Good morning, everybody. My name is Kaumil Gajrawala. I'm the Health and Wellness Consumer Analyst at Jefferies. Happy to be here and happy to introduce Biote, Terry Weber and Bob Peterson. Terry's the CEO of Biote. She's been at the forefront of evolving this business from an innovative, science-led company to a growth-oriented, education-oriented consumer plus healthcare business, growing and expanding the very exciting industry of hormone optimization, but more recently, a whole host of new things, which I believe she will talk about. Bob Peterson is a fairly new CFO, I think six months. Probably should have confirmed that with you. Has not had any time to settle in. He has since announced and executed a large or a complicated transaction with the founder, as well as a recent acquisition. Thank you guys for being here l ooking forward to learning about the business.
Good morning. I'm here to talk about Biote and introduce you to the world of hormone optimization, as well as therapeutic wellness. I'll move through both the category and introduction to Biote, and then expanding as to where we're going with therapeutic wellness. Forward-looking statements, but where does Biote really sit? We sit at the intersection of consumer, healthcare, and technology. So we're a platform healthcare company that got its roots in hormone optimization, where we were the real disruptor in the industry about 11 years ago, where we brought hormone optimization to the forefront in educating providers and really creating a brand name for Biote. We're very focused on evidence-based therapeutic wellness, but our vision is to be part of everyone's healthcare in the future. We believe that you'll know your testosterone levels as you know your A1C as we go forward.
So just a quick snapshot of Biote by the numbers. We have certainly built our name on hormone optimization, and we grew to $185 million at the end of 2023, with a $55 million adjusted EBITDA, approximately 30% adjusted EBITDA margin. We have over 7,300 providers now. We've performed over $4 million procedures and have currently 400,000 active patients. So what's the top line on the investment highlights? We're absolutely the trusted leader in hormone optimization. I'll show you the large and addressable market, TAM, we have. We are built on a platform of proprietary technology and clinical decision support software that really embraces our franchise-like model and makes it easy for providers to do a very complex world of hormone optimization and therapeutic wellness.
On the financial side, we're growing, highly profitable, and a capital-light annuity business model. Our goal is to be the leading single source provider of evidence-based therapeutic wellness solutions, and let me walk you through what I mean by that. How large is this market of Hormone Optimization, and just what is it? For those of you in the room, once you hit the age of 40, or you know somebody that's going into those 40s, you start to experience these common symptoms seen on the left: low energy, insomnia, brain fog, irritability. This is how hormone deficiency presents itself, masked in many symptoms that can often be misdiagnosed by a practitioner that's not been trained. And the comorbidities with hormone deficiency are serious: heart disease, breast cancer, osteoporosis, and neurodegenerative diseases.
In the U.S. alone, 47 million women are affected by menopausal symptoms, and about 28% are receiving any kind of treatment. For men, up to 20 million men over the age of 45 are affected by low testosterone, only 10%-12% receiving any kind of treatment currently. So what does Biote offer? We've put together a group of highly trained practitioners who are OBGYNs, family practice, urologists, functional medicine docs, and we train those providers, your first-line providers, to re-recognize the symptoms of hormone optimization and really guide their patients into health and wellness. Our practitioners also, we customize these new therapeutic wellness, programs to add to the other healthy aging requirements they have. We've built this all on proprietary algorithms, built over the last 11 years, to really look at individualized, personalized care for hormone optimization, as well as therapeutic wellness.
We have a complementary line of supplements, so it's about 19% of our business, and it complements the hormone optimization and therapeutic wellness. So what's happening in healthcare, so critical for you and for all of us as we age, is our patients are seeking ease and convenience, and they want it from a single provider. They expect their provider to know everything they know, that they've learned on the internet or through a podcast, on how to prevent those aging symptoms that their parents had and their grandparents had. So it's a very proactive approach, looking for one provider, and they want a complementary wide range to be able to talk about those therapies with that practitioner. Is it right for me? What does that practitioner seek?
They seek a single source tech platform to be able to order all these products, as well as to understand the therapeutics, and they're really looking at revenue opportunities because so much of reimbursed medicine has impacted them in the last few years. Where is Biote expanding from hormone optimization? We're offering therapeutic wellness now, which is those categories that are right aligned with that aging population, over 45, all the way to 100, as our oldest patients, male and female, are 99. So people stay on our therapies for decades. What are those wellness categories we're expanding into? Weight loss and body comp, which includes GLP-1s, as well as other products to help people come off of GLP-1s. And one of the things that's most interesting about what we do at Biote is hormone optimization builds muscle mass. The use of testosterone will build muscle mass.
