Q4 2024 Aytu Biopharma Inc Earnings Call

Thomson Reuters StreetEvents09-27

Participants Joshua Disbrow; President, Chief Executive Officer; Aytu Biopharma Inc Mark Oki; Chief Financial Officer, Treasurer, Company Secretary; Aytu Biopharma Inc Robert Blum; Moderator; Lytham ...

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Mark Oki; Chief Financial Officer, Treasurer, Company Secretary; Aytu Biopharma Inc. Greetings. Welcome to the Aytu Biopharma fiscal 2024 Q4 earnings call.  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.Thank you, Robert, and welcome, everyone. During fiscal 2024, we successfully repositioned Aytu as a growing specialty pharmaceutical company focused exclusively on commercializing our novel prescription therapeutics, consisting of our ADHD and pediatric portfolios. Since this repositioning commenced, which included indefinitely suspending our clinical development programs in 2022 and winding down our Consumer Health business, which was completed in July of this year, and both of which were drains on cash flows, we have positively transformed the operating profile of Aytu. For fiscal '24, adjusted EBITDA improved 162% ","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":["earning"],"viewcount":null,"language":"en","relate_stocks":{"AYTU":"Aytu BioScience, Inc."},"translate_title":"2024年第四季度Aytu Biopharma Inc收益电话会议","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"AYTU":0.9},"content_text":"Participants\nJoshua Disbrow; President, Chief Executive Officer; Aytu Biopharma Inc\nMark Oki; Chief Financial Officer, Treasurer, Company Secretary; Aytu Biopharma Inc\nRobert Blum; Moderator; Lytham Partners\nNaz Rahman; Analyst; Maxim Group\nPresentation\nOperator\n Greetings. Welcome to the Aytu Biopharma fiscal 2024 Q4 earnings call. (Operator Instructions) 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.\nRobert Blum\n All right. Thank you very much. Good afternoon, everyone, and thank you for joining us for as the operator indicated Aytu Biopharma's fiscal 2024 full year and fourth quarter operational and financial results conference call for the period ended June 30, 2024. Joining us on today's call is Aytu's Chief Executive Officer, Josh Disbrow; and the company's Chief Financial Officer, Mark Oki. At the conclusion of today's prepared remarks, we will open the call for a question and answer session. I'd like to remind everyone that today's call is being recorded. A replay of today's call will be available by using the telephone numbers and conference ID provided in the press release issued earlier today or by utilizing the link on the company's website under Events and Presentations. Finally, I'd also like to call your attention customary Safe Harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations and future potential operating results of Aytu Biopharma. Although management believes these statements are reasonable based on estimates, assumptions and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties and other factors, including but not limited to the factors set forth in the company's filings with the SEC. Aytu undertakes no obligation to update or revise any of these forward-looking statements. With that said, let me turn the call over to Josh Disbrow, Chief Executive Officer of Aytu Biopharma. Josh, the mike is yours.\nJoshua Disbrow\n Thank you, Robert, and welcome, everyone. During fiscal 2024, we successfully repositioned Aytu as a growing specialty pharmaceutical company focused exclusively on commercializing our novel prescription therapeutics, consisting of our ADHD and pediatric portfolios. Since this repositioning commenced, which included indefinitely suspending our clinical development programs in 2022 and winding down our Consumer Health business, which was completed in July of this year, and both of which were drains on cash flows, we have positively transformed the operating profile of Aytu. For fiscal '24, adjusted EBITDA improved 162% to $9.2 million compared to $3.5 million in fiscal '23. And when you look back at fiscal '22, our adjusted EBITDA was a negative $21.5 million. So over a two year span, we've achieved a more than $30 million positive swing in our operating results, quite an achievement by the entire Aytu team, and I thank them all for their efforts to get us to this point. As mentioned, in June of '23, we announced that we would wind down our Consumer Health business, which in the previous year had revenue of $33.6 million but did not generate positive operating cash flows. We tasked our Consumer Health team this past year to sell off remaining inventory and minimize expenses associated with this business with the goal to have minimal impact to the bottom line. And those goals were indeed achieved. While we were selling through some final inventory in the first quarter of fiscal '25 to minimize disruption costs. The Consumer Health business has been effectively shut down as of the end of fiscal '24. Further, we looked at ways to monetize the remaining consumer health assets again, this goal was achieved when we entered into an agreement to divest our Consumer Health business to a private e-commerce focused company. As part of the agreement Aytu receive up to $1.5 million of revenue base royalty payments on future sales of and our former consumer health business products. As we close the loop and the wind down of the consumer health business. We believe the company's operating profile will be made clearly visible to the market and to those investors that screen for growth, margin expansion and profitability. We believe this could lead to a re-rating of our corporate valuation going forward. Another key aspect of our strategic pivot to drive efficiencies across the organization has been the closure of our Grand