Aytu Biopharma (AYTU) Update / Briefing June 11, 2025 04:30 PM ET Speaker0 Greetings. Welcome to the Aytu BioPharma Analyst and Investor Conference Call, ExuA Opportunity and Commercialization Plan. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to your host, Robert Blum with Lytham Partners. You may begin. Speaker1 Thank you very much, John. Good a ...

Aytu Biopharma (AYTU) Q3 2025 Earnings Call May 14, 2025 04:30 PM ET Company Participants Robert Blum - Managing PartnerJosh Disbrow - Chief Executive OfficerRyan Selhorn - CFO Conference Call Participants Naz Rahman - Analyst Operator Please note this conference is being recorded. I will now turn the conference over to your host, Robert Blum, Investor Relations at Robert, your line, you may begin. Robert Blum Thank you very much, and good afternoon, everyone. As the operator indicated, during today's call, ...

Financial Data and Key Metrics Changes - Total revenue grew 32% to $18,500,000 compared to $14,000,000 in the same quarter last year [22] - Net income was $4,000,000, a significant improvement from a net loss of $2,900,000 in the prior year [6][27] - Basic earnings per share increased to $0.65 from a loss of $0.52 in the same quarter last year [6][27] - Adjusted EBITDA rose to $3,900,000 from $900,000 in the prior year [6][27] Business Line Data and Key Metrics Changes - ADHD portfolio net revenue increased by 25% to $15,400,000 compared to $12,300,000 in Q3 of the previous year [22] - Pediatric portfolio net revenue surged 77% to $3,100,000 from $1,700,000 in the same quarter last year [22][14] Market Data and Key Metrics Changes - ADHD prescriptions were approximately 94,000 during the third quarter, reflecting a return to normalized market conditions following previous shortages [10] - The pediatric business saw a rebound due to a return to growth plan and improved payer coverage [14][15] Company Strategy and Development Direction - The company has focused on its prescription pharmaceutical business, halting clinical development and selling its consumer health business [7] - Future growth is expected to be driven by leveraging the A2 RxConnect platform and pursuing additional in-licensed or acquired products [8][19] - The company aims to maintain a balanced focus on both ADHD and pediatric portfolios for growth [18] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the operational and financial performance, highlighting the achievement of positive income from operations for the second consecutive quarter [5][6] - The company is optimistic about future growth, particularly in the ADHD and pediatric segments, and is focused on operational efficiencies [18][19] Other Important Information - Gross margin for the third quarter was 69%, down from 74% in the same quarter last year, with expectations for improvement as inventory issues are resolved [22][25] - The company paid down $2,500,000 in long-term debt during the quarter, maintaining compliance with all debt covenants [29] Q&A Session Summary Question: Were there any one-time effects in the ADHD or pediatric business this quarter? - Management confirmed that the growth was organic and driven by optimization efforts, with no one-time effects impacting the numbers [35] Question: What are the expectations for the ADHD franchise moving forward? - Management expects continued growth in the ADHD franchise, supported by optimization efforts and a balanced focus on both ADHD and pediatric products [36][37] Question: What is the potential for the pediatric business? - Management indicated realistic growth expectations but does not foresee returning to a $25,000,000 annual business, aiming for something north of current levels [39][40] Question: What are the main factors affecting business development and asset acquisition? - The main gating factor is finding the right asset that complements the company's capabilities and therapeutic focus, with a preference for commercial-ready products [41][42] Question: What impact do tariffs have on the company? - Management stated that tariffs have a minimal impact as all ADHD products are manufactured in the U.S., with only small components sourced internationally [46][47] Question: Can you elaborate on the return to growth plan for the pediatric business? - The plan involved deploying the sales force against more pediatric targets and expanding coverage through creative contracting with payers [54][56] Question: What is the breakeven revenue number based on current operating expenses? - The breakeven revenue is approximately $15,000,000 on a quarterly basis, with a cash-based breakeven closer to $13,100,000 [61][62]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________ Commission File Number: 001-38247 AYTU BIOPHARMA, INC. (Exact name of registrant as specified in its charter) | Delaware | 47-0883144 | | --- | ...