What is the number one side effect of the use of a GLP-1? It is the loss of lean muscle mass. So currently, we're doing research to show what is that impact on the testosterone levels to be able to maintain, with an exercise program, lean muscle mass, and really address that number one side effect of GLP-1s that so many of people are talking about. Biote is the number one trainer in thyroid health, so expanding into thyroid products as well as sexual health, preventive wellness, hair loss, aesthetic dermatology. These are things all for that aging population group. How large is the TAM? Well, as we've shown research, $400 billion is what they're looking at at the U.S. therapeutic wellness market, with a 5%-10% CAGR.
If you just look at the hormone replacement market, that small niche in the bubble here, it's already a $7 million market with a 7% CAGR in the next five years. McKinsey just reported that 82% of consumers list wellness as their top priority in their everyday lives. I think this is a growing category, of which only a small part has really been treated. If 200 million Americans suffer from hormone deficiency, which is the accepted statistic, only 20% of that group is treated, and that's exactly where Biote has been building our market. This is a great map. We began in Arlington, Texas, with one clinic and one doctor 11 years ago. We expanded contiguously, so we're a geographic scale model, and in the recent years, we expanded our sales force.
We are now in all 50 states, and we are adding practitioners very quickly. So we trained 1,500 and certified 1,500 practitioners in 2023, and we'll have more than that in 2024. We'll also have a commercial team, probably one of the best sales forces, certainly the best sales force in the hormone replacement market, is 125 strong of direct salespeople throughout the U.S. So we currently have... I talked about that 71, we're now at 7,300 practitioners. Our targeted specialties in our indexing is about 78,000 in that hormone specialties, and when you expand to other relevant specialties and include nurse practitioners, you're looking at a target base of 260,000. So we've barely scratched the surface in training doctors that are absolutely ideal for this first-line discussion on hormone optimization and therapeutic wellness.
Biote is certainly the number one leader in education. We also lead in terms of research in hormone replacement, especially BHRT, bioidentical hormone replacement. We publish multiple studies in peer-reviewed journals, and we continue to investigate clinical studies in these areas, evolving hormone optimization and wellness as we grow. This is a quick snapshot of our proprietary franchise-like model. So Biote takes a very complex world of hormone optimization and therapeutic wellness and puts it right into the practitioners' offices. We train the practitioner, as well as their front and back office staff, in all of these therapeutics, and we provide them with a clinical decision support software that gives them guidelines and guardrails to be able to treat patients as soon as they're certified in our training.
So we train the practitioner, we train their front and back office staff, and we put a suite of proprietary software in their offices, which do everything from control 100% of their transactions, all the money with the whole business, as well as it takes care of all the inventory control. The proprietary software takes care of all the regulatory, and every state has different regulations on this, so that's fully contained in their software package, as well as a very complex clinical decision support software, which takes all of the blood tests that are required, the complex histories, the symptomology of the patient, and then puts it against our algorithms and recommends various types of suggested therapies that the doctor should use and will be looking at.
Sorry, I can't hear the podcast.
Oh, sorry. Okay. Should've realized that.
The room is easy, so for those of you that can't hear on this, we'll go ahead and get that. But what this proprietary software does is it completely drives the business for that practitioner, keeping track of all of their records.
It's your mic.
It's always technical. Here we go. Taking care of all of their, everything from all of the accounting through all of their dosing, those types of recommendations, as well as looks at the use of various therapies for that patient, and it's supported 100% by studies and evidence-based for every decision. So if there's a breast cancer survivor or a woman that's concerned about breast cancer, the practitioner literally looks into that algorithm, can print out the breast cancer studies that would be most relevant to that patient, or to email them to her other providers. So this is a wonderful resource that's part of our proprietary software. We also provide, like any good franchise, access to the highest quality products, both in hormone optimization and Rx, Biote Rx, which is our therapeutic wellness products.
And then we provide this practice management and practice development, where we work with the provider to help them understand how to grow their practice, how to most efficiently work through all of the mechanics of the business to grow it. When they're getting more patients than they have time for, how to add an additional practitioner. Our quarterly business reviews are invaluable, and all of that delivers over a 94% retention rate of our clinics. So we retain over 94% annually, and of that 6% we don't retain, the large majority we ask not to stay with us because they do not keep up with the right protocols or enough of the procedures to maintain their real competency. So this is run very much like a franchise to really have the highest quality standards for our providers.