Prairie, Texas manufacturing facility, which was acquired as part of the Neose acquisition and was much larger than what we needed. It was, therefore, source of large, fixed overhead expenses and a driver of increased COGS. We started the process about 36 months ago initially with the identification of a US based third party manufacturer that could meet the requirements to manufacture or EDHD product line. We then successfully received approval from the FDA to commence the transfer and have worked diligently since to ensure a consistent and orderly transition of production to the third party manufacturer. We completed our final in-house production run in June and have ceased using the facility for all intents and purposes, but we will continue to incur some costs related to the manufacturing facility through calendar '24 as we prepare to return the facility to the landlord. The end result has been the gradual improvement of the past year and our gross margins. our ex-gross margins during fiscal '24 were 75% compared to 71% last year. And we believe it is realistic to see that margin more or less maintain depending on the product mix between ADHD and pediatric products and following the old inventory getting sold through the channel. This has been an intense and time-consuming process led by our operations leadership team. I want to thank everyone involved in the Grand Prairie Wind down as we move Aytu into this next important phase of the company. I'm particularly impressed that through this challenging tech transfer process, the team maintain production levels and have gotten all products inventory levels among the highest in our brands respective histories. The aforementioned focus on driving towards profitability put us in a position to pay down a portion of our term loan and refinance our term loan on more favorable terms to Aytu. In mid-June, we announced that we entered into a new $30 million secured amortizing term loan with Eclipse, which replaces our previous $15 million secured term loan. Importantly, at the time of refinancing, this represented an approximately 350 basis points reduction in the interest rate, which results in potential savings of $1.3 million in interest expense. Additionally, the previous note had become a current liability as it matured in 2025 -- January '25. It now matures in June of '28, four years from now. So the refinancing improves our balance sheet by reclassifying most of the term loan from current to long-term liabilities and decreases our overall indebtedness, helping improve key financial ratios. This refinancing, along with our improving operating results, has resulted in the removal of the going-concern language from our periodic filings. Concurrently with the term note, we also extended the maturity date of our revolving credit facility agreement with Eclipse to June of 2028 with the amendment providing for a potential increase in borrowing capacity along with other terms, more advantageous to the company. So when I take a step back and look at our balance sheet, a few key points, I think help summarize our improvements. First, our cash position of $20 million is consistent with the March and December quarters. Second, the current portion of our long-term debt decreased from $15 million in March to less than $2 million at the end of June. Third, we have decreased our total debt by $2.4 million from March. And finally, we have decreased the interest rate associated with our term loan, which will provide for potential savings of $1.3 million in interest expense. All of these improvements could not have been possible without the strategic moves we made to significantly enhance the operating and financial profile of the business. My sincere thanks to everyone on the Aytu team for that. Also, I want to personally thank the team at Avenue Capital for their support and collaboration with us over the last few years and share my excitement to expand the relationship with Eclipse and the collaboration that we continue to build. With the business in a dramatically improved position compared to two years ago. Our focus is on continuing to drive revenue growth and efficiencies in our core prescription business, while also leveraging the unique capabilities of our RxConnect program, which provides tremendous benefits to patients and prescribers through transparent and consistent pricing. RxConnect is innovative and is also highly leverageable to enable scale for our current products and future products that we believe can be added to the promotional mix in the future. For the year net revenue from our ADHD portfolio increased 23% year over year and experienced an 8% year-over-year increase when comparing the second half of the fiscal year with that same period in 2023, given the significant revenue fluctuations we experienced in last year's second half, driven by the dramatic, albeit temporary effects related to a payer issue in the March quarter impacting our gross to net adjustments that have since been corrected by the way. It's best to view the ADHD trends by looking at the January through June timeframes. So again, that growth rate when looking at fiscal second half to fiscal second half was 8%. We're extremely pleased with this 8% revenue growth as we achieved this growth over the timeframe last year when the Adderall shortage was peaking and thus incentive scripts were way up over prior time periods. The temporary positive benefit we experienced from the supply shortages across most of the industry from which we benefited from last year, but have since normalized. And even with that normalization haven't taken place, we're still up 8% year over year on a half year comparative basis. And when looking at the current unit sales trajectory this quarter, ADHD ship units are up an