Journey Medical Corp (NASDAQ:DERM) is one of the best performing micro cap stocks in 2025. On January 4, Lake Street analyst Thomas Flaten reaffirmed a Buy rating on Journey Medical Corp (NASDAQ:DERM) with a $13 price target. Journey Medical (DERM) Publishes Positive Emrosi Phase 1 Microbiome Data Source: Pexels Earlier on December 10, Journey Medical Corp published results from a Phase 1 clinical trial, focusing on Emrosi’s impact on microbial flora in healthy adults, in the Journal of Drugs in Dermato ...

Core Insights - The article discusses the strong performance of micro-cap stocks in 2025, highlighting that they experienced significant growth during a year characterized by an "everything rally" across various asset classes [2][3]. Market Performance - The Dow Jones US Micro-Cap Total Stock Market Index gained 12.59% in 2025, while the S&P 500 achieved nearly 17% [2]. - The Russell Micro-Cap Index saw a remarkable recovery, returning 17.03% in Q3 2025 after a 14.39% decline in Q1 [3]. Investment Outlook - Analysts believe that smaller companies are set for meaningful rebounds in 2026, driven by improved macroeconomic conditions and a shift away from speculative stocks [4]. - Factors contributing to this positive outlook include moderated inflation, easing conflicts, stabilized energy prices, and anticipated interest rate cuts by central banks [4]. Methodology for Stock Selection - Micro-cap stocks were defined as companies with market capitalizations between $50 million and $300 million, focusing on those with the strongest year-to-date performance in 2025 [7]. - Hedge fund sentiment was also considered based on Q3 2025 13F filing data [8]. Notable Micro-Cap Stocks - **Duos Technologies Group Inc (NASDAQ:DUOT)**: Market capitalization of $205.17 million with a YTD performance of 49.20%. The company received a price target increase from $11.50 to $14.00 due to a major contract and its leadership in train check services [9][10]. - **Journey Medical Corp (NASDAQ:DERM)**: Market capitalization of $150.49 million with a YTD performance of 80.99%. The company reaffirmed a Buy rating with a $13 price target following positive results from a Phase 1 clinical trial for its FDA-approved medication Emrosi [13][15].

Core Insights - Journey Medical Corporation announced successful results from a Phase 1 clinical trial for Emrosi, indicating it can be safely used for up to 16 weeks without significant safety issues [1][2] - Emrosi is FDA-approved for treating inflammatory lesions of rosacea in adults, with a focus on maintaining normal microbiota and avoiding antibiotic resistance [2][5] Company Overview - Journey Medical Corporation is a commercial-stage pharmaceutical company focused on marketing FDA-approved prescription products for dermatological conditions [8] - The company currently markets eight branded FDA-approved prescription drugs aimed at treating common skin conditions [8] Clinical Trial Details - The Phase 1 clinical trial (DFD-29-CD-006) was a multicenter, randomized, double-blind, placebo-controlled study involving 60 healthy adults [2] - The trial achieved all primary microbiological endpoints, showing no significant changes in skin, gastrointestinal, or vaginal microbiota [5] - No significant safety issues were reported during the study, reinforcing the treatment's tolerability [2][5] Rosacea Background - Rosacea is a chronic inflammatory skin condition affecting over 16 million Americans and approximately 415 million people worldwide [3] - The condition significantly impacts patients' self-confidence and social interactions, with many reporting adverse effects on professional life [3]

Group 1: Fund Performance - Summers Value Fund LP achieved a net return of 20.4% in Q3 2025, outperforming the Russell 2000 Index ETF and the Russell 2000 Value Index ETF, which returned 12.4% and 12.5% respectively [1] - Year-to-date, the fund is up 4.9%, while the Russell 2000 Index ETF and the Russell 2000 Value Index ETF are up 10.3% and 8.9% respectively [1] Group 2: Journey Medical Corporation Overview - Journey Medical Corporation (NASDAQ:DERM) focuses on developing and commercializing pharmaceutical products for dermatological conditions [2] - The stock of Journey Medical Corporation has seen a one-month return of 8.46% and a 52-week gain of 52.01%, closing at $7.95 per share with a market capitalization of $215.73 million on November 18, 2025 [2] Group 3: Product Launch and Financial Outlook - Journey Medical recently launched Emrosi for treating rosacea, with annualized sales nearing $30 million in the first six months post-launch, and potential peak sales exceeding $100 million based on positive feedback [3] - The company is expected to achieve profitability in 2026, supported by a scalable business model, and may be an attractive acquisition target due to ongoing consolidation in the dermatology industry [3] Group 4: Revenue and Hedge Fund Interest - Journey Medical Corporation reported revenue of $17.6 million in Q3 2025, an increase from $14.9 million in Q3 2024 [4] - The company is not among the 30 most popular stocks among hedge funds, with only 4 hedge fund portfolios holding its stock at the end of Q2 2025, down from 6 in the previous quarter [4]