So we have essentially a very, very upgraded, proprietary software, all the algorithms. There's no one else in the industry that has this offering, and so as we grow these providers and as the science builds, we will build on even more with those algorithms as we do research on GLP-1s and testosterone, and some of the areas that are of most interest to us. And now I'll turn it over to Bob. You get a moment here, so-
Excellent. So, this will be our last slide, but in 2023, we was a pivotal year for us. We were able to achieve significant progress towards building a solid foundation for growth in the years to come. You can see, as Terry mentioned, on top line, we had double-digit growth both on top line in 2023 and on bottom line. Terry mentioned we're a capital-light business. We spun off about $27 million of capital, or of cash, sorry, in 2023, and as we look ahead, you can see our guidance is $200 million-$204 million on top line, and $60 million-$63 million on bottom, with a real focus on driving to driving growth in the second half. I think that's our final slide, and we can potentially open up for questions.
Before we open up for questions, one of the things that, since we've got a minute to make sure you understand, is, where this model is so attractive to a practitioner is they essentially become business partners with Biote, and they receive revenue from their first procedure after they come through our Biote certified training. It's a rev share model. So for each procedure, the provider gets a typical procedure is a $400 procedure for a woman, which costs her about $4 a day for this procedure, so it's cash pay. That's very interesting to the provider and very comfortable for the patient, as we have many, many patients in low-income areas. As a matter of fact, 50% of our patient base makes less than $100K household income. So this is not a wealthy person's therapy.
So if a typical procedure costing about $4 a day for women costs $400 and happens 2-3 times a year, the practitioner takes 260 of that, and then keeps that from the procedure, and then they remit the remainder of the $400 to the, to Biote, and that's all kept in the proprietary software, so it does the accounting for them. That's a significant amount of money to a, let's say, a family practitioner, who averages anywhere between $138,000-$158,000 a year. The average Biote clinic makes about $100,000 in Biote income annually. When you look at the low costs associated with the procedure, that is a very significant contribution to a family practice, OBGYN, or any of our providers.
So it really allows them to keep their practice going and to build the other wellness therapeutics for their patients. So we see this cash pay model increasingly becoming interesting even to hospital groups. So as Biote expands, we think this is a key, differentiation for what we do, and we build that same type of training into our other therapeutic wellness products. So that's, an exciting future for Biote, as we look forward, and we have very closely partnered in growing those providers' businesses.
And Terry, you mentioned something, and Kaumil, you mentioned it a little bit earlier also. We strengthened our capabilities through an acquisition, as you mentioned, as for buying Asteria Health. Very strategic, very accretive, acquisition for our business. Allowed us to really control the supply chain of our pellets, and also, allowed us to become a little bit more vertically integrated, which would allow us the ability to have some flexibility in how we operate in the future, and drive some bottom line also, so just-
It also allows us to control, to a very high level, the quality, as well as do research. So we're doing pharmacokinetic studies, which haven't been done in our industry, and I think are very important for all of our providers as we look to see evidence-based. So by vertically integrating with this manufacturing operation, it allows us to do that type of research very effectively, and provide all that information, not only to our providers, but to really elevate the whole industry.
If I may, let's start with your core business. And, you know, I think there's two things happening at the same time: it's recruiting, recruiting new physicians, as well as educating the consumer. And so can you maybe just talk a bit about how you go about the marketing aspect of educating a consumer, and then how that... how you marry that with bringing new clinics in?
So what's very interesting about the Biote model is we grew from word of mouth for patients. So we've always been very patient-driven, and patients are on the internet looking for hormone replacement, and where they can find a provider. So we have always had the issue of not enough providers and too many patients. So what we focus on is about 75% focus marketing directly to the providers, and about 25% to make sure that the patients get their or the potential patients get their questions answered, and we get them to a provider. So we do that recruitment, in terms of what providers are out there looking for hormone optimization, and now we expanded to therapeutic wellness, because they're also searching on the internet.
So this is very much a digital front-end, top-of-the-funnel for us, and the patients will email us or will call us, and they're really looking for providers. If you've heard, whether it's Oprah Winfrey, who was misdiagnosed with heart palpitations for years, and it was hormone optimization. Michelle Obama, I think, says she went through six doctors. Halle Berry saying the same thing. It's really about connecting a patient with a provider that knows what hormone deficiency looks like and how to treat it. So that's a key area for us, is information across both platforms, as we teach about hormone optimization.