impressive 26% from July 1, through yesterday, September 25. Importantly, what we believe to be a more normalized level today is a significant step change from a few years ago before the stimulant shortages occur. To put this in perspective, in fiscal '21, there were 352,000 scripts written for ADHD brands. That number stepped up to 376,000 in fiscal '22, 433,000 in fiscal '23 and was up again to 438,000 in fiscal '24. So the trend line from 2021 to 2024 is an increase of about 25%. And at an all-time high, we've reset the baseline to well above pre shortage levels, which extensive, which is very exciting to say the least. Something I touched upon last quarter that I wanted to expand upon again was the impact from the cyber-attack that the impacted UnitedHealthcare's subsidiary Change Healthcare. For those not familiar, Change Healthcare, among other things, enables branded manufacturers, co-pay program, savings programs, buy-downs, et cetera, to be processed through what is essentially a switchboard that interacts with pharmacy dispensing and reimbursement systems. It also interacts with physician building billing and reimbursement systems that get physician offices paid for their services. Among many other things the cyber cyberattack created havoc across the healthcare ecosystem and resulted in many pharma companies coupon programs not working effectively for extended periods of time. This in turn significantly impacted pricing and patient access to Rx products and often resulted in prescriptions going unfilled. I mentioned last quarter that we felt an impact from the cyberattack, albeit much less than many others in the industry, in particular, one of our largest grocery chain customers when it was unable to make some system changes to process our co-pay cards such that our co-pays were higher than the traditional $50. The net effect is likely in the range of a 15% sequential decrease in that change prescription dispensing. So we would consider this to have had a temporary negative impact on our business. Couple that with additional ordering issues, this customer experience in Q4 was surely negatively impacted. Fortunately and finally, that issue is now fixed and they're back to processing $50 max co-pay for commercial patients and are back to more normalized product ordering as well. Looking to the future a bit based on a preliminary read of the data with a couple of business days still to go. It is our expectation that we will see ADHD script growth as our units. The sales volumes are up, as I said, 26% from July 1, through yesterday, September 25. Now let me caveat that this is unit growth. So this doesn't always mirror revenue growth due to gross-to-net variations and the timing of shipments to distributors. That said, we're very pleased with our trends here as we round out fiscal Q1. On the pediatric front, our pediatric portfolio continues to be impacted by payer changes that occurred back in September of '23. However, we are seeing very promising signs of recovery here in the first quarter. I'll touch on those numbers shortly. On the whole pediatric scripts during fiscal '24 were 58,000 compared to 131,000 in fiscal '23. This resulted in net revenue during fiscal '24 decreasing to $7.3 million compared to $25.4 million. In the fourth quarter revenue, indeed drifted further sequentially. However, I do believe and I know I've said this before that we have bottomed out at these levels and can grow for here -- from here. It's taken us more time than anticipated to get the channel and payer issues back on track, but we remain optimistic about the pediatric products growth prospects. We've implemented a number of commercial initiatives that give us confidence that we can get back to growth across the pediatric portfolio with some early signs during the first three months of fiscal '25, pediatric product unit shipments are up 115% from July 1, through yesterday, which is very encouraging to say the least. We put numerous initiatives in place around securing improved reimbursement for both carbon Oxandrolone and the multivitamin franchise. And we've seen a significant increase in covered lives as a result of those efforts. As such, we're materially increasing our pediatric products promotion with our sales force as we're already seeing good early traction by way of both customer ordering, physician prescribing and pharmacy dispensing and reordering. We've increased our covered lives in areas that were previously lost due to the payer changes we've discussed. So we're resourcing those areas via direct promotion to regain and grow share as we realized significant coverage improvements. Also in areas where we didn't previously have coverage, we have had some very exciting payer wins, and we're also now beginning to resource those areas. I continue to be very confident in our collective abilities to win again, the pediatric portfolio. We acknowledge we have a long way to go to get those back to the levels we wanted we were once at, but believe we can get those products growing and back to the point of being meaningful revenue contributors for the company. For now though, we're excited about the impact our rebuilding efforts are having much of the success we've achieved during the past few years has been a result of our commercial efforts. And an important part of that is our RxConnect platform, which we believe is the a best-in-class patient support program. Our provider and patient centric access program through which we both clear and guaranteed pay no more than pricing for our brands. It works directly through our 1,000 plus partner pharmacies nationwide to deliver our brands, ensuring predictability of out-of-pocket costs for the patients who need our treatments and significantly reduce hassles for prescribing