[Q3 2025 Highlights & Management Discussion](index=1&type=section&id=Q3%202025%20Highlights) The company reported significant revenue growth and a return to profitability, driven by its strategic focus on the prescription pharmaceutical business Q3 FY2025 Key Financial Metrics | Metric | Q3 FY2025 | Q3 FY2024 | Change | | :--- | :--- | :--- | :--- | | Total Net Revenue | $18.5 million | $14.0 million | +32% | | ADHD Portfolio Revenue | $15.4 million | $12.3 million | +25% | | Pediatric Portfolio Revenue | $3.1 million | $1.7 million | +77% | | Net Income (Loss) | $4.0 million | ($2.9 million) | N/A | | Net Income (Loss) per Share (basic) | $0.65 | ($0.52) | N/A | | Adjusted EBITDA | $3.9 million | $0.9 million | +333% | | Cash and Cash Equivalents | $18.2 million | - | - | - The CEO stated that the **strategic realignment** to focus on the profitable prescription pharmaceutical business is beginning to fully manifest in the company's financial performance[3](index=3&type=chunk) - Aytu is actively pursuing in-licensed or acquired products to leverage its CNS-focused sales team and the **Aytu RxConnect platform**[3](index=3&type=chunk) - The company **reduced company-wide operating expenses by 13%** year-over-year while growing revenue, demonstrating improved operational efficiency[3](index=3&type=chunk) [Q3 2025 Detailed Financial Results](index=2&type=section&id=Q3%202025%20Financial%20Results) Net revenue grew 32% to $18.5 million, and despite a temporary gross margin dip, reduced operating expenses led to a significant operating income turnaround [Revenue by Portfolio](index=2&type=section&id=Revenue%20by%20Portfolio) Total net revenue grew 32% YoY, fueled by strong performance in both the ADHD and Pediatric portfolios Net Revenue by Portfolio (in thousands) | Portfolio | Q3 2025 | Q3 2024 | % Change | | :--- | :--- | :--- | :--- | | ADHD Portfolio | $15,389 | $12,326 | +25% | | Pediatric Portfolio | $3,059 | $1,729 | +77% | | **Total Net Revenue** | **$18,452** | **$14,025** | **+32%** | - ADHD Portfolio growth was primarily driven by **improvements in gross-to-nets** through the Aytu RxConnect platform[7](index=7&type=chunk) - Pediatric Portfolio growth reflects the positive effects from the Company's recently implemented **return-to-growth plan**[8](index=8&type=chunk) [Profitability and Operations](index=2&type=section&id=Profitability%20and%20Operations) Reduced operating expenses and operational efficiencies drove a significant turnaround to operating income despite a temporary gross margin decline - Gross profit margin decreased to **69% from 74% YoY** due to higher cost of sales for ADHD inventory from a now-closed facility, which is expected to normalize[9](index=9&type=chunk) - Operating expenses, excluding amortization and restructuring, were **reduced by 13% YoY to $9.5 million** due to cost reduction efforts and operational efficiencies[10](index=10&type=chunk) Profitability Comparison (in millions) | Metric | Q3 FY2025 | Q3 FY2024 | | :--- | :--- | :--- | | Income from Operations | $2.4 | ($1.6) | | Net Income (Loss) | $4.0 | ($2.9) | [Balance Sheet and Cash Position](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Position) The company maintained a solid cash position of $18.2 million while actively paying down $2.5 million in debt during the quarter - Cash and cash equivalents were **$18.2 million** at March 31, 2025[13](index=13&type=chunk) - The Company **paid down a combined $2.5 million** in long-term debt and other fixed payment arrangements during the third quarter[13](index=13&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) This section presents the unaudited consolidated statements of operations and balance sheets, alongside a non-GAAP to GAAP reconciliation [Unaudited Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) The company shifted from a prior-year net loss to a net income of $4.0 million, or $0.21 per diluted share, in Q3 FY2025 Q3 2025 vs Q3 2024 Statement of Operations Highlights (in thousands) | Line Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net revenue | $18,452 | $14,025 | | Gross profit | $12,806 | $10,361 | | Income (loss) from operations | $2,421 | ($1,597) | | Net income (loss) | $3,994 | ($2,887) | | Diluted net income (loss) per share | $0.21 | ($0.52) | [Unaudited Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets of $124.2 million and an increase in total stockholders' equity to $34.9 million as of March 31, 2025 Balance Sheet Highlights (in thousands) | Line Item | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $18,173 | $20,006 | | Total current assets | $72,512 | $61,891 | | Total assets | $124,201 | $118,095 | | Total current liabilities | $70,706 | $62,228 | | Total liabilities | $89,303 | $90,379 | | Total stockholders' equity | $34,898 | $27,716 | [Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=7&type=section&id=Unaudited%20Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA) A reconciliation from GAAP net income of $4.0 million to a non-GAAP Adjusted EBITDA of $3.9 million highlights strong operational performance Reconciliation to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) - GAAP | $3,994 | ($2,887) | | Adjustments (Net) | ($51) | $3,818 | | **Adjusted EBITDA - non-GAAP** | **$3,943** | **$931** | [Other Information](index=3&type=section&id=Other%20Information) This section provides details on the investor conference call, a corporate overview, and the forward-looking statements disclaimer - The company hosted a conference call and webcast on **May 14, 2025**, to discuss the quarterly results[14](index=14&type=chunk) - Aytu's prescription products include **Adzenys XR-ODT®** and **Cotempla XR-ODT®** for ADHD, **Karbinal® ER** for allergies, and fluoride-based vitamins[16](index=16&type=chunk) - The press release contains **forward-looking statements** that are subject to risks and uncertainties, and readers are referred to the company's SEC filings[17](index=17&type=chunk)

