BioHarvest Sciences Inc. Common Stock (NASDAQ:BHST) Q3 2025 Earnings Call Transcript

BioHarvest Sciences Inc. Common Stock (NASDAQ:BHST) Q3 2025 Earnings Call Transcript November 13, 2025

BioHarvest Sciences Inc. Common Stock reports earnings inline with expectations. Reported EPS is $-0.14 EPS, expectations were $-0.14.

Operator: Greetings, and welcome to the BioHarvest Sciences Third Quarter 2025 Corporate Update Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Before we begin the formal presentation, I’d like to remind everyone that statements made on today’s call and webcast, including those regarding future financial results and industry prospects, are forward-looking and may be subject to a number of risks and uncertainties that could cause actual results to differ materially from those described on the call. Please refer to the company’s regulatory filings for a list of associated risks, and we would also refer you to the company’s website for more supporting industry information. In addition, throughout today’s call, the company may refer to adjusted EBITDA, a non-IFRS financial measure, which it believes provides helpful information to investors about the performance of the business on an ongoing basis.

A reconciliation of adjusted EBITDA to its most directly comparable IFRS financial measure is included in today’s earnings release, which is available on the BioHarvest website under the Investors tab. On our call today is Chief Executive Officer, Ilan Sobel; and Chief Financial Officer, Bar Dichter. I would now like to hand the call over to CEO, Ilan Sobel. Ilan, the floor is yours.

Ilan Sobel: Thank you, operator, and good morning, everyone. I’m pleased to welcome you to today’s third quarter 2025 corporate update conference call. Q3 2025 was underscored by continued robust operational performance. We delivered revenue growth in line with our targets and moved closer to our near-term goal of achieving adjusted EBITDA breakeven. Total revenues increased 39% year-over-year to $9.1 million in the quarter, in line with our guidance with our total U.S. VINIA active user base now exceeding 75,000 customers. This growth was fueled by sustained momentum in our core VINIA capsules, the expanding success of our VINIA Inside product portfolio and an increasingly significant contribution from our CDMO customer base.

For those less familiar with our company, BioHarvest is the inventor of Botanical Synthesis, a patented non-GMO platform that produces highly potent plant-derived compounds without needing to grow the whole plant. This technology enables us to create consistent bioavailable products at industrial scale, serving high-value markets across pharmaceuticals, nutraceuticals, cosmetics and nutrition. We operate 2 synergistic business verticals. First, our direct-to-consumer products division, which includes our flagship VINIA nutraceuticals; and second, our services division as a CDMO, where we partner with other companies to develop novel plant-based compounds. This dual model positions us to drive revenue both from our own branded products and from B2B partnerships, leveraging our unique technology.

Now turning back to the third quarter, let me share with you some key facts which help explain the quality of our growth in the products business, which increased overall by 30% versus previous year. The core capsules business accounted for 88% of product revenues with new products representing the remaining 12%. Core capsules growth represented approximately 70% of total product revenue growth with new products contributing a significant healthy approximately 30% of growth, fueled by strong double-digit growth in tea and coffee businesses and the successful launch of our VINIA 2X Formula Chews, which today has a record review rating of 4.8 out of 5 on Amazon. I’d like to now take a moment to highlight three key growth drivers that defined our Q3 performance.

Our CDMO business is playing an increasingly important role in our growth with milestone-based project revenues compounding this quarter and together with new deals represented nearly 25% of the company’s revenue growth for the quarter. Notably, we secured an exciting new CDMO partnership to develop saffron-derived compounds with Saffron Tech, in which BioHarvest will retain a 25% ownership of the resulting saffron compound. This collaboration is running Stage 1 and Stage 2 of our process in parallel to accelerate time to market. For context, saffron is known as the world’s most expensive spice often retailing for over $10,000 per kilogram due to labor-intensive cultivation and limited supply. Our Botanical Synthesis technology has the opportunity to overcome these supply constraints, providing a unique high-value opportunity in this market.

