Nexgel (NXGL) Q1 2026 earnings call transcript

Thank you, Operator. Good afternoon and welcome everyone to NextGel's Shareholder Update Conference Call. I'm joined today by Adam Levy, Chief Executive Officer. Before we begin, I'd like to remind everyone that statements made during today's conference call may be deemed forward-looking statements within the meaning of the safe harbor of the Private Security Litigation Reform Act of 1995. And actual results may differ materially due to a variety of risks, uncertainties, and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I refer you to our filings with the SEC filed periodically. The company that expams any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law.

With that, it's my pleasure to turn the call over to Mr. Adam Levy. Adam, please go ahead.

Thank you, Walter, and thank you, everyone, for joining us today. On today's call, I would like to provide an overview of our first quarter 2026 financial results and bring everyone up to speed on the progress we have made on the integration of the acquisition week recently closed in mid-April. Starting with our first quarter results, revenue for the first quarter totaled $2.65 million as compared to $2.81 million for the same period last year. The business year over year was relatively flat, with sales from Silly George coming in lower, which were partially offset by revenue growth in both contract manufacturing and our MetaGel brand. During the quarter, the increase in our SG&A was due primarily to costs incurred relating to the acquisition of our Bionics division and the KISS nail products legal case, which has since been settled.

Cash and restricted cash as of March 31, 2026 was approximately $2.1 million. As of today, our cash on hand is $1.8 million. In total, we have raised $13.8 million, comprised of $8.8 million received in cash, and $5 million of our convertible note delivered to Cellularity to fund the acquisition and to provide the business with working capital.

The first quarter does not include any revenue from our acquisition. In the second quarter, we have already seen sales from Silly George normalize and recover, and we will begin accounting for revenue from our acquisition for about half of the second quarter. The financing for Bionics was led by Sequence Life Science with a $5.5 million investment that not only strengthened the financing structure of the transaction, but also aligns us with a partner that enhances our capabilities across manufacturing, product development, and distribution.

Importantly, this transaction replaced a financial lender who is seeking a near-term exit with a long-term strategic partner who is focused on supporting the long-term growth and execution of our business.

Brian J. Kieser and Kevin Harris, CEO and COO of Sequence Life Science, have since joined our board of directors. Brian and Kevin bring deep industry experience, product innovation, and a strong distribution network that will help us grow and expand the potential of our new acquisition. I am very excited to have them in our corner, and I'm looking forward to working with them to grow the business.

The Bionics portfolio includes six established regenerative biomaterial products, positioning us squarely within one of the fastest-growing segments of healthcare. These are not early-stage assets. They are commercial-stage products with more than a decade of clinical use, demonstrated real-world utility, and already have existing reimbursement pathways. These products are approved in approximately 500 hospitals across the U. S. and represent a large opportunity for bionics in several surgical specialties, as well as wound care.

To lead this effort, we recently appointed Dave Hazard as Vice President of Sales for Bionic Surgical, who brings more than 13 years of sales leadership across orthopedics, spine, biologics, and joins the company in an important stage in its commercial growth phase. He has a strong track record of building scalable sales infrastructure and establishing the kind of enterprise partnerships that drive repeatable revenue. His expertise in biologics and commercial execution will be instrumental as we continue expanding operations for our newly formed Bionics division In addition to our existing products we currently have three 510K devices in development within our pipeline. These programs represent approximately $4.6 million in invested paid-in capital and are targeted for commercialization in 2026, 27, and 2028.

Beyond the products, we have also added an experienced commercial and scientific team. This is an important aspect of the transaction as it meaningfully expands our internal capabilities and strengthens our ability to develop the markets of NextGel's own medical devices. This transaction will be transformative not only from a strategic standpoint, but also financially. On a pro forma basis, we anticipate it to approximately triple our annual revenue to roughly $35 million and to be immediately accretive to profitability upon closing.

Taken together, the acquisition and our strategic partnership with Sequence represent step change in NextGel's trajectory. We are combining a proven hydrogel platform with a portfolio of commercial regenerative products supported by a strategic manufacturing partner. This positions us to accelerate product development, broaden our commercial footprint, and pursue new opportunities within the regenerative medicine landscape.

Lastly, I am excited to introduce Ian Blackman as our new CFO. Ian is a veteran financial and M&A leader who has been appointed to lead the integration of our acquisition, scale the business, and accelerate growth. Our board and senior leadership team is now the strongest it has ever been in our history. We are focused on successfully integrating these assets, driving commercial growth, and continuing to build a platform that can generate sustained long-term growth and profitability.

I'm looking forward to reporting on our second quarter financial results in August, where we will be able to provide more details into the integration and execution of our Bionics division.

With that, I'll turn the call over to the operator, and I'm happy to take any questions. Operator?