Financial Data and Key Metrics Changes - The company's net revenue for Q2 2025 was $16.2 million, down from $18.7 million in the same quarter last year [44] - ADHD portfolio net revenue decreased 17% to $13.8 million compared to $16.6 million in Q2 fiscal 2024, reflecting normalization of the ADHD stimulant supply chain [44] - Pediatric portfolio net revenue was $2.4 million, up from $2.1 million in Q2 of last year, with a sequential increase of approximately 86% [45] Business Line Data and Key Metrics Changes - ADHD prescriptions were slightly over 99,000 in Q2, compared to just under 99,000 in Q1 and 111,000 in Q2 of last year [14] - ADHD net revenue was up 16% sequentially on an apples-to-apples basis, excluding a one-time item from the previous quarter [17] - Pediatric portfolio net revenue showed an 86% sequential increase, indicating a rebound from previous payer changes [24] Market Data and Key Metrics Changes - The ADHD stimulant market is returning to a more normalized state following significant market-wide stimulant shortages that began in early 2023 [17] - The company has diversified its prescriber base and improved payer coverage for both its multivitamin and antihistamine franchises, leading to better access and coverage [20][21] Company Strategy and Development Direction - The company is focusing on its profitable prescription business and leveraging the Aytu RxConnect platform while pursuing additional in-licensed or acquired products [12][34] - Future growth is expected to come from both organic growth in ADHD and Pediatric portfolios and potential acquisitions of smaller assets [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving net revenue and adjusted EBITDA growth from current levels, aiming for positive cash flows [58] - The company has successfully implemented a multiyear strategic realignment to focus on its profitable prescription business [57] Other Important Information - The company reported its seventh consecutive quarter of positive adjusted EBITDA and second consecutive quarter of net income [12] - Cash balance at the end of December was $20.4 million, slightly up from $20.1 million at the end of September [12][53] Q&A Session Summary Question: What is the outlook for the ADHD franchise? - Management anticipates growth and believes reaching $16 million to $17 million quarterly is feasible, contingent on market growth and share gains [63] Question: Were there any one-time effects in the Pediatric business? - Management confirmed that the growth in the Pediatric business is organic, with the antihistamine franchise being the largest driver of growth [66] Question: Can you elaborate on Medicaid coverage dynamics? - Management noted that they have expanded coverage across multiple states, resulting in healthier margins on Medicaid reimbursed business [71] Question: What are the sources of the additional $2 million in cost savings? - The additional savings are expected from G&A reductions and slimming down contracted services, starting in the current quarter [76] Question: What is the status of business development and potential acquisitions? - Management is in active discussions for potential tuck-in acquisitions and is optimistic about opportunities that require small or no upfront costs [80]

[Cautionary Information Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Information%20Regarding%20Forward-Looking%20Statements) This report contains forward-looking statements regarding future events and financial position, subject to risks detailed in the company's Annual Report on Form 10-K - This report contains **forward-looking statements** concerning the company's future clinical and regulatory events, financial position, business strategy, and operational objectives, identifiable by words like "may," "will," "expect," "anticipate," and similar terms[8](index=8&type=chunk) - These **forward-looking statements** are subject to **numerous risks and uncertainties**, as detailed in the "**Risk Factors**" section of the company's **Annual Report on Form 10-K** for the year ended June 30, 2024[9](index=9&type=chunk) PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for the quarter ended December 31, 2024, along with comprehensive notes on accounting policies and financial items [Unaudited Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) As of December 31, 2024, total assets slightly decreased to $116.2 million, while total liabilities decreased and stockholders' equity increased Consolidated Balance Sheet Summary (in thousands) | | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $63,053 | $61,891 | | **Total Non-Current Assets** | $53,174 | $56,204 | | **Total Assets** | **$116,227** | **$118,095** | | **Total Current Liabilities** | $64,048 | $62,228 | | **Total Non-Current Liabilities** | $21,414 | $28,151 | | **Total Stockholders' Equity** | $30,765 | $27,716 | | **Total Liabilities and Stockholders' Equity** | **$116,227** | **$118,095** | [Unaudited Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) For the three months ended December 31, 2024, the company reported net revenue of $16.2 million and a net income of $0.8 million, with significant improvement in net income for the six-month period Statement of