Biotese's Recall Recovery: Navigating Supply Disruption and Charting a Path to Growth

A voluntary product recall disrupts Q2, but the company signals supply normalization and a renewed focus on operational execution.

BTMDW · Earnings Call · 2026-08-05

Supply Disruption and the Road to Normalization

Biotese (BTMDW) reported Q2 2026 results that underscored the lingering impact of a voluntary product recall earlier in the year. The recall, which affected its Asteria Health hormone pellet line, temporarily constrained supply and disrupted procedure volumes. Revenue fell 9.5% to $44.2 million, with procedure revenue down 13.9% to $30.3 million, including an estimated $3.3 million hit from the recall. The company's interim CEO, Bob Peterson, acknowledged the gap between internal progress and financial results:

However, our reported financial results do not yet reflect the significant progress we've made internally against our strategic objectives.
Robert Peterson, Interim Chief Executive Officer and Chief Financial Officer · 2026-08-05

Supply issues are now largely resolved. “As we exit the second quarter with these challenges largely resolved, Xteria Health is once again operating at normalized inventory and increased production levels, supported by the addition of a second production shift.” — Robert Peterson, Interim Chief Executive Officer and Chief Financial Officer · 2026-08-05 The company expects to source a lower percentage of pellets from third-party suppliers in Q3, which should help gross margin recover. At the same time, management is doubling down on customer success—specifically strengthening clinic retention and enhancing the practitioner experience to prevent attrition, which remains elevated at ~8%.

Operational Turnaround and Sales Force Focus

The company is entering what it calls "phase two" of its strategic roadmap, centered on restoring procedure volume growth. Key initiatives include boosting commercial readiness through a fully staffed sales force and data-driven field activity. Peterson noted that face-to-face engagement is critical: “Attrition is still sitting at the high single digits rate. No material change.” — Robert Peterson, Interim Chief Executive Officer and Chief Financial Officer · 2026-08-05 He added, "We know that when we're in accounts every month and in front of the practitioner, we don't lose that account."

The company is also evaluating inorganic opportunities to complement organic growth, though details are under wraps. Management remains committed to a disciplined approach, viewing M&A as a way to broaden its footprint in hormone optimization and healthy aging.

Financial Guidance and Cost Actions

Gross margin contracted to 65.4% from 71.6% due to recall-related costs, including higher third-party pellet sourcing. SG&A expenses rose to $32.4 million from $24.2 million, driven largely by legal expenses. However, many legal matters have been resolved, and Peterson noted, “With all the settlements, this will pretty much eliminate all material outstanding legal matters.” — Robert Peterson, Interim Chief Executive Officer and Chief Financial Officer · 2026-08-05 Adjusted EBITDA fell to $5.6 million with a margin of 12.6%. The full-year outlook was revised downward: revenue guidance cut to above $175 million (from $190 million) and adjusted EBITDA to above $25 million (from $38 million). The company expects procedure revenue to improve sequentially in Q3 and Q4, but year-over-year growth will remain negative due to the first-half disruption. Peterson expressed confidence in achieving sequential improvements, citing that non-Asteria cohorts showed steady growth during the supply shortage. Despite near-term setbacks, management is optimistic about the longer-term trajectory. "We are building a more resilient platform that we believe will support sustainable, profitable growth over the long term," said Peterson. The focus on Earnings growth and operational discipline suggests a path to recovery, even if the current quarter reflects the ongoing cost of the recall. With supply restored and a clear plan for sales productivity, Biotese is positioned to rebuild momentum in the second half of 2026.