Biosyent Inc

XTSX:RX

Earnings Call Analysis

BioSyent Reports Record Revenue and EPS Growth

BioSyent Inc. hit a record high with nearly $8 million in Q4 sales, marking a 10% increase, and almost $30 million for the year, up by 13%. Key growth was led by Tibella, surging by 36% for the quarter and 46% annually. The company sustained an EBITDA margin of about 20%, with net income after tax margins rising from 16% to 18% and an annual net income growth reaching approximately $6.5 million. Earnings per share rose significantly to $0.12 for the quarter and $0.53 annually, a 20% jump compared to the previous year. BioSyent continued to reward shareholders with a fifth consecutive dividend and a 12.5% dividend increase to $0.045 per quarter. The company's flagship product FeraMAX, the leading oral iron supplement in Canada, is poised for continued success, and newer products like Gelclair and Inofolic have been launched. BioSyent is eyeing future growth through acquisitions and in-licensing, alongside their strong cash balance and consistent return on equity.

BioSyent's Robust Sales and Record Performance in Canadian Market

BioSyent Inc. has marked a successful quarter, achieving a 10% growth and an impressive $8 million in sales, representing an all-time high for the company. The continued upswing carried through the full year, with a notable 13% increase from the previous year, culminating in nearly $30 million in total sales. A noteworthy contributor to this growth has been the strong performance of the pharmaceutical brand Tibella, boasting a 36% surge in the quarter and a remarkable 46% on the year.

Mixed Results: International Business Volatility and Stable Margins

While international business exhibited volatility, with a 54% decrease in the quarter, it balanced out to a 53% uptick on a full-year basis. EBITDA margins remained steady at 20%, slightly up from the previous year, reflecting a well-managed cost base. Net Income After Tax (NIAT) margin rose modestly from 16% to 18%, demonstrating profitability and prudent fiscal management. On a full-year scale, the EBITDA margin hit 25% and NIAT maintained at 20%, paralleling the prior year but with an 18% increase in net income after tax, nudging just under $6.5 million.

A Decade of Deliberate Expansion and Reduced Share Count

BioSyent's successful expansion since its first profitable quarter in 2010 is evident. From a modest portfolio of two brands, the company has flourished, now boasting a diversified array and close to $32 million in full-year revenue for 2023. This strategic growth has been accompanied by a reduction in fully diluted shares outstanding, a testament to the management's commitment to enhancing shareholder value.

Strategic Product Introductions and Shareholder Return Initiatives

Latest developments include the launch of Gelclair and the inception of menopauseinformation.ca, alongside a string of dividends and share buybacks. The fifth consecutive dividend payout was marked up by 12.5% to $0.045 per quarter. In addition, BioSyent's recognition in the TSX Venture 50 and the progress of the FeraMAX and Inofolic brands underscore the company's innovation and growth strategies designed to drive future performance.

Solid Cash Position and Focus on Sustained Growth

BioSyent has maintained a stable year-end cash position for the past three years. In the last year, cash from operations reached $5.1 million, and the company actively invested in its business, fostering revenue and profit growth. Shareholders benefited through share buybacks totaling $3.1 million and dividends of $1.9 million. The company's strategy indicates continued investment in growth, with emphasis on improvements into 2024 and 2025, and a commitment to ongoing dividends and share repurchase programs.

Earnings Call Transcript 2023-Q4

[René Goehrum, executive]

Hello, and welcome to the BioSyent Inc. Q4 and Fiscal Year 2023 Results Presentation. My name is René Goehrum, and I'm the President and CEO of the company. I want to start the presentation today by just giving you an overview of our sales by brand and business unit. You can see here the Canadian pharmaceutical business grew 10% in the quarter ended December 31st, and did just under $8 million, which represented an all-time record for the business. And for the full year, we were just under $30 million, up 13% to the year ago.

You can see on a by-brand basis for the most part, both in the quarter and on the full year, we had strong growth, particularly Tibella, which was up 36% in the quarter and 46% on the year. I will note that Combogesic has kind of negative revenue growth figures here. We did some work around promotional testing that had an impact on the top line. And I would just direct you to kind of what we expect those numbers to look like as we go forward through into 2024. And I don't expect the same look in terms of business results in the marketplace. Overall, we've been talking about our international business being quite lumpy. That has continued. You can see on the quarter down 54%, but on a full year basis, up 53%. That business is concentrated into a handful of markets for which we receive and process and ship large orders. And as a result, best to measure that business on a full year basis. We have been filling the order book and expect that business to continue to progress.

