, and develop training capacity to meet the increased rate of new Biote-partnered clinics.
According to the Mater Data Forecast’s “Global Hormone Replacement Therapy Market Size, Share, Trends, COVID-19 Impact & Growth Analysis Report-Segmented By Type, Route of Administration & Region-Industry Forecast (2022 to 2027),” as of April 2021, 57% of the current global market for hormone products exists outside of North America. Thus there is a significant potential opportunity for Biote’s practice-building platform in a core group of Latin American countries, in Europe, and potentially in Asia, which some market analysts project to be the fastest-growing market globally.
The Company’s current presence outside the continental United States is in Puerto Rico, Mexico, and the Dominican Republic, where they enjoy a fast-growing but still nascent business.
In 2024, Biote plans to expand to countries like Brazil, Columbia, and Argentina. Biote believes that market acceptance is well established in these geographies, and targeted population demographics are favorable.
Overall, Biote seems promising because it operates in a rapidly growing industry and has a proven, highly effective business model. The efficiency of its business model and management team is evident in the consistently outstanding financial results delivered by the Company. Additionally, Biote is preparing to foray into new geographies such as Brazil and Argentina – this should also add to its growth trajectory and make the Company an attractive stock.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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Reference:
https://ir.biote.com/static-files/6d1e8517-a802-4fcc-b1a0-e38d1b0289a9
https://www.sec.gov/ix?doc=/Archives/edgar/data/1819253/000095017023010664/btmd-20221231.htm