NEXGEL Q1 2026 Earnings Call - BioNX Acquisition Tripling Revenue Pro Forma, Legacy Business Stalls

Conference Operator: Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to NEXGEL’s Shareholder Update conference call. I will now turn the call over to Valter Pinto, Managing Director of KCSA Strategic Communications for introductions. Please go ahead.

Valter Pinto, Managing Director, KCSA Strategic Communications: Thank you, operator. Good afternoon, and welcome everyone to NEXGEL’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 Securities 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. Company disclaims 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.

Adam Levy, Chief Executive Officer, NEXGEL: Thank you, Valter, 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 we 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 MEDAGEL brand. During the quarter, the increase in our SG&A was due primarily to costs incurred relating to the acquisition of our BioNX Surgical 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 Celularity 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 BioNX was led by Sequence LifeScience, 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 was 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. Keefer and Kevin Harris, CEO and COO of Sequence LifeScience, 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 BioNX 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 BioNX in several surgical specialties as well as wound care. To lead this effort, we recently appointed Dave Hazard as Vice President of Sales for BioNX 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 BioNX division. In addition to our existing products, we currently have 3 510(K) 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, 2027 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 NEXGEL’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 represents step change in NEXGEL’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. I’m 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 BioNX division. With that, I’ll turn the call over to the operator, and I’m happy to take any questions. Operator?

Conference Operator: Thank you. If you’d like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. Once again, that is star one to ask a question. Our first question today will come from Naz Rahman with Maxim Group. Your line is now open.

Naz Rahman, Analyst, Maxim Group: Hi, everyone. Congrats on closing the deal and the progress, Thanks for taking my questions. I just have a few. Now that you’ve closed the BioNX transaction, how long has the field force, I guess, been out there promoting the product? I realize it’s only gonna be a limited amount of time. How long have they been out promoting the BioNX product? Have you seen, like, I guess, an uptick in reception or sales of the products versus their prior run rate under the previous owner?

Adam Levy, Chief Executive Officer, NEXGEL: Okay, 3 parts. I’ll try to go through them in order. 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, had to be approved by legal. We have to do our own training because of various rules like sunshine laws. We’re really now just getting the contracts back and guys are going out there.

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 Celularity to BioNX. 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. We’re kind of excited for what, the second half of May and what June are gonna look like, but we’re really just getting started.

Naz Rahman, Analyst, Maxim Group: 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-BioNX business or businesses stay flat? Are you showing any growth peers? It seems like that non-BioNX business is basically flat at this point.

Adam Levy, Chief Executive Officer, NEXGEL: Yeah. It is. We don’t expect it to stay flat. you know, Silly George had a uncharacteristically bad fourth quarter and a kind of a meh first quarter year-over-year, down a little bit. We see already a recovery in April on that product line. We think there’ll be some growth, but we were kind of, you know, modest in that. We have very little growth built in for this particular segment.

Naz Rahman, Analyst, Maxim Group: Got it. One last question, if I may. I guess normalized with all the additional sales reps and the R&D 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?

Adam Levy, Chief Executive Officer, NEXGEL: We probably have added and, our CFO, Ian, is on the call as well. Correct me if I’m mistaken in this, Ian. I think that we’ve added. In fact, why don’t I just ask you what we think the operating overhead is?

Ian Blackman, Chief Financial Officer, NEXGEL: Yeah. It’ll be an approximate monthly run rate of $500,000 all in for salaries, marketing and commissions and so on.

Naz Rahman, Analyst, Maxim Group: Got it. That was helpful. Thanks for taking my questions.

Conference Operator: Thank you. Once again, if you’d like to ask a question, please press star and one on your keypad now. We’ll take our next question from Bess Mahailov as a private investor.

Bess Mahailov, Private Investor: Thank you for taking my questions, Adam. Good morning.

Adam Levy, Chief Executive Officer, NEXGEL: Hi, Bess. Good to talk to you.

Bess Mahailov, Private Investor: Good morning, Adam. I wanted to ask you about the offering. Is it still open? You just filed an 8-K for another $1 million. Are you still conducting this offering? Is it still open for additional investors? Do you intend to file an 8-K and a press release stating when it’s completely closed?

Adam Levy, Chief Executive Officer, NEXGEL: Yes, we do. It’s pretty much closed. There’s a couple of smaller investors, particularly board members, that are kind of coming in at the end. By the way, now if you look at the $1 million we filed, they’re also a board he’s also a board member at this point. This was really mostly an investor and there’s a couple of smaller investors that have been long-term friends of the company. We’ll be wrapping that up in the next day or two, and then we’ll make an announcement in an 8-K early part of next week.

Bess Mahailov, Private Investor: Okay. Just want to alert you that there’s like, you know, 350,000 shares sold short. I think that, you know, this is like a wet blanket on the stock, so the sooner it closes, provided you’ve got all the money necessary, the better. Just my personal opinion.

Adam Levy, Chief Executive Officer, NEXGEL: Understood.

Bess Mahailov, Private Investor: The next question is, I wanna go back to the legacy business. I mean, could you comment a little bit more on how did all this growth in all these product lines just disappear combined? We had STADA, we had, what was it? iRhythm, you announced in an 8-K, obviously Silly George. We were growing, you know, 100% year-over-year for quite a few quarters, and now you’re saying basically it’s flat. Could you expand on this a little bit more? Why is this happening?