Operations Summary (in thousands) | | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | $16,221 | $18,748 | $32,795 | $36,565 | | **Gross Profit** | $10,786 | $14,603 | $22,771 | $27,641 | | **(Loss) Income from Operations** | $(1,695) | $3,146 | $(2,625) | $2,279 | | **Net Income (Loss) from Continuing Operations** | $665 | $619 | $1,758 | $(6,854) | | **Net Income (Loss)** | **$788** | **$(220)** | **$2,262** | **$(8,340)** | Earnings Per Share (Basic) - Continuing Operations | | Three Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2024 | | :--- | :--- | :--- | | **Basic EPS** | $0.11 | $0.29 | [Unaudited Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended December 31, 2024, operating activities provided $1.7 million in cash, marking a positive shift, with the company ending the period with $20.4 million in cash and cash equivalents Cash Flow Summary (in thousands) | | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | **Net cash provided by (used in) operating activities** | $1,715 | $(346) | | **Net cash provided by (used in) investing activities** | $526 | $(250) | | **Net cash used in financing activities** | $(1,849) | $(2,860) | | **Net change in cash and cash equivalents** | $392 | $(3,456) | | **Cash and cash equivalents at end of period** | **$20,398** | **$19,529** | [Notes to the Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail the company's accounting policies and provide breakdowns of key financial statement items, highlighting strategic shifts, revenue impacts, and ongoing litigation - The company's continuing operations are now a **single segment** focused on prescription pharmaceuticals, primarily the **ADHD Portfolio** (Adzenys, Cotempla) and the **Pediatric Portfolio** (Karbinal, Poly-Vi-Flor, Tri-Vi-Flor)[23](index=23&type=chunk)[24](index=24&type=chunk) - The company entered into its **first international commercial agreements** to sell **Adzenys** and **Cotempla** in Israel, the Palestinian Authority, and Canada through partnerships with Medomie Pharma and Lupin Pharma[25](index=25&type=chunk) - A negotiation with a vendor led to a **$3.3 million reduction in a liability**, which was recognized as an **increase in net revenue** during the first quarter of fiscal 2025[45](index=45&type=chunk) - The **Consumer Health business was divested** on July 31, 2024, and its financial results are now reported as **discontinued operations**[133](index=133&type=chunk) - On December 11, 2024, the company filed a **patent infringement lawsuit** against **Granules Pharmaceuticals**, which triggered a **30-month stay on FDA approval** for the generic drug[98](index=98&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, strategic shifts, and liquidity, emphasizing the divestiture of the Consumer Health business, revenue changes, and capital management initiatives - The company's strategy is to focus on its **commercial prescription business**, having **divested the unprofitable Consumer Health business** and suspended clinical development programs to accelerate growth and achieve **positive operating cash flow**[138](index=138&type=chunk)[139](index=139&type=chunk) Net Revenue by Portfolio (in thousands) | Portfolio | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | Change | | :--- | :--- | :--- | :--- | | **ADHD Portfolio** | $29,080 | $31,700 | $(2,620) | | **Pediatric Portfolio** | $3,693 | $4,710 | $(1,017) | | **Total Net Revenue** | **$32,795** | **$36,565** | **$(3,770)** | - Net revenue for the six months ended Dec 31, 2024, **decreased by $3.8 million (10%)** compared to the prior year, primarily due to payer changes affecting the **Pediatric Portfolio** and normalized market conditions for the **ADHD Portfolio**[149](index=149&type=chunk)[150](index=150&type=chunk) - **Gross profit margin decreased to 69% from 76%** for the six months ended Dec 31, 2024, mainly due to the higher cost of self-manufactured ADHD inventory, which is expected to normalize[151](index=151&type=chunk) - The company secured a **new $13.0 million term loan** and maintains a **$14.5 million revolving credit facility** with Eclipse, also filing a **new $100.0 million shelf registration** in October 2024 to support liquidity[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Aytu BioPharma is not required to provide market risk disclosures - The company is a **smaller reporting company** as defined by Rule 12b-2 of the Exchange Act and is therefore **not required to provide quantitative and qualitative disclosures about market risk**[181](index=181&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective** at a reasonable assurance level as of the end of the period[182](index=182&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[184](index=184&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section outlines the company's material legal proceedings, including the settlement of the Witmer class-action, ongoing patent litigation against Granules Pharmaceuticals, and the conclusion of the Revive Investing lawsuit - **Witmer Class-Action:** A stockholder derivative suit was **settled** with court approval on January 13, 2025, involving corporate governance modifications and payment of plaintiff's attorneys' fees[187](index=187&type=chunk) - **Granules PIV:** The company filed a **patent infringement lawsuit** against Granules Pharmaceuticals on December 11, 2024, triggering a **30-month stay on FDA approval** of the generic, with a trial scheduled for December 2026[188](index=188&type=chunk) - **Revive Investing:** A lawsuit concerning alleged short-swing trading profits proceeded to a jury