ImmuCell's Q3 2025: Contradictions Emerge on Re-Tain Approval, Inventory Management, and Contamination Impact

Date of Call: November 14, 2025

Financials Results

• Revenue: Product sales down 8% in Q3 2025 (−$505,000 vs Q3 2024); 9-month product sales up 7% (+$1.3M vs prior 9 months); trailing 12-month product sales up 16% (+$3.9M vs prior 12 months).
• EPS: Basic net income per share ≈ $0.20 for the 9 months ended Sep 30, 2025 vs a net loss of $0.34 per share for the 9 months ended Sep 30, 2024.
• Gross Margin: 43% in Q3 2025 vs 26% in Q3 2024; 9-month 2025 gross margin 43% vs 27% prior-year 9-month; trailing 12-month 41% vs 27% prior trailing 12-month.

Guidance:

• Focus on operational excellence to ensure consistent supply and quality.
• Currently producing at an annual rate close to a $30 million capacity target; evaluating next capacity expansion opportunities.
• Expect to lap backlog dynamics in the second half of 2026.
• Awaiting FDA approval for Re-Tain; running investigational field studies to shape 2026 market entry.
• Building inventory for peak season while actively managing cash and weekly production-sales planning.

Business Commentary:

* Improved Financial Performance: - ImmuCell Corporation reported net income of $1.8 million during the 9 months ended September 30, 2025, compared to a net loss of $2.7 million in the same period of the prior year, representing a $4.5 million swing in the right direction. - The improvement was driven by higher sales, increased gross margins, and a reduction in operating expenses.

* Capacity Expansion and Production Yields: - ImmuCell has expanded its production capacity and can now support an annual revenue of approximately $30 million per year, nearing its capacity expansion goal. - Increased production output and improved manufacturing performance led to higher gross margins, which improved from 26% in Q3 2024 to 43% in Q3 2025.

• Commercial Success and Market Recovery:
• Domestic sales were up 2% during Q3 2025 compared to Q3 2024 and 9.5% compared to Q2 2025.

• The company's focus on operational excellence, rebuilding confidence in the market, and refilling distribution channels after addressing a backlog of orders contributed to this recovery.

• Gross Margin Improvement:

• Gross margin as a percentage of product sales increased to 43% during Q3 2025 compared to 26% in Q3 2024.

• The improvement was primarily due to enhanced manufacturing performance, a price increase of around 6%, and increased sales volume that helped spread fixed costs across a larger volume of sales.

• New Leadership and Strategic Focus:

• ImmuCell appointed Olivier Te Boekhorst as President and CEO, bringing extensive animal health experience from his tenure at IDEXX.
• The new leadership is focused on building on the foundation laid by Michael Brigham, prioritizing operational excellence, and capitalizing on the full potential of the First Defense suite of solutions.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted a $4.5M swing to net income ($1.8M vs a $2.7M loss prior year), gross margin improvement to 43% in Q3 2025 (vs 26% prior year), the ability to produce near a $30M annual rate, and an energized commercial team focused on regaining customers and growth.

Q&A:

• Question from Frank Gasca (private investor): I don't see the clean slate you referred to. Regarding First Defense, what has changed? You went from an expansion of capacity and committed capital to being uncommitted to that expansion. What active steps are you taking to increase the growth that was anticipated years ago?
  Response: We have reached the intended capacity with improved quality controls and manufacturing predictability, enabling the commercial team to actively pursue new customers and expand usage of First Defense.

• Question from George Melas (MKH Management Company, LLC): WIP continues to grow (frozen colostrum ≈ $3.3M) and finished goods are at about $2M (highest in years). How do you plan to balance production with cash generation/cash management?
  Response: Inventory was intentionally rebuilt from near-zero to support peak season; management conducts weekly production-sales planning and is monitoring colostrum levels to avoid excess while supporting demand.

• Question from Joe Diaz (Lytham Partners, LLC): The margin improvement in Q3 was very good. What do you attribute that to?
  Response: Gross margin improvement was driven primarily by better manufacturing performance, roughly 6% price increases, and higher volumes spreading fixed costs.