customers. Looking forward, we will continue to evaluate ways we can leverage the unique capabilities of our commercial infrastructure and RxConnect platform to drive growth as we go forward. To wrap things up, before I turn it over to Mark, it's been our objective to improve the financial profile of Aytu over the past few years. We've done just that and I couldn't be more pleased. We transitioned the business that had a negative $21.5 million in adjusted EBITDA in fiscal '22 was one was positive $9.2 million this year. Our cash balance over this time has remained steady with over $20 million on hand at the end of June, while we've also paid down our term loan from $15 million down to $13 million and refinanced it on terms more favorable to the company. Our ADHD portfolio has had a significant positive step change over pre shortage levels with script growth of about 17% from fiscal '22, while the impact from the pediatric portfolio flowed through the bottom line, which negatively impacted our adjusted EBITDA on a year-over-year basis. We're beginning to show progress through the first three months of fiscal '25 we shipped units up sequentially 115% through yesterday, which is providing us with a high level of optimism as we go forward. I'm confident in our plans and in our progress. And as indicated in our release earlier, we fully expect to achieve growth over our current EBITDA and net revenue levels in fiscal 2025. Let me turn the call over to Mark, and I'll then come back to wrap things up briefly before turning it over to questions. Mark?\nMark Oki\n Thanks, Josh, and welcome to everyone joining us on this call to help us review and acknowledge the operational turnaround at Aytu. As a reminder, our full year and fourth quarter financial results are detailed in our financial results press release and our Form 10-K that we released and filed earlier today. So let me focus my comments today on a few key areas, providing some added color where I can. First, let's look at revenue. For the 2024 fiscal year, net revenue was $81 million compared to $107.4 million for the prior year. Breaking it down net revenue from our Rx segment for the full year was $65.2 million compared to $73.8 million in fiscal 2023, a decrease of $8.6 million. Within Rx, we saw growth in our ADHD products of 8% in the second half of the fiscal year. For the full year, our ADHD portfolio which comprised 89% of Rx net revenue, a 23% increase to $57.8 million compared to the prior year period of $46.9 million. The growth in ADHD was offset by a decrease in our pediatric portfolio with full net year revenue coming in at $7.3 million compared to $25.4 million last year, a decrease of $18.1 million. As Josh indicated, the pediatric changes due to payer changes that impacted prescriptions, which we have communicated in detail over the past few quarters. And as Josh also pointed out, we are now starting to see signs of improvement. Looking specifically at the fourth quarter, Rx segment revenue was $14.6 million compared to $23.3 million in Q4 of last year. The change was primarily due to a decrease in pediatric sales mentioned and to a lesser extent, the decrease in ADHD net revenues, as the ADHD gross-to-net adjustments reflected a more normal status in the fourth quarter of 2024 as compared to 2023. We are seeing growth of both the ADHD portfolio and pediatric portfolio as we have entered fiscal '25 and are optimistic that we will continue to see a return to growth for our pediatric products. And again, we are guiding to our products revenue and adjusted EBITDA in fiscal 2025 ahead of fiscal 2024 numbers. Over a year ago, we initiated the plan to wind down our Consumer Health business. Part of the process -- part of the plan was to sell off remaining inventory this year and minimize expenses associated with those operations. As previously communicated, this resulted in a decline in declining revenue from the consumer health business in fiscal 2024. Aytu, net revenue for Consumer Health was $15.8 million for the 2024 fiscal year and $3.4 million for the fourth quarter. In July 2024, as outlined in our prior announcement, this business with wound down divested. The absence of the consumer health business should highlight the strength of the Rx business, improve adjusted EBITDA going forward. Starting in the first quarter of fiscal 2025 historical activity related to the consumer health business will be reflected as discontinued operations in our financial statements. Turning to gross margins, company-wide gross margins improved to 67% for full year 2024 compared to 62% in fiscal 2023. For the quarter, this improvement was once again highlighted with Q4 gross margins coming at 66% from 60% for the quarter last year. The improvement is a reflection of the evolving mix of our business towards the Rx segment. Given the wind down of the consumer health business, coupled with efficiency improvements made across our Rx segment to help everyone get a better picture of what this business will look like going forward. Gross profit margin for the Rx business was 75% in 2024 compared to 71% in the prior year. Let's turn to OpEx. Operating expenses, excluding amortization of intangible assets, restructuring costs, impairment expense and gain from considered -- contingent consideration were $52.3 million for fiscal 2024 compared to $74.2 million in the prior year. For the fourth quarter this adjusted OpEx number was $12.1 million in 2024 compared to $14.6 million in the same period a year ago. The decreases were a result of reduced consumer health spending and improved operational efficiencies. Within research and development for the year, R&D expenses were $2.8 million versus $4.1 million last year for the quarter, R&D was $1 million compared to $0.5 