The legacy business had a strong fourth quarter and for the year ended flat to the year ago. So overall, company sales reached just under $8.3 million for the quarter, up 11% to the year ago. Our EBITDA margin was relatively flat, 20% to the year ago, 21% NIAT margin up slightly from 16% to 18%. On a full year basis, you can see our sales reached just under $32 million, up 13% to the year ago. We've already talked about the strong performance in the Canadian pharmaceutical business. It represented a record quarter, obviously, a record year as well for Canadian pharma. We reshaped the portfolio a couple of years ago and have nicely gone through making up the loss in revenue that we had for the products that we returned to partners and have returned the business to a solid growth as we move forward.

On a full year basis, you can see that our EBITDA margin was 25% as a ratio to sales and just under $8 million, up 7% to the year ago. And our NIAT margin consistent with the year ago at 20%, and that represented a growth of 18% versus a year ago, just under $6.5 million of net income after tax. So how does this flow through to a quarterly look on earnings per share? I would like to just point out the fact that the fourth quarter represented our 54th consecutive profitable quarter. For the quarter itself, we did $0.12 on a fully diluted basis, and that compares favorably to $0.09 in the year ago period. Overall, on our TTM, which in this case, represents fiscal 2023, we did $0.53 per share compared to 44%. So solid up over 20% year-on-year measuring EPS.

So if we go back to 2010, which is the first year that we had a profitable quarter in the middle of that year, we had our first profitable quarter. We've -- and operating our business profitably. Since then, we've been investing in in-licensing and launching new assets. You can see back in 2010, we have 2 brands on market. That included our legacy business. On the far right of your screen, you can see all of the products and brands that we have in market today. On a full year revenue basis, 2023, as I've already indicated, just under $32 million in sales, progressing over time. We've added to the portfolio, and we've grown our profit over that period of time.

And then at the bottom of the screen, just to kind of point out bottom right corner, fully diluted shares outstanding at the recording of this presentation in the second week of March under 12 million shares fully diluted, and that compares favorably to 2010 when we first came profitable. So though we've been investing in the business, and we have a substantially larger business, larger commercial footprint and capacity and capability, a larger portfolio, measurably more profitable business, we've done that and reduced the fully diluted shares outstanding over that period of time.

So I'd like to just speak to a couple of highlights for the fourth quarter of 2023. We launched Gelclair and started shipping it in the quarter. We launched menopauseinformation.ca in partnership with the Canadian Menopause Society. This is a website to provide information, education to women that are experiencing menopause symptoms and menopause itself and also to direct them to some options for treatment and how to prepare and consult with healthcare practitioners.

In the quarter, we delivered our fifth consecutive dividend. In this case, it was a $0.04 dividend that was paid in December, and we bought back over 93,000 shares under our NCIB. Subsequent to the quarter end, we declared an increase to our dividend, a 12.5% increase. So from $0.04 to $0.045 per quarter, and that first increased dividend will be paid on the 15th of March coming up.

In February, BioSyent was named to the 2024 TSX Venture 50 top-performing companies on the TSX Venture Exchange in the Clean Tech and Life Sciences category. We launched a new corporate website if you haven't taken a look. I invite you to do so at biosyent.com. And we continued under our NCIB in buying back shares. In this case, just under 123,000 shares have been purchased since January 1 until the recording of this presentation.

Our lead asset, FeraMAX brand has been the most recommended oral iron supplement in Canada for 8 years, and I don't think I'd be letting too much out of the bag by telling you that we fully expect over the coming months to be telling you that it is 9 consecutive years. This is an independent survey done on the self-medication or OTC products amongst physicians and pharmacists. And this has given us a strong platform in which to build a life cycle strategy for the FeraMAX brand. We've been working on this for a number of years and executing on it now since late in 2020. I'm not going to go over much of the detail on this slide, you can pause it. The thing that I would point out is that we launched the latest FeraMAX product, that's FeraMAX 45 about a year ago, and that business has been progressing well. I've got a couple of more comments on it in a couple of slides. And we are working on the next FeraMAX product, it's in development. I don't have much to say on that at this point in time. But we have a new asset that we expect to see market upon regulatory approval and completed development.