Beyond saffron, we continue to advance a robust CDMO prospective customer pipeline with several other target compounds, and we expect additional partners could onboard in the coming quarter. Now turning to the product side of our business. To further drive VINIA’s growth in Q3, we launched Phase 1 of our VINIA Health Pros professional affiliate program, creating a new network of health practitioners, athletes, coaches and wellness influencers who are passionate about VINIA. The early response has been very encouraging. We have already onboarded 75 Health Pros to date, and we’re targeting approximately 300 by year-end as we launch Phase 2 of our onboarding process. These professionals effectively become a VINIA professional sales force, introducing our VINIA products to their clients and followers in return for earning a high-teen commission on all sales, costing us significantly less in marketing spend.

We believe this professional affiliate program will amplify our reach and credibility in the health and wellness community, and we are preparing to enter a more aggressive Phase 2 of this program following the success of our initial Phase 1 onboarding. This week, we continue to advance our VINIA Inside strategy by providing our customers with exclusive early access to our VINIA BloodFlow Hydration Solution, which we believe has the potential to be a major category disruptor and driver of significant incremental revenue for the company. We began a VIP early adopter rollout on November 10, ahead of a broader market-wide public launch on December 3. This product extends the VINIA brand into the $17 billion U.S. electrolyte hydration market. The line features six great tasting flavors and leverages VINIA’s core competence of driving better blood flow, which is so critical in delivering hydration benefits by ensuring the effective transportation of fluids and electrolytes to the body’s organs, tissues and cells.

We are configuring our marketing stack and e-commerce platform to support an aggressive rollout of this exciting new product as we work to uniquely differentiate our BloodFlow Hydration solution versus competition, anchored in our delivery of unique benefits such as increasing dilation of arteries and improving blood flow, improving physical energy and mental alertness, regulating body temperature under heat and stress. This product is backed with a 90-day money back guarantee if consumers do not love the taste or feel the VINIA difference. Early feedback from our VIP users has been very encouraging, and we’re confident that VINIA BloodFlow Hydration will open a significant new revenue stream for BioHarvest. In addition to these growth initiatives, gross profit margins continue to benefit from scale increasing to 61%.

We remain disciplined and focused on taking every possible action to drive costs out of the manufacturing and distribution side of the business as well as controlling OpEx and G&A. On the capital markets front, over the last 2 months, we executed a series of strategic transactions to fortify our balance sheet. In September, we completed a $14.7 million strengthening of our balance sheet with an injection of USD 10.9 million of gross proceeds and an additional $3.8 million in debt reduction via accelerated warrant exercises and debt-to-equity conversions, which significantly reduced our debt and warrant overhang. Leveraging that momentum, earlier this week, we closed a successful $19.9 million institutional equity financing, marking our largest financing ever and the first to bring institutional investors into our shareholder register, bringing total gross proceeds from these combined efforts to roughly $30.8 million.

This transaction fully funds the company for our next growth phase, giving us the strength and flexibility to accelerate our direct-to-consumer health and wellness business, including the required funds to triple our manufacturing capacity and drive our growing CDMO services business. It also diversifies our shareholder base, enhances trading liquidity and confirms that BioHarvest now firmly belongs on the big stage of NASDAQ. Looking ahead, we remain laser-focused on closing out 2025 on a high note. We currently expect to deliver in fourth quarter revenue in the range of $9 million to $9.5 million and adjusted EBITDA between negative $0.6 million and 0, essentially breakeven. If not in Q4, this milestone is extremely close and will be delivered in early 2026.

Achieving positive adjusted EBITDA has been a key near-term objective for us, and we are consistently pushing forward on this important financial outcome every day. With that, I’ll now turn it over to Bar to walk through the financials. Bar, over to you.