trial, which returned a verdict of **no liability** on January 29, 2025[189](index=189&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new risk factors related to the potential negative impact of unstable market and economic conditions and the significant costs and uncertainties associated with intellectual property litigation - A new risk factor was added regarding **unstable market and economic conditions**, noting that volatility, inflation, and geopolitical events could **adversely affect business operations, financial condition, and access to capital**[192](index=192&type=chunk) - A new risk factor addresses the potential for **costly and unpredictable litigation** related to enforcing **intellectual property rights**, which could divert resources and put **patents at risk of being invalidated**[195](index=195&type=chunk)[196](index=196&type=chunk) [Other Information](index=43&type=section&id=Item%205.%20Other%20Information) The company states that during the quarter ended December 31, 2024, no directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement - During the quarter ended December 31, 2024, **no directors or executive officers adopted or terminated a Rule 10b5-1 trading plan**[197](index=197&type=chunk) [Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including employment and separation agreements for CFOs and Sarbanes-Oxley certifications - The report includes as exhibits the **employment agreement for new CFO Ryan J. Selhorn**, the **separation agreement for former CFO Mark K. Oki**, and **certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act**[199](index=199&type=chunk) [Signatures](index=45&type=section&id=SIGNATURES) The Form 10-Q report was duly signed and authorized on February 12, 2025, by Joshua R. Disbrow, Chief Executive Officer, and Ryan J. Selhorn, Chief Financial Officer - The report was **signed on February 12, 2025**, by **Joshua R. Disbrow (CEO)** and **Ryan J. Selhorn (CFO)**[204](index=204&type=chunk)

[Q2 2025 Highlights](index=1&type=section&id=Q2%202025%20Highlights) Aytu BioPharma achieved sequential prescription growth in ADHD and Pediatric portfolios, reporting $0.8 million net income and $1.3 million Adjusted EBITDA Q2 FY2025 Key Financial Metrics | Metric | Value | Comparison Period | Value (Comparison) | | :--- | :--- | :--- | :--- | | Net Income | $0.8 million | Q2 FY2024 | ($0.2 million) loss | | Adjusted EBITDA | $1.3 million | Q2 FY2024 | $5.5 million | | Net Income per Share (Basic) | $0.13 | Q2 FY2024 | ($0.04) loss | | Cash and Cash Equivalents | $20.4 million | Sep 30, 2024 | $20.1 million | - For the first time since Q2 fiscal 2023, the company reported a quarterly **sequential increase in prescriptions** across both its ADHD and Pediatric portfolios[1](index=1&type=chunk) Sequential Net Revenue Growth (Q2 vs Q1 FY2025) | Portfolio | Q2 FY2025 Net Revenue (in millions) | Sequential Growth | Note | | :--- | :--- | :--- | :--- | | Pediatric Portfolio | $2.4 million | +86% | Reflects positive effects from return-to-growth plan | | ADHD Portfolio | $13.8 million | +16% | Adjusted for a one-time $3.3M positive impact in Q1 | [Management Discussion](index=2&type=section&id=Management%20Discussion) Management highlighted successful sequential prescription growth and corporate optimization efforts, aiming for positive cash flow and enhanced stockholder value - The company returned both ADHD and Pediatric portfolios to **positive sequential prescription growth** for the first time since late 2022[3](index=3&type=chunk) - New corporate optimization programs are expected to generate at least **$2.0 million in annual cost savings**, building on previous expense reductions[3](index=3&type=chunk)[4](index=4&type=chunk) - Management noted that while the normalization of the ADHD stimulant supply market impacted year-over-year comparisons, prescription volumes for Aytu's ADHD brands remain above pre-shortage levels[3](index=3&type=chunk) - The company's strategy is to focus on its profitable prescription pharmaceutical business and leverage its commercial infrastructure to seek and add in-licensed or acquired products[3](index=3&type=chunk) [Corporate Strategy and Restructuring](index=2&type=section&id=Organizational%20Changes%20and%20Operating%20Optimization%20Plan) Aytu completed a strategic realignment, divesting Consumer Health and suspending clinical programs to focus on prescription pharmaceuticals - The company has fully repositioned itself to focus on commercializing novel prescription therapeutics[4](index=4&type=chunk) - Completed strategic actions include: - Divestiture of the Consumer Health business - Outsourcing of ADHD product manufacturing and closure of the Grand Prairie, Texas facility - Indefinite suspension of clinical development programs[4](index=4&type=chunk)[5](index=5&type=chunk) - The financial results of the Consumer Health business are now reported as a discontinued operation, effective July 31, 2024[6](index=6&type=chunk) [Q2 2025 Financial Performance](index=2&type=section&id=Q2%202025%20Financial%20Results) Q2 FY2025 net revenue was $16.2 million, with a net income of $0.8 million, influenced by a non-cash gain and temporary gross margin decrease Net Revenue by Portfolio (Three Months Ended Dec 31, in thousands) | Portfolio | 2024 | 2023 | YoY Change | | :--- | :--- | :--- | :--- | | ADHD Portfolio | $13,816 | $16,572 | -17% | | Pediatric Portfolio | $2,400 | $2,145 | +12% | | **Total Net Revenue** | **$16,221** | **$18,748** | **-13.5%** | - Gross profit was **$10,786 thousand** (**66% margin**) compared to **$14,603 thousand** (**78% margin**) in