Nexgel's Q3 2025 Earnings Call: Contradictions Emerge on ReSonic Device Status, Manufacturing Capacity, and Revenue Guidance

Date of Call: November 10, 2025

Financials Results

• Revenue: $2.9M, flat year-over-year; slightly higher sequentially
• Gross Margin: 42.4%, compared to 39.3% in the prior year

Guidance:

• Q4 revenues expected to increase sequentially; Q4 to be a record quarter.
• Full-year 2025 revenue guidance $12.0M–$12.5M (higher end assumes strong holiday consumer sales).
• Adjusted EBITDA expected to narrow further and approach break-even in Q4.
• Growth driven by contract manufacturing (including iRhythm) and upcoming consumer product launches supported by STADA financing.

Business Commentary:

* Revenue Stability and Gross Profit Margin Improvement: - NEXGEL reported revenue of $2.9 million for Q3 2025, flat year over year but slightly higher sequentially. - Despite flat revenue, the company's gross profit margin improved to 42.4%, up from 39.3% in the previous year. - This trend was driven by consistent performance in contract manufacturing and consumer-branded products, as well as improved operational efficiencies.

• Contract Manufacturing Growth and Strategic Partnerships:
• NEXGEL's contract manufacturing revenue totaled $907,000 in Q3 2025, showing a slight increase year over year and sequentially.
• The growth was led by increased demand from existing customers, such as Cintas, and the onboarding of new global corporations like iRhythm.

• The integration of NEXGEL's Hydrogels into iRhythm's ZIO heart monitor showcases another impactful application of its technology and a strategic partnership opportunity.

• Consumer Product Segment and Holiday Season Outlook:

• NEXGEL's consumer product revenue remained stable year over year and sequentially, with some logistical delays impacting inventory movement.
• Despite these delays, the company anticipates a strong fourth quarter with new product launches and expects full-year 2025 revenues to be between $12 million and $12.5 million.
• The outlook is supported by the upcoming holiday season and new consumer product offerings, such as expanded beauty lines from Silly George and Kenkoderm, as well as the launch of new products with STADA's partnership.

• Adjusted EBITDA Loss Narrowing and Path to Profitability:
• NEXGEL's adjusted EBITDA loss narrowed to $354,000 in Q3 2025, compared to $500,000 in Q1 and $419,000 in Q2.
• The narrowing trend was driven by operational improvements and disciplined financial management.
• The company expects to approach adjusted EBITDA break-even in Q4 and potentially achieve profitability by year-end, with strong performances in contract manufacturing and consumer products.

Sentiment Analysis:

Overall Tone: Positive

• "Q4 will be a record quarter for the company."; "full year 2025 revenues of between $12 million and $12.5 million."; "adjusted EBITDA loss narrowed to $354,000... I see that narrowing even further to very close to adjusted EBITDA break-even."

Q&A:

• Question from Naz Rahman (Maxim Group): Could you elaborate on the logistical delays you mentioned? How many days' worth of sales did it impact and how much could those sales have been worth?
  Response: Customs/regulatory issues delayed launches (notably lip gloss to Sept 27), reducing near-term sales by an estimated $100k–$200k.

• Question from Naz Rahman (Maxim Group): What gives you confidence in the $12M–$12.5M full-year guidance, especially the top end?
  Response: Confidence driven by recurring contract-manufacturing reorders and expected strong Q4 contract shipments (including iRhythm); consumer holiday performance is the main uncertainty.

• Question from Naz Rahman (Maxim Group): Do you know if AbbVie still plans on launching the ReSonic device after their impairment charge?
  Response: Management is uncertain—received mixed signals (an RFQ/email then reports of AbbVie's impairment); current status unknown.

• Question from Curtin Patel (Private Investor): What is the current order book like from the contract manufacturing side?
  Response: Order book is strong with continuing reorders and a robust pipeline; management has visibility for growth over the next 2–3 quarters.

• Question from Curtin Patel (Private Investor): Do you still have a strong cash position to be able to fulfill those orders?
  Response: Yes; inventory was built in Q3 to fulfill demand and management expects Q4 shipments to convert inventory into cash and improve cash position.

• Question from Curtin Patel (Private Investor): Are you still expecting to achieve positive EBITDA by the end of the year?
  Response: Management expects to reach or come very close to positive adjusted EBITDA by year-end, contingent on strong consumer product performance in Q4.