Bar Dichter: Thank you, Ilan. Good morning, everyone. I will provide you with a succinct review of our financial results. A full breakdown is available in our SEC filings and in the press release that crossed the wire before market opened today. Please note that all figures are in U.S. dollars unless stated otherwise. Revenue for the third quarter of 2025 increased 39% to $9.1 million, in line with management revenue guidance as compared to $6.5 million in the third quarter of 2024. Third quarter product revenue grew 30% to $8.4 million, while CDMO revenue grew 722% to $0.7 million. Gross profit increased 50% to $5.6 million or 61% of total revenue in the third quarter of 2025 as compared to $3.7 million or 57% of total revenue in the same year ago quarter.

The increase in gross margin was primarily due to the benefits of increased manufacturing scale and improved manufacturing yields. Total operating expenses for the third quarter totaled $6.5 million as compared to $5.8 million in the same year ago quarter. The increase in operating expenses was primarily due to increased marketing spend and the development of the Health Pros affiliate programs to support future revenue growth and higher expenses for the CDMO service division, which partially offset by lower general and administration expenses. Net losses for the third quarter of 2025 totaled $2.5 million or $0.14 per basic and diluted share as compared to a net loss of $2.7 million or $0.16 per basic and diluted share in the same year ago quarter.

Adjusted EBITDA loss, a non-IFRS measure, totaled $0.4 million in the third quarter of 2025 as compared to an adjusted EBITDA loss of $1.7 million in the same year ago quarter. Cash and cash equivalents as of September 30, 2025, totaled $11 million as compared to $2.4 million as of December 31, 2024. Subsequent to the close of the third quarter, the company fortified its balance sheet with $19.9 million in gross proceeds from an institutional equity raise in November. Importantly, with current margin momentum and expense discipline, we continue to project that we will reach adjusted EBITDA breakeven in the coming quarters. This inflection is a key financial milestone for validating the scalability of our business model. I would now like to pass the call back to Ilan to offer some closing remarks, after which we will begin our Q&A session.

Ilan Sobel: Thank you, Bar, and thank you all for joining us today and for your continued support of BioHarvest. We are executing against a clear plan. Our direct-to-consumer engine is scaling. The Health Pros program is expanding our reach with more efficient customer acquisition and the VINIA BloodFlow Hydration launch opens new doors accessing a multibillion dollar market with an incremental customer base. In parallel, our CDMO pipeline is advancing with the Saffron partnership and additional prospects that can translate milestones into durable revenue and often an economic interest in the underlying molecules we hope to create. The recent capital formation simplifies our capital structure, fortifies our balance sheet and gives us the resources necessary to invest in strategic CapEx to expand capacity and capabilities.

We will prioritize additional bioreactor capacity, process automation, quality systems and the tooling needed to support both VINIA growth and CDMO scale. These investments are designed to improve throughput and increase gross profit margins. The near-term priorities are straightforward: execute the VINIA BloodFlow Hydration rollout, scale Health Pros quickly, convert additional CDMO customers and advance projects with existing clients and keep tightening our cost base while we scale. We will judge ourselves on revenue growth, gross margin progression, adjusted EBITDA trajectory and cash discipline as we work towards achieving the critical adjusted EBITDA breakeven target in the near term. With that, operator, please open the line for questions.

Operator: [Operator Instructions] The first question comes from Matt Hewitt with Craig-Hallum Capital Group.

Matthew Hewitt: Maybe first up, could you kind of help us with what to expect from a ramp with the new hydration product? Obviously, you’ve got it in some initial customers’ hands. But as that gets broadly launched on December 3, how should we be thinking about kind of the uptake from that point?

Q&A Session

Ilan Sobel: Thank you for the question. So let’s step back. I mean, this is a monster category, $17 billion category in the U.S., the electrolyte hydration category. You’ve got the largest player being Liquid I.V. that sits on about $1 billion of revenue. Other major players like [BevNology] sitting at about $200 million of annual revenue. Obviously, very, very competitive category. We are doing a stage launch. So starting Monday this week, we launched VINIA BloodFlow Hydration to all of our existing customers to give them a sneak preview and almost like a VIP opportunity to purchase. We’re doing this through a series of very engaging e-mails. All of these people obviously are part of our e-mail database, and this is a very efficient way to reach them.