Core Insights - Journey Medical Corporation reported revenue of $17.63 million for the quarter ended September 2025, reflecting a year-over-year increase of 20.5% [1] - The earnings per share (EPS) was -$0.09, an improvement from -$0.12 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $17.7 million by 0.39%, while the EPS was below the consensus estimate of -$0.08 by 12.5% [1] Financial Performance Metrics - Total net product revenue for Accutane was $2.77 million, which is 30.7% lower than the year-ago figure and below the average estimate of $3.54 million [4] - Total net product revenue for EmrosiTM was reported at $4.88 million, compared to the estimated $6.35 million, indicating a significant shortfall [4] - Total net product revenue for Qbrexza was $7.36 million, slightly exceeding the estimated $6.67 million, but still showing a year-over-year decline of 2.9% [4] Stock Performance - Journey Medical's shares have increased by 25.7% over the past month, outperforming the Zacks S&P 500 composite, which rose by 4.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Core Insights - Journey Medical Corporation reported a quarterly loss of $0.09 per share, slightly worse than the Zacks Consensus Estimate of a loss of $0.08, but an improvement from a loss of $0.12 per share a year ago, indicating a -12.50% earnings surprise [1] - The company generated revenues of $17.63 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 0.39%, but showing growth from $14.63 million in the same quarter last year [2] - Journey Medical shares have increased approximately 131.5% year-to-date, significantly outperforming the S&P 500's gain of 16.4% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.03 on revenues of $19.5 million, and for the current fiscal year, it is -$0.42 on revenues of $68.15 million [7] - The estimate revisions trend for Journey Medical was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6] Industry Context - The Medical - Drugs industry, to which Journey Medical belongs, is currently ranked in the top 32% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Journey Medical reported total revenues of $17.6 million for Q3 2025, a 21% increase from $14.9 million in Q3 2024, driven by the successful launch of Amrosi [5][13] - Gross margin decreased to 67.4% in Q3 2025 from 69.4% in Q3 2024, but showed steady improvement from 63.5% in Q1 2025 and 67.1% in Q2 2025 [13][14] - The company reported a GAAP net loss of $2.3 million, or $0.09 per share, compared to a loss of $2.4 million, or $0.12 per share, in the same period last year [15] - EBITDA improved from a loss of $1 million in Q3 2024 to a loss of $500,000 in Q3 2025, with adjusted EBITDA reaching $1.7 million compared to $300,000 in the prior year [15][16] Business Line Data and Key Metrics Changes - Emrosi contributed $4.9 million to revenue in Q3 2025, a 75% increase from Q2 2025, while legacy products like Qbrexza, Accutane, and Zilxi saw a 16% year-over-year decline due to generic competition [5][6] - Total prescriptions for Emrosi grew by approximately 146% from Q2 to Q3 2025, with 18,198 prescriptions in Q3 compared to 7,394 in Q2 [6][17] - The number of unique prescribers for Amrosi increased by approximately 50% to over 2,700, indicating strong initial adoption [9][11] Market Data and Key Metrics Changes - Over $100 million of the $187 million commercial lives currently have access to Amrosi, with successful contracting with two of the three largest GPOs [7][8] - Physician feedback on Amrosi has been positive, with prescribers noting early efficacy and strong refill rates, indicating a favorable reception in the market [8][10] Company Strategy and Development Direction - The company aims to establish Amrosi as the standard of care for rosacea treatment, with expectations of peak annual net sales exceeding $200 million in the U.S. and $300 million globally [17][18] - Journey Medical is focused on disciplined expense management and margin expansion while scaling Amrosi's commercial footprint [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving sustainable EBITDA positivity in Q4 2025, highlighting the transformational potential of 2025 for the company [18] - The company anticipates that as drug coverage increases, reliance on the copay assistance program will decrease, with significant gains expected in 2026 [21][22] Other Important Information - The company is actively participating in dermatology medical conferences to build awareness and momentum for Amrosi [9][11] - The launch of Amrosi is expected to create a snowball effect in prescription growth as more physicians gain confidence in the product [25][26] Q&A Session Summary Question: Usage of patient assistance program for Amrosi - Management noted that the copay assistance program will see reduced reliance as reimbursement improves, with significant gains expected in 2026 [21][22] Question: Focus on breadth vs. depth of prescribers - The company is focusing on both breadth and depth, with efforts to convert new prescribers into consistent writers while expanding the prescriber base [24][25] Question: Revenue per script fluctuations - Management acknowledged variability in gross to net revenue and indicated that improvements are expected as more GPOs are contracted [29][30] Question: Launch curve expectations - Management expressed optimism about a consistently growing and potentially accelerating launch curve based on current performance [32] Question: Accutane's performance amidst generic competition - Management indicated that Accutane appears stable, with a recent uptick in performance, although competition remains a concern [33] Question: Retention rate of prescribers - Management did not provide specific retention rates but noted ongoing trial and adoption among new prescribers [37][40] Question: Qbrexza's performance and overlap with Amrosi - Management reported good growth for Qbrexza despite competition, with effective overlap in marketing strategies for both products [41][42]