million in the corresponding 2023 quarter. I want to call out that we had a one-time $0.5million fee recognized in the fourth quarter of 2024 pertaining to the final close out of AR101 activities with our CRO. Those of you that have reviewed our press release or 10-K, will note that we incurred $2.4 million in restructuring charges for the year, the majority of which were incurred in the fourth quarter and are related to the closure of our Grand Prairie manufacturing facility in the Consumer Health business wind-down. We also had a $700,000 inventory impairment associated with the consumer health business down recorded to cost of sales. We specifically highlight these items to provide a better understanding of our core expenses on a go forward basis. Net loss for fiscal 2024 was $15.8 million or $2.86 per share versus a $17.1 million net loss or $5.11 per share in fiscal 2023. For the fourth quarter, we incurred a $4.6 million net loss or $0.82 per share versus last year's $2.5 million net loss or $0.59 loss per share. Loss from operations for the year improved from a loss of $17.1 million in 2023 to only a loss $5.3 million in 2024. For the fiscal 2024 year, consolidated adjusted EBITDA was $9.2 million, contrasted to fiscal 2023's $3.5 million or $5.7 million increase. Adjusted EBITDA for the Rx business was $10.8 million for the fiscal 2024 year compared to $9.7 million in the prior year. Period for the quarter, our consolidated adjusted EBITDA was $1.5 million against last year's quarter of $7.7 million. And looking at just the Rx core business, adjusted EBITDA was [$2.2 million] in the fourth quarter of fiscal 2024 compared to $8.3 million in the prior year period. The change here is primarily due to the pullback in the fourth quarter due to the pediatric portfolio and to the lesser extent, the normalization of the ADHD business. A full reconciliation of net loss to adjusted EBITDA is available in the press release issued earlier today. Turning now to the balance sheet. Cash and cash equivalents as of June 30, 2024, were $20 million compared to $19.8 million as of March 31, 2024. This just touched on since our last conference call, the biggest change in the balance sheet is refinancing of our debt and its consolidation into one lender to Eclipse. As an aside, I too, would like to thank the folks at Avenue Capital who are true partners in helped us achieve our goals and move forward over the last few years. With the old loans maturing in 2025, we reported a going concern note in our financials and in the auditor's opinion, we were pleased that with the extended maturities of our debt and other operational improvements, the going concern language have been removed from our fiscal 2024, 10-K. Again, as we look into fiscal 2025, we are pleased with our progress. We have refinanced and extended our debt credit facility exited our Consumer Health business completed ADHD projection shift to our US-based outside contract manufacturer or finalizing our exit from our Texas manufacturing facility are seeing a rebound in our pediatric portfolio. These accomplishments to improve our gross margins, reduce our interest expense and allow us to focus on generating free cash flow and positive net income. One thing to note before I hand it back to Josh, along with the filing of our 10-K today, we also filed an S3 shelf registration statement. Our previous shelf was set to expire in October and as a corporate housekeeping matter, we filed to have an active shelf in the three years, providing us with financial flexibility in the future. With that, let me turn it back over to Josh.\nJoshua Disbrow\n Thanks, Mark. My excitement for the opportunity Aytu represent remains very high. We have completely different transform the outlook for this company from what it was just two years ago. Our balance sheet remains strong. Our operating profile is dramatically improved and the core infrastructure of this business allows for significant leverage potential. As always, I want to thank the entire team and Aytu for their hard work and dedication to delivering for both patients and stockholders. We look forward to fiscal '25, which is off to a very nice start. Thank you to everyone participating in today's call. I'll now be happy to answer any questions.\nQuestion and Answer Session\nOperator\n (Operator Instructions) Naz Rahman, Maxim Group.\nNaz Rahman\n Hi, everyone. Congrats on the progress, and thanks for taking my questions. I have a few if you don't mind. First, I just want to start on your ADHD franchise and the sales this quarter. So I know you said that in this, if you just take the second half year over year number, you're seeing growth, but on the 4Q numbers were weaker than last year's 4Q. And if you look at 4Q of last year, 4Q of '23 per share of '24. And second, you have '24 your base around on states and $16 million. What gives you confidence that you could sort of get back to those levels or do you but to get back to those levels going forward?