Contradiction Point 1

ReSonic Device Status

It involves a change in the status and expectations surrounding the ReSonic device, which could impact Nexgel's partnerships and revenue projections.

What is the current status of AbbVie and the ReSonic device? - Naz Rahman (Maxim Group)

2025Q3: It is puzzling and frustrating that AbbVie's communication regarding the ReSonic device is unclear. Adam Levy received an email from AbbVie stating they would be sending a PO soon, but recently AbbVie took an impairment charge. Adam Levy is unsure of AbbVie's plans and is concerned about the situation. - Adam Levy(CEO)

What's the status of the AbbVie partnership? - Unidentified Analyst

2025Q2: The AbbVie project has faced delays due to issues with their console vendor, but they have rectified the situation. The project is expected to start in Q1 2026, despite previous setbacks. - Adam Levy(CEO)

Contradiction Point 2

Manufacturing Capacity and Growth Opportunities

It involves differing statements on the company's manufacturing capacity and growth opportunities, which could impact investor expectations for future production and partnerships.

What is the current order backlog in contract manufacturing? - Curtin Patel (Private Investor)

2025Q3: The order book for contract manufacturing is strong, with existing customers continuing to order and a robust pipeline of new potential customers. The company is optimistic about growth over the next two to three quarters, with visibility into future orders. - Adam Levy(CEO)

What is your current manufacturing capacity to supply partners and how much slack exists in the system? - Nazibur Rahman (Maxim Group LLC, Research Division)

2025Q2: Manufacturing capacity, especially for gel, is sufficient with plant utilization around 20%. More customers are needed to fill capacity, with partnerships like iRhythm already secured and more in the pipeline. - Adam Levy(CEO)

Contradiction Point 3

Revenue Guidance and Growth Expectations

It highlights a shift in expectations for revenue growth and profitability, which are crucial for investor confidence and strategic planning.

What justifies the revised full-year revenue guidance of $12–$12.5 million despite flat quarters? - Naz Rahman (Maxim Group)

2025Q3: While revenue has been flat year-over-year, the company experienced a strong start last year due to onboarding new customers like Owens & Minor and Cintas. This year, the business is growing, with existing customers like Cintas providing recurring orders. The company is optimistic about the growth in contract manufacturing and consumer products, particularly with the strong holiday season ahead. - Adam Levy(CEO)

Regarding your adjusted EBITDA trajectory to breakeven or cash flow positive? - Nazibur Rahman (Maxim)

2024Q4: We're taking this quarter off and we're absolutely going to be back in Q2, and I expect us to be back into these growth rates, these growth rates that we've shown in our past, and I expect us to be back to those growth rates this year. So, just the put a pin in it. We're going to get back to those growth rates. We're taking a pause in the fourth quarter, that's, that's it. - Adam Levy(CEO)

Contradiction Point 4

Strong Cash Position and Financial Health

It involves the company's statement regarding its strong cash position and financial health, which is crucial for investor confidence.

Do you still have sufficient cash to fulfill those orders? - Curtin Patel (Private Investor)

2025Q3: Yes, the company has a strong cash position and has built inventory to support a strong fourth quarter. The company expects to receive funds from direct-to-consumer sales, which will improve the cash position further. - Adam Levy(CEO)

Can the company sustain operations with current cash reserves until achieving positive EBITDA by year-end? - Unknown Attendee (Investor)

2025Q1: We started with $30 million in cash. We raised another $15 million last quarter. And we put back $7 million of that towards the purchase of STADA. So we're ending the quarter with a little over $30 million in cash. - Adam Levy(CEO)

Contradiction Point 5

AbbVie and ReSonic Device Status

This contradiction involves the uncertainty around the status of a key partnership with AbbVie, which could potentially impact revenue and operational plans.

Can you provide an update on AbbVie and the ReSonic device? - Naz Rahman (Maxim Group)

2025Q3: It is puzzling and frustrating that AbbVie's communication regarding the ReSonic device is unclear. Adam Levy received an email from AbbVie stating they would be sending a PO soon, but recently AbbVie took an impairment charge. Adam Levy is unsure of AbbVie's plans and is concerned about the situation. - Adam Levy(CEO)

What is the current status and progress of the AbbVie Resonic device launch? - Nazibur Rahman (Maxim)

2024Q4: AbbVie is on schedule to ship their product in Q2. We're receiving orders in Q1. We're ready to supply them as planned. I'm not privy to all their marketing plans, but they seem to have a good plan. - Adam Levy(CEO)