Got it. And the complementary, the newer sort of complementary pieces to the portfolio, should we think about it as you have an existing—somebody's existing, an existing customer or an existing patient, and there are incremental things to sell to them? Or they may be arriving for something perhaps related to weight loss, and then Bio—the hormone optimization becomes the secondary sale.
I think both are true, but I think the majority of our providers are now looking at the hormone optimization patients that are in the category already and then looking for these types of solutions. But just like our nutraceutical program was used for people who weren't using our pellet therapy. So it's just the same as the therapeutic wellness. We have a lot of different age perimenopause, that may be on a different type of hormone, that's going to be very interested in the therapeutic wellness, and may eventually become a candidate for the pellet therapy. But we see ourselves as educating. We've always educated across that whole platform of different hormone optimization options, such as pellets, creams, patches, oral. So we educate across all of it, and now we provide that in the Biote Rx.
So it's really making sure we provide the products that we've educated on for years. You know, we are the number one educator in thyroid, I think, in the world, but we never provided a product before what we're gonna do later this year.
I see. Interesting. Given all the buzz around GLP-1, is it... Given how critical it is to recruit new practitioners, is it a challenge to get the focus for the sort of core pellet business when everyone is reading about all the opportunity that lives in GLP-1?
I think that if you don't treat or understand GLP-1s, the provider is really at a disadvantage. It hit. You know, one of our doctors described it very accurately as a tidal wave that hit all of us last year. It took top-of-mind awareness, it took clinic time, it took staff time, it took trying to find the GLP-1s. Everyone was involved in this distraction, and I think that's now starting to sort itself. But I think if you're a provider and you don't understand or do GLP-1s, I think that can be a problem. I think patients will leave you. So for many of the doctors, that became a focus, but I see it settling down now, and as we start to build this whole thought process on testosterone, building lean muscle mass, I think it's going to be an advantage for us.
No question, large disruption to all of our market, including all of our providers.
Got it. And, Bob, I have to ask you a few as well.
Go for it.
This might be a hard one. I don't know. You, we'll see how you answer is... Every time I hear systems, and software, and algorithms, we know there's quite substantial inflation in the cost of these types of things, and keeping them fresh, keeping them up to date. So generally, as a franchiser, CapEx needs are typically low.
Mm-hmm.
But this sort of this base infrastructure that you have, how should we just think about what the cost is to keep it modernized and keep it going?
No, it's a good question. I'd, I'd say the capital, capital-light structure still holds true in this, in this business. I would say that we leverage, whether it's our sales force, whether it's our, our doctor team or our clinical team, we're leveraging a lot of know-how within our employee base. So I would say that majority of the information that comes in, that feeds these tools is done internally by individuals within the company. So I'm not seeing a significant increase, inflation, from an inflation perspective, because majority of what we do is really in-house.
There you go.
Would you agree with that?
Great.
Yeah.
Yeah. How about if you think about you have $200 million this year in revenue, is there a level at which the investment hits, you know, a bit of a tipping point where, you know, if you're adding 10% practitioners a year at the moment, but is it $300 million, $400 million, where it really starts to lever, and now you're adding 1,500 a year? You know, how should we just think about t he mechanics of the P&L?
Yeah, no, no. So as, as you look at... We've got a geographic scale, model, right? I mean when you look at the way that we've got our sales force spread throughout the country, we are in a phase of really trying to address three things. One is how do we bring in the news into the portfolio, as you mentioned. Number two is how do we leverage that sales force to grow our existing base, to expand that even further?
Number three is, how do we really cultivate those faster-growing or larger customers into other areas of the portfolio so that, as we were mentioning with these new products that we're bringing, how do we continue to expand those? So as I look, where we're at, I mean, as we continue to escalate and elevate in these new territories, that's really where I think we're gonna start to see the scale come into place.
Okay, great. Any final words, or are we good to wrap it up there?
Well, I think you just take a look at the map. If you understand the TAM, and you look at a $400 billion US wellness market, and you look at the amount of penetration that we have or anyone else has, and you're looking at, you know, 80% untreated, have only trained a little over 2% of the docs, and look at the geographic scale model in a highly profitable, your annuity-like business model, I think the wellness category is so important for you to understand, and then to see where companies like Biote really fit and be able to define the market. So that's what's exciting about the years to come, so stay tuned.