Revenue Performance - Total revenue for the three-month period ended September 30, 2025, increased by $3.0 million, or 21%, to $17.6 million compared to the same period in 2024[108]. - Product revenue, net for the three-month period ended September 30, 2025, was $17.0 million, reflecting a $2.4 million, or 16%, increase from $14.6 million in 2024[109]. - The U.S. commercial launch of Emrosi™ contributed $4.9 million to net product revenue in the third quarter of 2025[109]. - Total revenue for the nine-month period ended September 30, 2025, was $45.8 million, an increase of $3.3 million, or 8%, from $42.5 million in the same period of 2024[119]. - Product revenue, net for the nine-month period ended September 30, 2025, was $45.2 million, reflecting a $2.7 million, or 6%, increase from $42.5 million in the prior year, with $9.7 million attributed to the launch of Emrosi[120]. Expenses and Losses - Operating expenses for the three-month period ended September 30, 2025, totaled $19.2 million, an increase of $1.6 million, or 9%, from $17.5 million in 2024[108]. - Loss from operations improved by $1.4 million, or 47%, to a loss of $1.5 million for the three-month period ended September 30, 2025[108]. - The company reported a net loss of $2.3 million for the three-month period ended September 30, 2025, a slight improvement of $75,000, or 3%, compared to a net loss of $2.4 million in 2024[108]. - Selling, general and administrative expenses rose by $4.4 million, or 14%, to $34.5 million for the nine-month period ended September 30, 2025, compared to $30.1 million for the same period in 2024, mainly due to activities related to Emrosi's launch[128]. - Research and development expenses decreased by $555,000, or 66%, to $287,000 for the three-month period ended September 30, 2025[108]. - Research and development costs decreased by $9.3 million, or 97%, to $0.3 million for the nine-month period ended September 30, 2025, from $9.6 million in the same period of 2024, as the prior year included pre-approval project expenses for Emrosi[127]. Cash Flow and Financing - Cash and cash equivalents increased to $24.9 million as of September 30, 2025, compared to $20.3 million at December 31, 2024, with working capital rising to $16.7 million from $13.0 million[130]. - Net cash used in operating activities decreased by $5.2 million to $6.2 million for the nine-month period ended September 30, 2025, compared to $11.4 million for the same period in 2024[143]. - Net cash provided by financing activities increased by $4.4 million to $10.8 million for the nine-month period ended September 30, 2025, compared to $6.4 million for the same period in 2024[144]. - The company issued and sold 1,832,107 shares of common stock under the 2022 Shelf, generating net proceeds of $10.9 million during the nine-months ended September 30, 2025[140]. - The company received proceeds of $10.9 million from the issuance of common stock under the ATM program for the nine-month period ended September 30, 2025, compared to $1.7 million and $5.0 million in the previous year[144]. Debt and Obligations - Interest expense increased by $179,000, or 24%, to $937,000 for the three-month period ended September 30, 2025[108]. - Interest expense, net increased by $1.0 million, or 77%, to $2.3 million for the nine-month period ended September 30, 2025, from $1.3 million for the same period in 2024, primarily due to a higher principal balance under the Credit Agreement with SWK[129]. - The company is required to make regular payments under the SWK Credit Facility, with total expected payments of $32.1 million, including $25.0 million in principal and $5.9 million in interest[146]. - The maturity date of the existing Credit Facility has been extended from December 27, 2027, to June 27, 2028, and the revenue threshold for the Revenue-Based Payment provision has been lowered from $70.0 million to $60.0 million[137]. - The company is in compliance with the financial covenants under the Credit Facility as of September 30, 2025[139]. Other Revenue and Adjustments - Other revenue for the three-month period ended September 30, 2025, was $606,000, reflecting a 100% increase from no other revenue in 2024[110]. - Gross-to-net sales accruals increased by $2.4 million, or 24.5%, to $12.2 million as of September 30, 2025, compared to $9.8 million as of September 30, 2024, primarily due to the Emrosi coupon rebate allowance[112]. - Amortization of acquired intangible assets increased by $0.8 million, or 31%, to $3.2 million for the nine-month period ended September 30, 2025, driven by the addition of the Emrosi intangible asset[126]. - The company has contractual obligations for milestone and sales-based royalty payments, but the amounts cannot be reasonably predicted due to their contingent nature[146]. - The company executed a new At Market Issuance Sales Agreement in August 2025 to enhance capital structure and meet liquidity needs for Emrosi's commercialization[132].