\nJoshua Disbrow\n Yeah. Good question now. So as we as we described. And I think that we're trying to make a little bit clearer here. Q3 and Q4 there had there was some snapping back if you will. That was really in response to a payer change that occurred in the March quarter and that snapback of basically occurred in Q4. We came into the new year and unexpectedly had an essential utilization management mandate put on our products by one of the payers, a payer that we actually have a commercial contract with that was done in AR. It was call it very early and that payer acknowledged the area AR rather than put the products that remove the product from utilization management list and essentially normalize the coverage. That in turn enabled us to essentially sort of reverse that damage that changed from our fiscal Q3 to our Q4. So some ways it boosted Q4 revenues, but it really what's most important to look at is if you look at sort of just raw units and if you look at prescription demand and you again, you smooth out sort of that abnormally low Q3 and then that sort of adjusted Q4. We have a high level of confidence based on just the core demand, core prescription strength, the stabilization of the gross to nets that have actually improved fairly materially, particularly since that March quarter. And so at the end of the day, it's all about physicians prescribing. And we're seeing obviously, higher levels of prescription year over year, having reset the baseline, as I mentioned, significantly higher even from the high that was predicated off of some of the shortages that happened happening, particularly in the amphetamine category. And so when you look at roll demand, it's up and up significantly, particularly over pre shortage levels. And again, because of this normalization that occurred in Q4 it did to some degree boost that revenue number higher than it really should have been. So we're really back to normal cadence, normal gross to nets and ultimately feel very comfortable with the fundamental demand that's there being prescribing.\nNaz Rahman\n Got it on how your thoughts on contracting and reimbursement and essentially the entire managed care game sort of changed going into fiscal '25 as you're now at a higher level of demand and sales?\nJoshua Disbrow\n And as we'll always be open to considering contracts with payers, they're going to have to work for both sides. In some cases, they don't in which case we wouldn't entertain those. I'll say we remain active in discussions and are always going to be open to contracting if it's something that can be favorable for our products, obviously will ensure as many covered lives as possible, but we can only do that on terms that make sense for the company. So at this point remain open, we'll not commit to any one thing. Other than to say, look, we have the ability to navigate the payer landscape, irrespective of any contracts we have or don't have RxConnect gives us a high level of leverage and enables us to work through any reimbursement landscape that presents itself and it really the ultimate for patients is just knowing that they've got coverage one way or another. And we can assure that obviously to these commercially insured patients by virtue of a guaranteed pay no more than $50 co-pay for commercially insured patients. That having been said open to discussions open to contracting with payers, but it will have to be on terms that make sense for us. So a bit of a non-answer, but to say, we never say never, but we would also never say always you have to be flexible. I think you've got to be forward looking, you've got to and you've got to also keep in mind that we do have a mechanism in place where irrespective of any coverage we've got the ability to get patients to peace of mind knowing that their products is going to be covered at no more than $50.\nNaz Rahman\n Got it. Thank you, that was awful. Recently, the DEA increased the amount of annual each quarter for Vyvanse or generic Vyvanse by roughly 24%. I know you talked about a little bit that customer shortages are normalizing. How much of an impact do you think that increase in our API core for generic guidance or guidance may impact Aytu niche or if at all?\nJoshua Disbrow\n I think it will have minimal if any impact on us. We don't directly compete with Vyvanse with the Xenos in particular, while obviously Vyvanse was a large brand and actually remains still of a large brand give even despite the generics, we compete in an ecosystem of many products. Vyvanse included inclusive of generic Adderall XR, inclusive of any stimulant particularly the extended-release stimulants and frankly, command a relatively share of the market. So relatively small share of the market that is so irrespective of any quota changes, whether those are increased or decreased. We our goal is to grow from less than 1% of the market to over 1%, 2%, 3%, 4% of the market in the short term and the impact of a Vyvanse quota will have very much impact on how we think about. At the end of the day, we're going to doctors with a message of certainty, clarity, predictability. And that's something that even Vyvanse can offer with the number of generics that have been approved and the mess that's been created in that specific market or molecule category, we can go in and be, I think, a real asset to our physician customers and their office staff by saying, look, if you're looking for product, that's the same every time that's predictable from both an availability perspective as well as from a patient experience and an economic perspective prescribers, NSXR or in the case of methylphenidate prescribed Cotempla XR and so irrespective of sort of the macro events that are happening, whether it relates to DEA quotas or some of the large brands or larger generics, we can do just by growing our products sort of irrespective of any of those changes.\nNaz Rahman\n Got it. Thank you. On the pediatric business, I know you mentioned that the volume for the business is increasing, but just due to differences in gross-to-net fluctuations, how much of that do you think really translates to material revenue? And I am a big one other question. I have is strategically, what do you think about the pediatric business in terms of normalizing the revenue? Is there a certain level you want to return to or gets better yet? Is there a certain level on sales you want to see before you start thinking about strategically and maybe divesting or monetizing that business?