BTMD — Q2 2026 Financial Report Analysis

A recall-hit quarter, a legal bill, and a guidance cut

biote Corp. (BTMD) makes its money from hormone "pellet therapy." Doctors and nurse practitioners that Biote trains and certifies implant small pellets of bioidentical hormones under a patient's skin. These are lab-made hormones chemically identical to the body's own estrogen and testosterone, and each pellet releases slowly over several months. Biote earns a procedure fee each time a certified practitioner implants a pellet. It also sells Biote-branded dietary supplements to those clinics and their patients, and charges for training. Part of its pellet supply comes from its own compounding facility, Asteria Health, and the rest from outside pharmacies.

In the second quarter of 2026 (the three months to June 30, 2026), that model was hurt from two sides. In January 2026 Asteria Health recalled certain pellet lots because they might contain metal particles. The recall left clinics short of pellets, which pushed revenue down 9.5% to $44.2 million. Replacement pellets bought from outside suppliers also cost more. On top of that, $5.1 million of legal settlements turned an operating profit of $10.8 million a year ago into an operating loss of $3.5 million. Management cut its full-year guidance sharply and dropped its promise of a return to procedure growth in the second half.

At a glance

• Procedure revenue fell 13.9% to $30.3 million. This is the core pellet business. Biote estimates the recall alone cost about $3.3 million of it this quarter.
• Gross margin fell to 65.4% from 71.6%. Gross margin is the share of revenue left after paying for the product itself. Pellet costs rose 8.0% even as pellet revenue fell 13.9%, because Biote had to buy replacements from outside suppliers at higher prices.
• Full-year adjusted EBITDA guidance was cut by about a third, to above $25 million from above $38 million. Adjusted EBITDA is the company's preferred profit measure: earnings before interest, tax, depreciation and amortization, minus items it treats as one-offs.

Key figures

Net loss including the share held by outside owners of Biote's operating subsidiary (the "noncontrolling interest") was $7.4 million, against net income of $3.9 million a year ago. Over the first six months, revenue fell 8.9% to $89.2 million and the net loss was $4.8 million, against a $19.8 million profit in the first half of 2025.

Where the revenue went

Procedure revenue fell $4.9 million. The filing blames "lower procedure volumes at established Biote-certified clinics and lower productivity of newer Biote-certified clinics." It says both were hit by a "temporary contraction of bioidentical hormone pellet inventory availability" and by a "brief shift in focus" of the sales team toward helping practitioners through the recall. Biote puts the recall's direct cost to procedure revenue at about $3.3 million this quarter and $5.0 million for the half. That means roughly $1.6 million of this quarter's procedure decline is not attributed to the recall. Procedure revenue was already shrinking before the recall: Q1 2026 was down 13.2% year on year.

The quarter did not improve on Q1 either. Procedure revenue slipped from $31.3 million in Q1 to $30.3 million in Q2, and total revenue from $44.9 million to $44.2 million. Asteria Health added a second manufacturing shift during Q2 to rebuild pellet stock, so any benefit should show up in the second half rather than in this quarter.

Supplements were the one part of the business that grew. Revenue rose 5.7% to $11.4 million on higher e-commerce demand, adding $0.6 million. That is a sharp slowdown from Q1's 19.1% growth. Training and other service revenue fell $0.4 million to $0.9 million, which the filing attributes to less training revenue. Fewer new practitioners being trained is a small number today, but it matters for future procedure volume.

Where the profit went

Revenue fell $4.6 million, but operating income fell $14.3 million. Three things account for the gap:

• Higher product costs: cost of revenue rose $1.4 million (+10.4%) while revenue fell, because Biote bought replacement pellets from third-party pharmacies, and Asteria Health ran less efficiently during the recall. About $0.6 million of direct recall costs also landed in cost of revenue.
• Legal settlements: selling, general and administrative expense (SG&A, the overhead of running the company) rose $8.2 million (+33.9%) to $32.4 million. Of that, $5.1 million came from settling "various legal matters," some on terms agreed after quarter-end, and $2.5 million from higher legal fees on claims arising in the normal course of business. A $0.5 million drop in bad-debt expense partly offset these.
• Below the operating line: Biote refinanced its bank debt in May and wrote off $0.6 million of old loan fees. It also booked a $0.8 million non-cash loss on its earnout liabilities. These are extra shares owed to former owners and SPAC sponsors if the stock reaches set price targets. Because the stock rose 40% during the quarter, those liabilities became more valuable, which shows up as a loss for Biote.