the prior year, with the decrease attributed to temporary overhead costs[11](index=11&type=chunk) - Net income of **$788 thousand** was significantly impacted by a **$3,016 thousand** gain on derivative warrant liabilities, contrasting with a **$577 thousand** loss in the prior-year period[13](index=13&type=chunk) - Adjusted EBITDA was **$1,273 thousand**, compared to **$5,459 thousand** in the prior-year period[14](index=14&type=chunk) [Financial Statements](index=5&type=section&id=Financial%20Statements) [Unaudited Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) For Q2 FY2025, Aytu reported net revenues of $16.2 million and a net income of $0.8 million, or $0.13 per basic share Consolidated Statements of Operations Summary (in thousands) | Line Item | Q2 FY2025 (3 mos ended Dec 31, 2024) | Q2 FY2024 (3 mos ended Dec 31, 2023) | | :--- | :--- | :--- | | Net Revenue | $16,221 | $18,748 | | Gross Profit | $10,786 | $14,603 | | (Loss) Income from Operations | $(1,695) | $3,146 | | Derivative Warrant Liabilities Gain (Loss) | $3,016 | $(577) | | **Net Income (Loss)** | **$788** | **$(220)** | | Basic Net Income (Loss) per Share | $0.13 | $(0.04) | [Unaudited Consolidated Balance Sheets](index=6&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) As of December 31, 2024, total assets were $116.2 million, with cash of $20.4 million, and stockholders' equity increased to $30.8 million Consolidated Balance Sheets Summary (in thousands) | Line Item | Dec 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,398 | $20,006 | | Total Current Assets | $63,053 | $61,891 | | Total Assets | $116,227 | $118,095 | | Total Current Liabilities | $64,048 | $62,228 | | Total Liabilities | $85,462 | $90,379 | | Total Stockholders' Equity | $30,765 | $27,716 | [Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=7&type=section&id=Unaudited%20Reconciliation%20of%20Net%20Income%20%28Loss%29%20to%20Adjusted%20EBITDA) Aytu reconciled GAAP net income of $788 thousand to non-GAAP Adjusted EBITDA of $1.3 million for Q2 FY2025, with key adjustments for non-cash items Reconciliation to Adjusted EBITDA (in thousands) | Line Item | Q2 FY2025 (3 mos ended Dec 31, 2024) | Q2 FY2024 (3 mos ended Dec 31, 2023) | | :--- | :--- | :--- | | Net Income (Loss) - GAAP | $788 | $(220) | | Depreciation and amortization | $1,292 | $1,510 | | Derivative warrant liabilities (gain) loss | $(3,016) | $577 | | Restructuring costs | $1,317 | — | | Net (income) loss from discontinued operations | $(123) | $839 | | **Adjusted EBITDA - non-GAAP** | **$1,273** | **$5,459** | [Historical Quarterly Financial Data (FY2024 Adjusted)](index=8&type=section&id=Unaudited%20Fiscal%202024%20Quarterly%20and%20Full%20Year%20Consolidated%20Statements%20of%20Operations%20Adjusted%20for%20Discontinued%20Operations) This section presents restated FY2024 quarterly and full-year financial results, adjusted for discontinued operations, showing $65.2 million net revenue and $10.8 million Adjusted EBITDA FY2024 Full Year Adjusted Financial Summary (in thousands) | Line Item | Twelve Months Ended June 30, 2024 | | :--- | :--- | | Net Revenue | $65,183 | | Gross Profit | $49,054 | | (Loss) from Operations | $(1,591) | | Net Loss from Continuing Operations | $(12,098) | | **Adjusted EBITDA - non-GAAP** | **$10,833** |

Financial Data and Key Metrics Changes - The company reported its first positive net income in history for Q1 2025, with a net income of $1.5 million or $0.24 per share basic, compared to a net loss of $8.1 million in the same quarter last year [30][34] - Adjusted EBITDA was positive at $1.9 million, marking the sixth consecutive quarter of positive adjusted EBITDA [9][30] - Cash and cash equivalents at the end of September 2024 were $20.1 million, slightly up from $20 million at the end of June 2024 [32] Business Line Data and Key Metrics Changes - ADHD portfolio net revenue increased by 11% sequentially to $15.3 million, up 1% year-over-year [13][27] - Pediatric portfolio revenue was $1.3 million, showing a sequential increase of 54% from $0.8 million in Q4 2024, although it was down from $2.6 million in the same quarter last year [27][17] Market Data and Key Metrics Changes - ADHD prescriptions were at 99,000 in Q1 2025, down from 115,000 during the stimulant shortage but up 10% over the normalized baseline levels from fiscal 2022 and 2023 [15][9] - Pediatric prescriptions showed a sequential growth of 16% from September to October 2024, indicating positive momentum [40] Company Strategy and Development Direction - The company is focused on optimizing operations and driving near-term cash flow, with expected annual operating expense reductions of at least $2 million [11][12] - Aytu is pursuing both out-licensing and in-licensing opportunities, with recent deals in Israel and Canada for ADHD brands [47][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the positive trends for both ADHD and Pediatric portfolios, anticipating continued growth in the coming quarters [18][34] - The company is positioned to generate positive operating cash flow moving forward, supported by a strong balance sheet [18][32] Other Important Information - The Consumer Health business sale has been completed, and its historical impact is now classified as discontinued operations [11][26] - The company has undergone organizational changes to streamline operations, including the departure of key executives [19][21] Q&A Session Summary Question: Is there a strategic opportunity to broaden promotional reach for the ADHD franchise? - Management confirmed that they are already expanding their