\nJoshua Disbrow\n I'll take the last first, which is that we view the pediatric business is still very core to our business and would not consider monetizing those. And obviously if there were a scenario where someone came and ascribe large value to them. It's something that we have to think about. But as we think about it today, the pediatric business is very important to us, and we think we can get it back to a meaningful level such that it represents material revenue and we don't necessarily have it modeled such that it would get back to the levels that it was say, coming out of fiscal '23. That having been said, we think carbon all ER can be a really nice product for us. And we do think the multivitamins can get back up to be a reasonable contributor. I want to put a specific number on it. What we have said is, look, we are sort of comfortable guiding to overall prescription revenue higher than it was last year. A big chunk of that growth is going to be a return of the pediatric products, and we feel confident saying that on to your initial part of the question around gross to nets the gross-to-net for the pediatric products, while they are variable, they have been a little bit more consistent than, we've seen indications of, for example, the ADHD brands that having been said there may be some normalization and sort of moving around GTN's as we get those products back up and running through some of the programs we have going. But the bottom line at the pediatric business can be meaningful they can be, I think, a significant chunk of our revenue. And I think that will help obviously add significant value if we could just bring them back up to even a third and maybe even more optimistically, maybe halfway to where they had been and I'm not talking next quarter even the quarter thereafter. That's meaningful. If you think about really our EBITDA number for this quarter of, call it $1.5 million just under $2 million. As you think about the Rx segment that flows straight through to the bottom line and obviously has direct impact on improving our EBITDA and hopefully getting us to operating cash flow. And that's the expectation with pediatric products and we can get them back to growth. We can get them back to be meaningful contributors such that they are dropping a meaningful cash flow from operations and EBITDA.\nNaz Rahman\n Got it. That's helpful. And I just have one last question and just a high-level question here. So obviously, your Rx business is growing in terms of revenue and you are generating better margins and just generating more and more cash. But long term, where do you sort of -- what are you sort of thinking about Aytu strategically in terms of expanding beyond, what's majority, the ADHD business and like how to expand our Accelerate Aytu's growth?\nJoshua Disbrow\n You think about it in two ways knows one of which is obviously continuing to capitalize on the leverage that we gain through RxConnect, and that can be through by virtue of adding additional products irrespective of the therapeutic areas. And we're always on the hunt and have recently launched a smallish product that is in the very early stages of launch, but it is really an RxConnect play such that we think we can leverage the pharmacy network. We can leverage the fact that this product is a brand that we're bringing back to enable some familiarity for patients that are prescribed this brand. And so we think we can tuck in a handful of smallish things without any significant added infrastructure and really any expense beyond variable expenses. And then we do think about things that would align therapeutically understanding that we call on psychiatrists and pediatricians primarily. We also have a smattering of prescribers in primary care, general practice and sort of a smattering of others. So we do have some ability to look for things that are aligned that align with the call point, whether it be second psychiatry or pediatrics and the hundreds always on four things that are commercial stage near commercial stage and launch ready. But nothing that we envision would it take a material amount of cash off the balance sheet because we've got leverage. We've got leverage with the sales force that can put additional products into the bag and can be and sold to our prescribing customer base. And then we've got leverage afforded by the RxConnect network and enables us to both additional assets on that can drive incremental revenue that would pretty naturally flow to the bottom line. So we've got flexibility and leverage through both of those mechanisms. So we're actively on the hunt and strategically, look, I think we can be a company that has materially more revenue. And once we're to the point of generating free cash flow, obviously that opens us up for bigger opportunities. But at this point, we want to make sure that we are being disciplined, focusing on driving cash flow from operations and ultimately put ourselves in a position to generate real cash such that down the road we can bring in additional assets that take revenues to even higher levels.\nNaz Rahman\n Thank you. That was very helpful. Thanks a lot for taking my questions. And I know I have a few and there.\nOperator\n (Operator Instructions)\nRobert Blum\n Yeah, Josh, I know, Mark, this is Robert on a couple offline questions now has actually touched on most of them here, but there was one that I was hoping. Maybe you could expand upon, which is to provide a little more detail on some of the initiatives you've implemented to get the pediatrics products back to sort of the growth given sort of these recent where would appear to be very positive trends in sales in Q1 here?