So, okay, three parts. I'll try to go through them in order. So we weren't able to really do a lot pre-closing just because of the nature of we hadn't closed and it wasn't our asset. there is a little bit of a lag in terms of getting the sales force re-engaged and going out there, right? We have our own contracts that have to be approved by legal. We have to do our own training because of various rules like sunshine laws. So we're really now just getting the contracts back and guys are going out there. So that's why I kind of framed it as half a quarter because now as of May 15th, we're just really getting out there and starting to ramp the sales and sending out, you know, getting back the contracts, changing all the vendors, calling all the hospitals that don't, you know, change the account name from cellularity to bionics.

All of these things are small things that happen in a matter of a few weeks, but they do need to get done before you can really ramp. So we're kind of excited for what the second half of May and what June are going to look like, but we're really just getting started.

Understood. That's fair. On the tripling of your revenue that you communicated and previously communicated, does that assume at this point that, like, the non-Bionics business or businesses stay flat? Or are you assuming any growth? It seems like that non-Bionics business is basically flat at this point.

Yeah, it is. We don't expect it to stay flat. You know, Silly George had an uncharacteristically bad fourth quarter and kind of a meh first quarter year over year, down a little bit. So we see already a recovery in April on that product line. So we think there'll be some growth, but we were kind of modest in that. We have very little growth built in for this particular segment Got it And one last question if I may I guess normalized with all the additional sales reps and the R team how much do you expect operating expenses to be, I guess, on a quarterly basis, or how much do you expect it to increase annually on a normalized basis?

So, we probably have added, and our CFO, Ian, is on the call as well, So correct me if I'm mistaken in this, Ian. But I think that we've added – in fact, why don't I just ask you what we think the operating overhead is?

Yeah. So it will be an approximate monthly run rate of $500,000 all in for salaries, marketing, and commissions, and so on.

Hi, Vest. Good to talk to you again. notice.

Yes, we do. And it's pretty much closed. There's a couple of smaller investors, particularly board members, that are kind of coming in at the end. And by the way, now, if you look at the million we filed, he's also a board member at this point. So this was really mostly an investor and there's a couple of smaller investors that have been long-term friends of the company. But we'll be wrapping that up in the next day or two, and we'll make an announcement in an AK early part of next week.

Sure. Well, again, let me be clear. It's flat, and in my projected total of what I'm talking about, I'm being very conservative and building a modest maybe 10% growth in there. We hope to do a lot better. And one of the reasons, one of the things that, first let me talk about what happened. So Billy George had an exceptionally bad fourth quarter. The new products, like the lip gloss, did not do what we expected and was very slow, as well as just a general downturn, given all the competition that was out there at that time, especially in the pop-ons. Now, we've repositioned some things. We've added a couple of new. We have a new tweezer that's doing extremely well.

So we're seeing the growth kind of return in April. We're seeing more of a normalized revenue stream. The Stata products are growing nicely. We released the second one in January. Actually, it didn't really get to market until mid-February due to some Amazon had some stickering issues. But we are seeing growth there. The Trophilastin products are on their way to us. They've shipped from Germany. We should be receiving those and putting those up on Amazon in the next 60 days. So there's lots of areas for growth. But as a matter of being sort of conservative, we're not going to – because there's consumer products, we're not going to really go out on a limb again because sometimes they don't work out the way you think they are.

So it's just a conservative estimate more than anything else.

You mean iRhythm?

Who are you talking about?

Correct, yes. Yes, no, there's still a funnel there. But, you know, and I've talked about this before, you know, the development and the release of these products is 510K clearance associated. So it's hard to pinpoint the exact quarter that these things are going to start to ramp and grow. But we are expecting growth. We are expecting more products. And, in fact, as I said, partially offset the disappointing Silly George was that we did see some growth in contract manufacturing, and we did see some growth in the Metagel products, which includes the Stata products. So that growth is still there, and we expect it to continue in 2026.

Yeah, we didn't because everything kind of got, like, overshadowed by what we're doing right now, but I'm happy to tell you that that study was published. The results were outstanding. We have not done a press release on it yet, but it showed a 96% reduction in the plume. It showed secondary endpoints of reduced pain and also I think it was 7% efficacy.

But if you want, Vest, reach out to me on email and I'll send you the link. It is a published study, so we certainly can talk about it.

So Innovative Optics sponsored and paid for that study. They are the company that deals and has business relationships with all the large laser manufacturers. So they are using that study now, which actually was published only about three weeks ago. They're using that study to market. So I don't really know exactly where they are with it because they're going to market and they buy the goods from us and they take a transfer price.

So they're really just have just got the study in their hands and they're just getting started. So, you know, how successful they'll be in marketing, they seem very excited, is yet to be determined.

Thank you, Matt.

Thank you, operator.