promotional efforts and exploring new distribution partnerships to enhance geographic reach [36][37] Question: Can you provide additional details on Pediatric script growth and pricing stability? - Management reported a 54% sequential growth in Pediatric revenue and indicated that gross-to-net pricing has remained steady [39][40] Question: When will the noise in gross margin numbers normalize? - Management anticipates that normalized gross margins will be evident by Q1 of fiscal 2026, following the sale of higher-cost inventory [45] Question: Can you expand on product licensing opportunities? - Management highlighted recent out-licensing deals in Israel and Canada and expressed active pursuit of in-licensing commercial-stage assets [48][49]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Q1 FY2025 reflect a net income of **$1.5 million**, a significant turnaround from a **$8.1 million** net loss in the prior year, driven by a **$2.9 million** gain on derivative warrant liabilities and income from discontinued operations [Unaudited Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Consolidated%20Balance%20Sheets) Total assets decreased slightly to **$115.8 million** as of September 30, 2024, while total liabilities decreased to **$86.0 million**, leading to an increase in total stockholders' equity to **$29.8 million** Consolidated Balance Sheet Highlights | Balance Sheet Item | Sep 30, 2024 (in thousands) | Jun 30, 2024 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $60,738 | $61,891 | | **Total Assets** | $115,831 | $118,095 | | **Total Current Liabilities** | $61,252 | $62,228 | | **Total Liabilities** | $86,005 | $90,379 | | **Total Stockholders' Equity** | $29,826 | $27,716 | [Unaudited Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Operations) The company reported a net income of **$1.5 million** for the quarter, a significant turnaround from a **$8.1 million** net loss in the prior year, despite a 7% decrease in net revenue to **$16.6 million**, primarily due to a **$2.9 million** gain on derivative warrant liabilities Quarterly Statement of Operations | Metric | Q1 FY2025 (ended Sep 30, 2024, in thousands) | Q1 FY2024 (ended Sep 30, 2023, in thousands) | | :--- | :--- | :--- | | Net Revenue | $16,574 | $17,817 | | Gross Profit | $11,985 | $13,038 | | Loss from Operations | ($930) | ($867) | | Derivative Warrant Liabilities Gain (Loss) | $2,880 | ($5,907) | | Net Income (Loss) from Continuing Operations | $1,093 | ($7,473) | | Net Income (Loss) from Discontinued Operations | $381 | ($647) | | **Net Income (Loss)** | **$1,474** | **($8,120)** | | **Basic Net Income (Loss) Per Share** | **$0.24** | **($1.48)** | [Unaudited Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities increased to **$1.2 million**, while investing activities provided **$0.4 million**, and financing activities provided **$0.9 million**, primarily from the revolving credit facility Summary of Cash Flows | Cash Flow Activity | Three Months Ended Sep 30, 2024 (in thousands) | Three Months Ended Sep 30, 2023 (in thousands) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($1,190) | ($211) | | Net Cash Provided by (Used in) Investing Activities | $381 | ($76) | | Net Cash Provided by (Used in) Financing Activities | $911 | ($2,734) | | **Net Change in Cash** | **$102** | **($3,021)** | | Cash at End of Period | $20,108 | $19,964 | [Notes to the Unaudited Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20the%20Unaudited%20Consolidated%20Financial%20Statements) Key notes detail the company's strategic shift, including the divestiture of its Consumer Health business, a **$3.3 million** reduction in vendor liability, new international distribution agreements for ADHD products, and debt refinancing - The company divested its Consumer Health business on July 31, 2024, now reported as a discontinued operation, generating a net income of **$0.4 million** for the quarter, compared to a **$0.6 million** loss in the prior year[138](index=138&type=chunk)[140](index=140&type=chunk) - Net revenue for the ADHD Portfolio was positively impacted by a **$3.3 million** reduction in a vendor liability, following successful negotiations[42](index=42&type=chunk) - The company is expanding internationally, signing exclusive distribution agreements for its ADHD products, Adzenys and Cotempla, in Israel, the Palestinian Authority, and Canada[24](index=24&type=chunk) - In June 2024, the company refinanced its debt, replacing the Avenue Capital loan with a new **$13.0 million** term loan and a **$14.5 million** revolving credit facility with Eclipse Business Capital, maturing in June 2028[87](index=87&type=chunk)[88](index=88&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 7% decrease in quarterly net revenue to Pediatric Portfolio declines, partially offset by ADHD Portfolio stability and a **$3.3 million** vendor liability reduction, alongside successful cost reduction efforts and strategic divestitures [Overview](index=33&type=section&id=Overview) The company focuses on commercializing novel prescription therapeutics for childhood conditions like ADHD, divesting its Consumer Health business, suspending clinical programs, and expanding ADHD product reach internationally - The company's strategy focuses on in-licensing, acquiring, developing, and commercializing novel prescription therapeutics, primarily for childhood conditions like ADHD[145](index=145&type=chunk) - In July 2024, the company completed the divestiture of its Consumer Health business to focus on core prescription pharmaceutical products[146](index=146&type=chunk) - The