Financial Performance - Third quarter 2025 net revenues were $17.6 million, a 21% increase from $14.6 million in the same quarter of 2024[3] - Total revenue for the three-month period ended September 30, 2025, was $17,631 million, a 20.5% increase from $14,629 million in the same period of 2024[16] - Product revenue for the nine-month period ended September 30, 2025, reached $45,173 million, up from $42,514 million in 2024, reflecting a growth of 6.2%[16] - The net loss for Q3 2025 was $2.3 million, slightly improved from a net loss of $2.4 million in Q3 2024[8] - The net loss for the three-month period ended September 30, 2025, was $2,315 million, a slight improvement from a net loss of $2,390 million in the same period of 2024[16] - Basic GAAP net loss per share for the three-month period ended September 30, 2025, was $0.09, compared to $0.12 in 2024[22] Expenses - Selling, general and administrative (SG&A) expenses were $12.1 million, reflecting a 6% increase from $11.4 million in Q3 2024, primarily due to Emrosi's commercialization[3] - Operating expenses for the three-month period ended September 30, 2025, totaled $19,160 million, compared to $17,523 million in 2024, representing a 9.3% increase[16] - Research and development expenses for the three-month period ended September 30, 2025, were $287 million, down from $842 million in 2024[16] - Interest expense for the three-month period ended September 30, 2025, was $937 million, compared to $758 million in 2024, indicating a 23.6% increase[16] - The company reported a total other expense of $786 million for the three-month period ended September 30, 2025, compared to an income of $504 million in the same period of 2024[16] Profitability Metrics - Adjusted EBITDA for Q3 2025 was $1.7 million, compared to $0.3 million in the prior-year quarter, reflecting a $1.4 million improvement[8] - Adjusted EBITDA for the three-month period ended September 30, 2025, was $1,676 million, significantly higher than $252 million in 2024[22] Cash Position - Cash and cash equivalents increased to $24.9 million as of September 30, 2025, up from $20.3 million at the end of 2024[8] Product Performance - Emrosi™ total prescriptions increased 146% over the second quarter of 2025, generating $4.9 million in net revenues for the third quarter[2] - Emrosi demonstrated superior efficacy in clinical trials, with statistically significant improvements over both placebo and doxycycline[8] - Expanded payer access for Emrosi now covers over 100 million commercial lives in the U.S., up from 54 million in May 2025[8] Future Outlook - The company anticipates significant operating leverage from the growth of Emrosi and its established dermatology commercial infrastructure[2] Gross Margin - Gross margin improved to 67.4% in Q3 2025, compared to 69.4% in Q3 2024, driven by higher-margin products and lower inventory costs[3] Share Information - The weighted average number of common shares for the three-month period ended September 30, 2025, was 24,959,114, an increase from 20,537,794 in 2024[22]

Core Insights - Journey Medical Corporation reported third quarter 2025 net revenues of $17.6 million, a 21% increase year-over-year from $14.6 million in Q3 2024, driven by the commercial launch of Emrosi™ [3][6] - Emrosi™ total prescriptions surged by 146% compared to the second quarter of 2025, generating $4.9 million in net revenues for the third quarter [1][3] - The company anticipates significant operating leverage from the growth of Emrosi and its established dermatology commercial infrastructure [3] Financial Results - Gross margin improved to 67.4% in Q3 2025, compared to 69.4% in Q3 2024, influenced by higher revenues from Emrosi and Qbrexza, despite a favorable one-time adjustment in the previous year [6] - Selling, general and administrative (SG&A) expenses rose to $12.1 million in Q3 2025, a 6% increase from $11.4 million in Q3 2024, primarily due to operational activities related to Emrosi's launch [6] - The net loss for Q3 2025 was $2.3 million, slightly improved from a net loss of $2.4 million in Q3 2024, translating to $(0.09) per share [6][17] Recent Corporate Highlights - Emrosi's clinical differentiation was validated through a pooled Phase 3 efficacy analysis, showing statistically significant superiority over Oracea® and placebo [3][12] - The company expanded payer access for Emrosi to over 100 million commercial lives in the U.S. as of July 2025, up from 54 million in May 2025 [12] - Journey Medical's cash and cash equivalents increased to $24.9 million as of September 30, 2025, compared to $20.3 million at the end of 2024 [6]