Earnings Call Presentation August 1, 2025 SAFE HARBOR STATEMENT Statements contained in this presentation that are not based on historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terminology such as "should," "could," "may," "will," "expect," "believe," "estimate," "anticipate," "intends," "continue," or similar terms or variations of those terms or the negati ...

Financial Data and Key Metrics Changes - The company reported record quarterly consolidated revenue of $255 million, a 9.1% increase year-over-year [11] - GAAP earnings from operations reached $51 million, up 12.3% compared to the prior year [12] - Consolidated net income was $38 million, reflecting a 19.4% increase, translating to diluted net earnings per share of $1.17, up 19 cents or 19.4% year-over-year [12][18] - Adjusted EBITDA was a record $69 million, an increase of 11.2%, with an adjusted EBITDA margin of 27.1%, up 50 basis points from the prior year [12][17] Business Segment Performance - The Human Nutrition and Health segment generated record sales of $161 million, an increase of 8.7% from the prior year, with earnings from operations of $38 million, up 14.9% [18][19] - The Animal Nutrition and Health segment reported quarterly sales of $56 million, a 13.1% increase, with earnings from operations of $4 million, up 30.5% [20][21] - The Specialty Products segment achieved record quarterly sales of $37 million, a 6% increase, with earnings from operations of $11 million, up 0.4% [22][23] Market Data and Key Metrics Changes - Demand in the Human Nutrition and Health segment is driven by trends towards nutrient-dense, high-protein, and low-sugar foods [5] - The Animal Nutrition and Health segment is benefiting from improved market conditions and the European Commission's provisional antidumping duties on Chinese choline, expected to positively impact growth [5][21] - The Specialty Products segment is experiencing higher demand in both performance gases and plant nutrition businesses [6] Company Strategy and Industry Competition - The company is focused on expanding its scientific and clinical research pipeline, with over 20 active clinical studies aimed at evaluating the benefits of various nutrients [7] - A new $36 million microencapsulation manufacturing facility is planned to double production capacity, supporting growth in the fast-growing microencapsulation technologies [10][11] - The company is well-positioned to manage through the current global trade environment, with a manufacturing and sales model that minimizes reliance on China [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth outlook, citing strong market positions and a value-added product portfolio [24] - The company remains flexible to adjust to evolving market conditions and is optimistic about continued growth in the second half of the year [6][23] - Management highlighted the importance of ongoing investments in marketing and scientific research to support growth in human health and nutrition [50][51] Other Important Information - Cash flows from operations were $47 million, with free cash flow of $41 million, and the company ended the quarter with $65 million in cash [18] - The effective tax rate for 2025 is expected to be between 22% and 23%, with a slight decrease anticipated in the second half of the year [59] Q&A Session Summary Question: Update on European monogastric demand and growth drivers for Animal Nutrition and Health - Management indicated that European monogastric demand is stable, with potential for increased market share due to antidumping duties on Chinese suppliers [30][31] - Growth is expected from the ruminant side, particularly in dairy, and the companion animal business is also seen as a growth opportunity [34] Question: Details on the new manufacturing facility - The new facility is expected to double production capacity and is funded through existing cash resources and debt facilities, with production anticipated to start in late 2027 to 2028 [36][46] Question: Status of VitaCholine ProFlo and strategic outlook for human health - Management noted positive reception for VitaCholine ProFlo and emphasized the company's ongoing evolution towards health-focused products, while not shifting towards pharmaceuticals [54][52] Question: Impact of tariffs and update on CureMark - Tariffs have increased the cost impact to approximately $25 million, but the company is managing this through supply chain adjustments and pricing strategies [62] - CureMark is preparing to file a BLA, with the company having completed necessary manufacturing preparations [65]

Financial Data and Key Metrics Changes - The company reported total revenues of $74.1 million for Q1 2025, a 61% increase compared to $46 million in Q1 2024 [19] - Net sales revenue for IBSRELA was $44.4 million, reflecting a 57% increase year-over-year [19] - Exposa generated net sales revenue of $23.4 million, up approximately 55% from $15.2 million in the same quarter last year [19][21] - The company recorded a net loss of approximately $41.1 million or $0.17 per share, compared to a net loss of $26.5 million or $0.11 per share in the prior year [23] Business Line Data and Key Metrics Changes - IBSRELA experienced strong prescription demand, with one of the highest prescription demand quarters to date [6] - Exposa grew by 30% year-over-year when excluding a one-time gross to net adjustment for return reserve release [7][21] - The gross to net deduction for IBSRELA was 34.8%, expected to improve throughout the year [20] Market Data and Key Metrics Changes - The IBS C market traditionally contracts in Q1, which was observed this year, but the company remains optimistic about recovery in subsequent quarters [31] - The dialysis market is undergoing significant disruption due to the loss of Medicare Part D coverage for phosphate-lowering therapies, impacting Exposa's market dynamics [8] Company Strategy and Development Direction - The company is focused on driving strong commercial execution for IBSRELA and navigating access complexities for Exposa [10] - The strategic imperatives include raising awareness of IBSRELA and positioning it as a first-line treatment for appropriate patients [13] - The company aims to achieve peak annual net sales revenue of over $1 billion for IBSRELA and $750 million for Exposa [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory of IBSRELA and Exposa, citing strong patient demand and effective commercial strategies [5][10] - The company is closely monitoring market dynamics and will provide further updates as the landscape evolves [9] - Management remains committed to building long-term value for shareholders despite current market challenges [10] Other Important Information - The company received a $5 million milestone payment from a partner in China following the approval of a cannabinoid for hyperphosphatemia [22] - Research and development expenses increased to $14.9 million, reflecting greater engagement with scientific and medical communities [22] Q&A Session Summary Question: Expectations for the IBS C market improvement in Q2 - Management expects the IBS C market to improve as the year progresses, based on strong prescription demand observed in Q1 [31][32] Question: Details on the return reserve and its impact - The return reserve was deemed unnecessary due to zero returns and limited bottles in distribution, leading to modest improvements in gross to net going forward [29][30] Question: Insights on the Q1 contraction and its differences from previous years - The contraction is consistent with historical trends, but the company remains optimistic about future growth [35][37] Question: Long-term gross to net targets and updates on the China launch - Long-term guidance for gross to net is expected to be around 30% plus or minus 5% [40] Question: Discrepancies between reported revenue and script data for IBSRELA - Management acknowledged fluctuations in scripts and emphasized the importance of focusing on guidance rather than individual quarter performance [48][50] Question: Metrics for assessing the expanded field force's impact - Key metrics include increases in activity, new riders, and new/refill prescriptions, all of which showed positive trends in Q1 [56][57] Question: Updates on the Kidney Patient Act and potential external asset acquisitions - The Kidney Patient Act is viewed as a call option, and the company is actively pursuing external assets in renal and GI spaces [102][104]