company has entered into its first international commercial agreements to sell Adzenys and Cotempla in Israel, the Palestinian Authority, and Canada[147](index=147&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Net revenue decreased 7% to **$16.6 million**, primarily due to a **$1.3 million** decline in the Pediatric Portfolio, partially offset by a **$3.3 million** ADHD Portfolio adjustment, while operating expenses decreased by **$1.0 million**, and a **$2.9 million** gain on derivative warrant liabilities was recognized Net Revenue by Portfolio | Portfolio | Q1 FY2025 (ended Sep 30, 2024, in thousands) | Q1 FY2024 (ended Sep 30, 2023, in thousands) | Change (in thousands) | | :--- | :--- | :--- | :--- | | ADHD Portfolio | $15,264 | $15,128 | $136 | | Pediatric Portfolio | $1,293 | $2,565 | ($1,272) | | **Total Net Revenue** | **$16,574** | **$17,817** | **($1,243)** | - The decrease in total net revenue was primarily driven by the Pediatric Portfolio, negatively affected by payer changes impacting prescription coverage[153](index=153&type=chunk) - General and administrative expenses decreased by **$1.2 million** (**19%**) compared to the prior-year period, attributed to cost reduction efforts and improved operational efficiencies[156](index=156&type=chunk) - A **$2.9 million** unrealized gain on derivative warrant liabilities was recognized, compared to a **$5.9 million** loss in the prior-year period, primarily due to changes in the company's stock price[161](index=161&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources include cash from operations and its revolving credit facility; it refinanced debt in June 2024 with a new **$13.0 million** term loan and **$14.5 million** revolving credit facility, and filed a **$100.0 million** shelf registration in September 2024 - As of September 30, 2024, the company had **$20.1 million** in cash and cash equivalents[11](index=11&type=chunk)[19](index=19&type=chunk) - In June 2024, the company entered into a new debt agreement with Eclipse, consisting of a **$13.0 million** term loan and a **$14.5 million** revolving credit facility, to refinance a previous loan[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - A new shelf registration statement on Form S-3 for up to **$100.0 million** was filed in September 2024 and became effective in October 2024, subject to 'baby shelf' limitations[166](index=166&type=chunk) [Contractual Obligations, Commitments and Contingencies](index=38&type=section&id=Contractual%20Obligations%2C%20Commitments%20and%20Contingencies) The company has significant contractual obligations, including a **$5.8 million** accrued settlement liability for the terminated Tuzistra License Agreement and a **$1.7 million** accrued fixed payment for the Tris Karbinal Agreement - The company has an accrued settlement liability of **$5.8 million** payable to Tris related to the termination of the Tuzistra License Agreement[177](index=177&type=chunk) - An accrued fixed payment arrangement balance of **$1.7 million** exists for the Tris Karbinal Agreement as of September 30, 2024[178](index=178&type=chunk) [Critical Accounting Estimates](index=38&type=section&id=Critical%20Accounting%20Estimates) The company's critical accounting estimates are consistent with its 2024 Form 10-K, requiring management to make estimates and judgments in financial statement preparation - The discussion and analysis of financial condition are based on financial statements prepared under U.S. GAAP, requiring management to make estimates and judgments, with detailed discussion available in the 2024 Form 10-K[180](index=180&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk under Rule 12b-2 of the Exchange Act - As a smaller reporting company, Aytu BioPharma is exempt from providing quantitative and qualitative disclosures about market risk[182](index=182&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2024[182](index=182&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter[184](index=184&type=chunk) [PART II - OTHER INFORMATION](index=40&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) No new material legal proceedings were initiated or terminated during the quarter; the company agreed to settle the Witmer class-action securities litigation through corporate governance modifications and payment of attorneys' fees, pending court approval - The company agreed to settle the Witmer class-action derivative suit, alleging breaches of fiduciary duties related to past acquisitions, involving corporate governance changes and payment of attorneys' fees, subject to court approval[101](index=101&type=chunk) - No new material legal proceedings were initiated or terminated during the reporting period[184](index=184&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those disclosed in its Annual Report on Form 10-K for the year ended June 30, 2024 - The company reports no material changes to its risk factors from those previously reported in the 2024 Form 10-K[185](index=185&type=chunk) [Other Information](index=40&type=section&id=Item%205.%20Other%20Information) During the quarter ended September 30, 2024, no directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the quarter[186](index=186&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes standard exhibits such as CEO/CFO certifications (302 and 906) and XBRL data files[188](index=188&type=chunk) [Signatures](index=41&type=section&id=SIGNATURES) - The report was duly signed by Joshua R. Disbrow, Chief Executive Officer, and Ryan J. Selhorn, Chief Financial Officer, on November 13, 2024[190](index=190&type=chunk)