Adam Levy, Chief Executive Officer, NEXGEL: 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 in building a modest, maybe 10% growth in there. We hope to do a lot better. First, let me talk about what happened. Silly George had an exceptionally bad fourth quarter. The new products, like the lip gloss did not do what we expected, and it 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 lines. We’ve repositioned some things. We have a new tweezers doing extremely well, so we’re seeing the growth kinda return in April. We’re seeing more of a normalized revenue stream.

The STADA 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. We are seeing growth there. The Trofolastin 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. There’s lots of areas for growth. As a matter of being sort of conservative, we’re not, we’re not gonna ’cause these are consumer products, we’re not gonna really go out on a limb again because sometimes they don’t work out the way you think they are. It’s just a conservative estimate more than anything else.

Bess Mahailov, Private Investor: How is the iRhythm relationship going? Is that ramping up? It was supposed to be $300,000-$400,000 a year business, I think.

Adam Levy, Chief Executive Officer, NEXGEL: You mean iRhythm?

Bess Mahailov, Private Investor: Yeah, iRhythm. Sorry.

Adam Levy, Chief Executive Officer, NEXGEL: Who are you talking about? I didn’t catch who you were talking about, Vas. I’m sorry.

Bess Mahailov, Private Investor: iRhythm. Correct. iRhythm.

Adam Levy, Chief Executive Officer, NEXGEL: iRhythm. Yeah. They’ve ordered a few times, but it has not been as big as originally we thought it might be. Now, some of that could have been the initial orders were, you know, kind of eaten it up. I don’t have a daily update on the expansion of their business. We are the gel pad that they use. I expect that, you know, their sales will also kind of increase over the course of the year. So far, we haven’t seen them be a huge customer yet. They are a steady customer.

Bess Mahailov, Private Investor: On previous conference calls, you had mentioned that you thought there were an additional $300,000-$400,000 deals in the funnel, in the pipeline, so to speak, similar to this one, to the iRhythm. Has any one of those?

Adam Levy, Chief Executive Officer, NEXGEL: Yeah. Right now it’s more like $200.

Bess Mahailov, Private Investor: Okay. Are they still in the funnel? Have some of them come through? You know, is the funnel growing?

Adam Levy, Chief Executive Officer, NEXGEL: Oh, you mean other accounts away from iRhythm?

Bess Mahailov, Private Investor: Correct. Yes.

Adam Levy, Chief Executive Officer, NEXGEL: Yes. No, there’s still a funnel there. But you know, I’ve talked about this before, you know, the development and the release of these products is 510(K) clearance associated. It’s hard to pinpoint the exact quarter that they’re, you know, these things are gonna start to ramp and grow. We are expecting growth. We are expecting more products. In fact, the 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 MEDAGEL products, which includes the STADA products. That growth is still there, and we expect it to continue in 2026.

Bess Mahailov, Private Investor: Okay. What happened with the laser hair removal product? You never announced anything publicly, on that one, as far as I know.

Adam Levy, Chief Executive Officer, NEXGEL: Yeah, we didn’t because everything kinda got, like, overshadowed by what we’re doing right now. 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. If you want, Vas, reach out to me on email and I’ll send you the link. It is a published study, we certainly can talk about it.

Bess Mahailov, Private Investor: No, I mean in what does it mean for NEXGEL in terms of future sales? Is it, are you guys doing sales or what needs to happen for any revenues to come from that one?

Adam Levy, Chief Executive Officer, NEXGEL: Innovative Optics sponsored and paid for that study. They are the company that deals and has business relationships with all the large laser manufacturers. They are using that study now, which actually was published only about 3 weeks ago. They’re using that study to market. I don’t really know exactly where they are with it because they’re gonna market and they buy the goods from us and they take a transfer price. They’re really just got the study in their hands, and they’re just getting started. You know what, how successful they’ll be in marketing, they seem very excited, is yet to be determined.

Bess Mahailov, Private Investor: Thanks, Adam, for all the great answers. Just 1 final comment. Now that the company has been transformed in terms of size and hopefully profitability starting in Q3 and later, you know, most investors would expect that the company would be more communicative going forward, you know, hopefully with the product launches, you know, market developments, you know, revenue updates in the beginning of the quarter. You know, April, sorry, August 15th is in the dark days of summer. Probably it would be great to get some sort of an update on the integration and revenues, some sort of a pre-announcement at the end of Q2 or beginning of Q3 before the dark days of summer, like I said.

Thank you very much again for all the great work you’ve done and the whole team at NEXGEL.

Adam Levy, Chief Executive Officer, NEXGEL: Thank you, Vas.

Conference Operator: Thank you. As a reminder, ladies and gentlemen, it is star and one if you’d like to ask a question. I’m showing no further questions at this time. I will now turn the meeting back to our presenters for any additional or closing remarks.

Adam Levy, Chief Executive Officer, NEXGEL: No, I think we’re fine. Thank you, operator.

Conference Operator: Thank you. This will bring us to the end of today’s Q&A session as well as NEXGEL’s shareholder update conference call. We appreciate your time and participation. You may now disconnect.