Takeaway: The recall did more than cost a quarter of sales. It exposed how much Biote's earnings depend on its own low-cost pellet supply. Pellet revenue fell 13.9% while pellet costs rose 8.0%, and management now expects procedure revenue to stay below last year for the rest of 2026. The new full-year floor of above $25 million adjusted EBITDA implies only about $10.7 million in the second half, roughly the same run rate as this weak Q2. That means management is not planning for a rebound in margins this year.

What the headline numbers hide

• The adjusted-profit gap is wide, and some of it is recurring. Adjusted EBITDA of $5.6 million adds back the $5.1 million settlement charge, $1.0 million of recall and other costs, $2.0 million of share-based pay, the $0.8 million earnout loss and the $0.6 million debt write-off. Most of these are reasonable to treat as one-offs. However, legal costs have now appeared in several periods: a $5.0 million settlement with a former pellet supplier was agreed in February 2025, and more settlements are being finalized after quarter-end. The extra $2.5 million of ordinary-course legal fees is not added back, so adjusted EBITDA does bear part of the legal burden.
• Cash flow looks better than it really is. Operating cash flow for the first half was $2.7 million, down from $13.6 million. Part of that $2.7 million comes from bills not yet paid: accrued expenses rose $4.2 million, mainly because the $5.1 million settlement had been recorded but not yet paid. That cash goes out in a later quarter. Earnings also included a $1.4 million reversal of an inventory write-down reserve, which is a non-cash benefit. After $3.8 million of capital spending, free cash flow (operating cash flow minus capital spending) was about -$1.1 million for the half.
• Buybacks continued while cash fell. Biote spent $5.9 million buying back 3.16 million shares in the first half ($4.8 million in Q2 alone, at about $2.05 a share). It also paid off the remaining $18.5 million it owed for an earlier share repurchase. Cash fell from $24.1 million to $11.2 million over the six months. The new $125 million Truist term loan, which replaced about $101.6 million of old term debt plus $5 million of revolver borrowing, funded part of this. Net debt (debt minus cash) is now roughly $114 million.
• Leverage is a number to watch. The new loan caps total net leverage (net debt divided by a measure of yearly operating profit) at 3.75 times. Biote says it was in compliance at June 30. The credit agreement uses its own profit definition, which the filing does not spell out. Still, $114 million of net debt is about 4.5 times the new full-year adjusted EBITDA floor of $25 million. That gap is worth watching if profit does not recover.
• The fewer shares did not drive the per-share result. The diluted share count fell 9.8% to 28.6 million because of buybacks, but with a loss, fewer shares make the per-share loss larger, not smaller. The swing in EPS, from a $0.10 profit to a $0.23 loss, comes from the operating results.
• Taxes and governance. Biote still recorded $0.3 million of income tax expense despite a pre-tax loss of $7.1 million. Management also again concluded that its disclosure controls were "not effective," because of an internal-control weakness in its accounting team and IT access that was first identified for 2019–2020 and still hasn't been fixed. CEO Bret Christensen resigned on June 8. Robert C. Peterson is interim CEO, and Marc Beer became executive chairman.

Guidance: the second-half recovery has been pushed back

In its Q1 release on May 6, Biote expected procedure revenue to "return to growth in the second half of 2026." With the Q2 results on August 5, it dropped that view:

Management says Q3 and Q4 should benefit from "a return to normalized inventory levels at Asteria Health." With first-half revenue at $89.2 million, the new floor of above $175 million needs only about $85.8 million in the second half. That is slightly less than the first half, so the guidance does not depend on much recovery.

Our read: The specific numbers to watch in Q3 are procedure revenue (it needs to rise from Q2's $30.3 million) and gross margin (it needs to move back toward the high 60s as Biote relies less on costlier outside suppliers). If gross margin recovers but procedure revenue stays flat, supply was the main problem. If procedure revenue stays weak even after inventory normalizes, that points to a demand or clinic-retention problem, which a supply fix won't solve. The share of the procedure decline not explained by the recall, and the drop in training revenue, make the second possibility a real risk. With about $114 million of net debt, an interim CEO and more legal settlements still being paid out, Biote has less financial room than it did a year ago.

Source: biote Corp. Form 10-Q for the quarter ended June 30, 2026 (filed August 7, 2026); guidance from the company's August 5, 2026 and May 6, 2026 earnings releases (Form 8-K, Exhibit 99.1).