Contradiction Point 1

Re-Tain Product Launch and Regulatory Approval Status

It directly impacts expectations regarding the timeline for the commercial launch of Re-Tain and the company's ability to secure regulatory approval, potentially influencing product revenue and investor expectations.

What specific steps are being taken to accelerate the long-anticipated growth in First Defense despite capacity expansion? - Frank Gasca(Private Investor)

2025Q3: On our side, we've passed inspection and do not have a 483. The challenge is with our CMO for filling, which has an ongoing 483. The timing of resolution is out of our control and is an open inspection. It's the final hurdle to FDA approval. - Michael F. Brigham(CEO)

Can you provide an update on Re-Tain, including any recent FDA inspection and resulting Form 483? Has there been further communication with the FDA regarding this, and can you comment on the delay in potential approval? - Andrew Rem (Odinson Partners)

2025Q2: On our side, we've passed inspection and do not have a 483. The challenge is with our CMO for filling, which has an ongoing 483. The timing of resolution is out of our control and is an open inspection. It's the final hurdle to FDA approval. - Michael F. Brigham(CEO)

Contradiction Point 2

Inventory Management and Financial Strategy

It involves changes in financial and operational strategies, specifically regarding inventory management and cash flow, which are critical for operational efficiency and financial planning.

How will you balance inventory growth, especially frozen colostrum and finished goods, with cash flow management? - George Melas (MKH Management Company, LLC)

2025Q3: We have a regular inventory review process to manage levels effectively. Colostrum is a key ingredient, and we ensure that we have a desirable level without overstocking. - Timothy Fiori(CFO)

Can you provide details on inventory nearing expiration and the amount expected to expire in the second half of the year for investigational use? - Andrew Rem (Odinson Partners)

2025Q2: All of it will be used for investigational use, not generating revenue. Expenses for this inventory have already been accounted for. - Michael F. Brigham(CEO)

Contradiction Point 3

Inventory and Cash Management

It involves the company's approach to managing inventory levels and cash generation, which are critical for financial stability and operational efficiency.

How do you plan to balance inventory growth, especially in frozen colostrum and finished goods, with cash flow management? - George Melas (MKH Management Company, LLC)

2025Q3: We have a regular inventory review process to manage levels effectively. Colostrum is a key ingredient, and we ensure that we have a desirable level without overstocking. - Timothy Fiori(CFO)

How will the new bulk powder product contribute by late 2025 and into 2026, given Tri-Shield's sales share rose to 71% this quarter from 55% last quarter? - George Melas (MKH Management)

2025Q1: Our inventory levels are within our normal range. We also have specified that the frozen colostrum will move out of the inventory category and into finished goods. - Michael Brigham(CEO)

Contradiction Point 4

Impact of Contamination Event

It pertains to the long-term impact of the contamination event on the company's financial and operational recovery, which is crucial for investor confidence.

What active steps are being taken to drive the growth that was anticipated years ago? - Frank Gasca (Private Investor)

2025Q3: We have now reached the capacity level set out in the expansion project, with improved quality measures for predictable manufacturing. - P.F. Te Boekhorst(CEO)

Can you provide more details on expense category breakdowns under the new CFO and guidance for Q2 and Q3 EBITDA this year given the focus on adjusted EBITDA over the past 12 months? - Russ Tolander (Capital Alliance)

2025Q1: The contamination event in April 2024 affected the first quarter significantly, and subsequent quarters were impacted less. - Michael Brigham(CEO)

Contradiction Point 5

Inventory Management Strategy

It involves strategic planning for inventory levels, which is crucial for operational efficiency and financial management of the company.

How will you balance inventory growth with cash flow management? - George Melas (MKH Management Company, LLC)

2025Q3: We have a regular inventory review process to manage levels effectively. Colostrum is a key ingredient, and we ensure that we have a desirable level without overstocking. - Timothy Fiori(CFO)

Why has WIP inventory increased significantly over the past 2.5 years? What is the strategy for utilizing this inventory? - George Melas-Kyriazi (MKH Management)

2024Q4: The increase in inventory, especially WIP, was due to the expansion of colostrum collection to feed the production process. The strategy involves exploring a new format of bulk product using the excess colostrum. - Michael Brigham(CEO)