NEXGEL targets $13M revenue and positive EBITDA for 2025 as contract manufacturing and branded products surge

Earnings Call Insights: NEXGEL, Inc. (NXGL) Q2 2025

MANAGEMENT VIEW

* Adam R. Levy, CEO, reported that "revenue during the quarter was approximately $2.9 million, an increase of 100% year-over-year and up slightly sequentially." Levy highlighted that gross margins reached 43.6%, "more than double the 20.3% we reported in Q2 2024 and an increased sequentially from 42.4%." The CEO emphasized the narrowing of EBITDA and adjusted EBITDA losses and anticipated a seasonally strong second half.
* Levy noted that contract manufacturing revenue increased to $863,000, a 103% year-over-year rise, driven by both existing customers and new global corporations. The ongoing partnership with Cintas remained strong, with reorders beginning in late Q2. Levy also discussed the integration of NEXGEL hydrogels into iRhythm’s Zio® ECG heart monitor, describing this as "another impactful application for our skin-friendly dermatologically safe technology."
* For consumer products, Levy stated that this segment experienced a 95% year-over-year revenue increase, with strong performance from new Silly George product launches and upcoming beauty and skincare products expected to contribute meaningfully in Q3 and Q4. Kenkoderm and MEDAGEL were also expanding product lines, tapping into larger markets such as eczema solutions and new wound and burn kits.
* Levy announced an expanded partnership with STADA, projecting new product launches as early as Q4 2025. As part of this partnership, STADA provided $1 million in non-dilutive funding to support product launches and marketing. Levy added, "With our current cash on hand, the $1 million from STADA and the $1.05 million which we recently raised, we now have sufficient cash to support our upcoming growth initiatives."
* The CEO reaffirmed guidance for 2025: "We remain confident in our previously issued guidance for 2025 of $13 million in revenue and to achieve positive EBITDA during the year."
* Levy welcomed Steve Ciardiello, Chief Accounting Officer at Shutterstock, to the Board of Directors, citing his expertise in accounting systems and financial oversight.
* Joseph F. McGuire, CFO, stated, "For the second quarter of 2025, revenue totaled $2.88 million an increase of 100.3% as compared to $1.44 million for the second quarter of 2024." McGuire added, "Gross profit totaled $1.26 million for the second quarter of 2025 as compared to a gross profit of $0.29 million for the second quarter of 2024. Gross profit margin for the second quarter of 2025 was 43.6% as compared to 20.3% for the second quarter of 2024."

OUTLOOK

* Management reiterated their expectation to achieve $13 million in revenue and positive EBITDA for 2025, with upcoming product launches and expanded partnerships poised to drive growth in the second half of the year. No changes to guidance were reported compared to the previous quarter.
* Levy emphasized ongoing product innovation, expanded relationships, and sufficient cash reserves to support growth initiatives.

FINANCIAL RESULTS

* Revenue for Q2 2025 was reported at $2.88 million.
* Gross profit reached $1.26 million, with a gross profit margin of 43.6%.
* Cost of revenues totaled $1.63 million.
* Selling, general and administrative expenses were $1.89 million.
* EBITDA loss narrowed to ($530,000), and adjusted EBITDA loss to ($420,000).
* Net loss attributable to stockholders was ($670,000).
* The company held $0.73 million in cash as of June 30, 2025, with an additional $1 million from STADA and $1.05 million from a registered direct offering and private placement added subsequent to quarter end.

Q&A

* Nazibur Rahman, Maxim Group: Asked about market opportunities for upcoming STADA product launches. Levy explained, "The upcoming enzymes, gluten, for example, dairy, fructose, we also have an extra strength, vegan version of Histasolv coming out. Those are much larger markets."
* Rahman: Inquired about retail strategy and brand consolidation. Levy responded that brands have distinct identities and combining them is not planned, but retail opportunities are being pursued primarily via private label, with significant retail presence anticipated in 8-10 months.
* Rahman: Questioned manufacturing capacity. Levy noted plant utilization is still low, "still only at about in the high teens maybe," and the company can "still make lots and lots and lots of gel."
* Rahman: Sought details on the iRhythm partnership's revenue potential. Levy indicated opportunities with large medical device customers typically range from $300,000 to $1 million per year, with some projects potentially yielding "millions and millions of dollars."
* Rahman: Asked about tariff impacts. Levy acknowledged a "mild negative impact on the margins in Silly George," but cited increased interest from domestic customers.
* Unidentified Analyst: Asked about the AbbVie partnership. Levy confirmed delays but said, "they assure me that they're back on schedule, on the new schedule and that things are progressing."
* Unidentified Analyst: Requested details on new Silly George products. Levy described positive customer response to new lash variations and higher-margin Focus Packs, with more beauty products launching throughout the year.
* Kirtan Patel: Inquired about capacity, recession planning, and cash management. Levy explained capacity is sufficient and plans exist for future expansion, with a focus on high-margin consumer products and careful expense management.

SENTIMENT ANALYSIS

* Analysts appeared positive, with questions focusing on growth opportunities, product launches, and capacity. Congratulatory remarks and interest in market expansion prevailed.
* Management maintained a confident tone, especially in prepared remarks, emphasizing growth, partnerships, and financial improvements. Levy frequently used phrases such as "we remain confident" and "we look forward to growing this relationship."
* Compared to the previous quarter, management’s confidence remained steady, with slightly more detail on partnerships and product pipeline. Analyst tone also remained supportive.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for $13 million in revenue and positive EBITDA remained unchanged from the previous quarter.
* Gross margin improved from 42.4% in Q1 to 43.6% in Q2.
* Contract manufacturing and consumer product revenues both continued strong year-over-year growth.
* Expanded partnership with STADA and new Board appointment were new developments.
* Analyst focus shifted slightly more to manufacturing capacity, partnership economics, and cash management, while management’s confidence in growth initiatives was consistent.

RISKS AND CONCERNS

* Levy acknowledged continued delays in the AbbVie partnership and explained the company is waiting for clarity, with expectations for revenue contribution pushed to 2026.
* Management cited tariff impacts, noting only minor negative effects to date but monitoring for escalation.
* Questions from analysts highlighted concerns about cash position and potential economic downturns, with Levy stating the company would manage costs and leverage high-margin products if necessary.

FINAL TAKEAWAY

NEXGEL’s second quarter 2025 call highlighted robust revenue and margin growth, expanding partnerships, and a strong product pipeline. The company reaffirmed its $13 million revenue and positive EBITDA guidance for the year, backed by new capital infusions and ongoing operational improvements. Management emphasized the scalability of its manufacturing operations, the potential of its consumer and contract businesses, and confidence in executing on both immediate and long-term growth opportunities.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/nxgl/earnings/transcripts]

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