\nJoshua Disbrow\n Yeah. Thanks, Robert, for passing that. I'll take it in two buckets, really by product in the pediatric category here in the pediatric portfolios. First of all, as it relates to carbonyl ER and what I'll say first and foremost is that we've significantly broadened our geographic spread to further diversify sales from areas where carbon prescriptions had historically been written. That's largely being driven by the ability for us to capitalize on some of the recently improved payer coverage. That's largely being driven by some key states Medicaid plans that have actually picked up coverage. Previously carbonyl our sales were concentrated in a handful of states, most of product sales and prescriptions actually came from two or three states where Medicaid coverage was favorable. We're now able to resource and deploy sales and actually have sales specialists in excess of 10 states. So while it's still not selling and everywhere understanding we're a small company, we can't be everywhere at once that's significantly broader geographic coverage. And we're seeing very good early uptake just by putting sales representatives and it's our current ADHD sales force by the way that we're adding responsibility while still enabling them to focus on their ADHD targets. So seeing really good coverage in some states and even in places in particular where we had lost some coverage and just given some changes and some new strategies around how we're pursuing coverage particularly at the state levels, we're really seeing good uptake. So we're getting good coverage in all states that had dropped coverage, which was really the big reason that we have had lost a fair amount of prescribing in it for carbonyl particular, we're seeing that come back. And then we've got new states that previously didn't cover carbon oxide that are covering it. So we've actually now got a majority of our sales force, a big chunk of our sales force in one way, shape or form with some responsibility for promoting carbonyl or, of course, along with the ADHD brands being very targeted, very judicious, very efficient. Previously, we had just a handful of sales representatives covering the pediatric products and so now we've got most of the sales force getting heavily incentivized to sell carbonly our long with the ADHD brands of so excited about really just having some extra promotional emphasis having some I see behind incentive compensation and getting some coverage picked up at some other states. We've also got some new distribution partners that we're starting to see some really promising things from and have opened up some other areas and excited to see what some of those can do to help augment our internal efforts. With the multivitamins, look, I'm I'll certainly acknowledge that it has taken some time, but I'm really happy to say that we have gotten our largest historical dispensing pharmacy back online. There was a significant sort of inventory slacking issue that needed to get on flat. And while I can't say we absolutely anticipate the level of dispensing that particular customer had done previously, we've at least gotten their supply chain Slack issue resolved such that they are back to ordering the multivitamin. So that's extremely encouraging. We've also gotten some good pockets of improved coverage for the multivitamins in various places. So we're selectively directing sales reps and putting some other commercial resources against in some of those areas where we've gotten some improved coverage. So that's encouraging to see it in some big states with big populations and big areas of market opportunity for sodium chloride supplements. And we also have some of these new distributors working on the multivitamins and starting to see some good ordering patterns and optimistic that we can pick up some improved sales in areas that we hadn't previously had much going on against small company with limited resources. We're not going to go out and blast everywhere at once just because that would be spending ahead. But as we're seeing opportunities present themselves, we're diverting resources we're putting incremental resources in place, doing it with the sales force we have in place, doing it with the distributors that we've recently aligned with and excited about what we're seeing so. This is all this a high level of comfort that we are going to get some pickup in real time. We're seeing sales orders increased from July to August to September as it looks as you look at both Carbonyl as well as the multivitamin franchise. So excited about what we can put together going forward is going to takes a little time may not get back to where we were. But frankly, if we can get back to even a partially where we were, the pediatric products become meaningful revenue contributors again.\nRobert Blum\n Very good. That's the only other question we had offline here. So Josh, I guess I'll turn it back over to you for any other live questions.\nOperator\n We have no further questions in queue. I'd like to turn the floor back to management for closing remarks.\nJoshua Disbrow\n Well, thanks very much. Again, as always, thank you all for participating in the call, thanks to the entire Aytu team for their hard work and dedication in delivering for patients and to our stockholders. We look forward to what we view as a very exciting very productive and very growth-oriented fiscal '25. It's off to a very nice start, as I've just referenced. So thanks to everyone for participating, and I look forward to sharing news on our fiscal Q1 here later this year. It will be in November when we report out our 10-Q for our September quarter. Until such time, we look forward to continuing to drive the business. Thanks for your time. Thanks for your interest in Aytu, and I wish you all a very good evening.\nOperator\n This concludes today's conference and you may disconnect your lines at this time. 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