As I mentioned, we are progressing with FeraMAX 45. We are increasing points of distribution. You'll find it in the pharmacy close to you in Canada. This is a Canada-only launch at this phase. It's a chewable iron supplement that also has Vitamin B12 and Vitamin C, and it's positioned to maintain iron health for those patients and consumers that cycle in and out of iron deficiency and iron deficiency anemia. The product is, as I say, available now across the country, and we're growing distribution literally in the hundreds of pharmacies on a monthly basis.

In August of 2023, we launched Inofolic, a new treatment option for women with Polycystic Ovary Syndrome. I invite you to visit the product website inofolic.com. It's still very early days on this product.

I mentioned a few moments ago that we had launched Gelclair, and this is an oncology supportive care product to help patients manage side effects from radiation and chemotherapy, essentially mouth and throat that really have a severe impact on quality of life and for patients to continue that medication. So this product was launched just in November, so even earlier days than Inofolic. So we look forward to reporting to you over time how we're doing on these new product introductions.

So these products that I've just outlined for you, together with the existing in-market FeraMAX products and coming FeraMAX products and Tibella, are hormone replacement therapy product to constitute the bulk of what our expectation is for growth over the next several years. So growth drivers, not just in 2024, but '25 and '26. We are working on additional acquisition and in-licensing opportunities and enhanced focus on acquisitions, so in-market assets that are revenue generating, but we do have a few assets in either negotiation or diligence at this stage, and we expect to be able to share more about that as the year progresses.

So how has our business performance affected our cash balance. You can see here on this slide, we're showing you cash balance ending December 31 for '21, '22 and '23. And our average return on equity is represented by the green line. So you can see through the slide that our cash position at year-end has been fairly consistent now for 3 years. I've spoken earlier in this presentation about how we're generating cash in our business or operating a profitable business. Last year, our cash from operations was $5.1 million. And we've been actively managing this by investing in the business. We've launched new assets, which I've spoken about. Those assets are contributing to revenue growth in the company.

And the profit growth, we expect that investment to continue going into '24. I would think that ratios that we've come to expect in terms of operating profit and profit contribution from brands as we get through 2024, will improve over time. And I think into 2025, those ratios will improve. Nevertheless, we've been generating cash from operations and profitability, and we've been returning that capital to shareholders. So we bought back $3.1 million worth of shares last year, and we paid dividends of $1.9 million. So essentially, we've returned the cash generation from 2023 back to shareholders.

We expect to continue, obviously, both dividends and our buyback program, as we have done through the first quarter of this year. We expect those 2 will continue to feature in our strategy as we move forward.

So let me revisit that approach and how we're linking our capital allocation to our strategy. Our cash position is strong at just under $29 million. We have 0 debt. Our first dollar of cash generation or cash that we have on the balance sheet goes to drive growth in the business. We have been investing when you do a deeper dive and take a look at our investments in sales and marketing and other OpEx elements. You'll see that we're investing in growth in the business, and we are clearly diversifying the revenue streams with new assets in marketing.

So our third use of capital is to return that to shareholders and to make sure that we're doing that and leaving an ample amount of capital on the balance sheet to drive our strategy. So just over 5 years ago, we started buying back shares. We've repurchased 2.7 million shares since the end of 2018 for an enhancement in earnings per share of 23%, so for those shareholders which we've had -- we have many, a lot of shareholders have been with us for an extended period of time. Those shareholders have seen their EPS enhanced by 23% through share buybacks. And of course, we've now returned including the dividend that's being paid this week, $2.9 million through dividend payments back to shareholders. So we're growing a substantial business, managing the bottom line and returning capital to shareholders. So we're working on managing all 3 of those.

I don't want to spend too much time on this table. I'd like to just remind listeners and viewers to this presentation that we have replaced share options as an equity element in our compensation with RSUs, restricted share units. And we do this because we feel the way we manage that is less dilutive. We buy back shares in the open market, all them and trust to satisfy our future obligations under the RSU plan. So it's been over 4 years since we've issued any new share options. So very non-dilutive and shareholder friendly. And the reason we're focused on being shareholder friendly is because employees, management and directors are significant shareholders of the company. We own in aggregate about 25% of the company. I believe 80% of our employees are also shareholders in the company. So we keep an eye on these measures, the cap table, the balance sheet and ensuring that we're growing a strong, healthy business as we move forward.

I look forward to reporting our progress to you as the year progresses. You'll next hear from us after our Annual General Meeting, which is mid-May. Thank you.