And I must say, in the last 4 days, we’ve had a great response. very, very encouraging response. And we will be shipping out product to them around about the middle of next week. The products will be shipped out, and then they’ll start to consume the product and experience really the amazing overall sensory performance of the product. We will then December 3, start turning on all of our assets. So all of our assets, marketing assets, everything from TV assets, so short form as well as long form, as well as YouTube, Instagram, Health Pros will all start to basically drive the multiplier effect of driving BloodFlow Hydration. So we should start to see it ramping up in December, and that continued to ramp up in the first quarter. We — it will take time for us to get it on to Amazon just purely because this is Amazon’s most critical sales period, and it takes a long time for the product to reach through their distribution system.

So we don’t expect to see any Amazon revenue coming on board until early January. And then we’ve also, through our Health Pros affiliate network, we’re very, very focused on signing up gyms and other points of sweat, and those will start coming on board literally as we speak. So what you can expect to see is a quarter-on-quarter ramp-up. Definitely, the focus for us from a marketing communications perspective will be heavy weighted BloodFlow Hydration because we really believe in this opportunity. And we’ll be putting all the required resources towards it. And basically, we’ll see a ramp-up every single quarter and largely also not just through the driving top of the funnel customer acquisition, but we really believe, just given the uniqueness of the proposition, anchored in BloodFlow Hydration, really, it’s the first hydration product, which is powered by circulation, powered by blood flow that there will be a significant organic focus, not just through our influencers, but just purely just given the PR value and the unique nature of the proposition.

Matthew Hewitt: That’s super helpful. And then kind of shifting gears to the CDMO opportunity. Congratulations on the Saffron Tech agreement. I noted that you’re planning to run the Stage 1 and Stage 2 in parallel. What comes after that? Is there another stage? Or at that point, would you have product that you believe you could start to sell? I’m just trying to think about for fiscal ’26, how that opportunity might shake out. Thank you.

Ilan Sobel: That’s a great question. So partnering with Saffron Tech really is kind of like a glove fitting on a hand for us because they’re obviously very local here in Israel. They have developed significant technology utilizing vertical agriculture, indoor agriculture to — indoor agriculture to be able to grow saffron at a very high premium grade with very high active levels indoor. And therefore, we have the plants on our doorstep, which allows us to move very, very fast. They also have great plants from an overall bioactives perspective, which is critical for us. And so we’re going to be running two swim lanes with them. They themselves have already done a set of tissue culture work, and we will take their existing tissue culture work and move that into our Stage 2 — into our Stage 2, which goes from solid media into liquid media.

So in a way, that gives us basically a 9-month head start that we could then take their existing cell bank and work to optimize their existing cell bank into the transfer into liquid media, into [indiscernible] and small and medium bioreactors. If we’re successful at that stage in driving the mirroring and the magnification, which is part of our Botanical Synthesis technology, then we will move very quickly to large-scale bioreactors. And I believe based on our success in the past, we can get a product to market relatively quickly. So this is leveraging the power of their existing capabilities Secondly, we will go back to their plant and start and do Stage 1 ourselves, leveraging our unique IP and know-how on how to drive the mirroring and the magnification at a — specifically at a tissue culture level.

So we’re kind of in a way, got two horses in the race, two tracks. And we’re obviously trying to bring the optimized product to the market, which ultimately we believe is going to be an opportunity to bring a super saffron to the marketplace. In a way, Matt, do on Saffron what we did on Resveratrol. Our Piceid Resveratrol is kind of like a super Resveratrol with greater solubility, greater bioavailability and obviously, the fact that we have Piceid levels 100x the levels of what’s found in the red grape. So we obviously, for us, the vision is to do a super saffron and then be able to bring product to the market through the power of BioHarvest e-commerce machine and also play a critical role in the joint venture that we own 25% of to be able to bring the product to market from a B2B perspective at very, very high margins.

Operator: The next question comes from Nick Sherwood with Maxim Group.

Nicholas Sherwood: Kind of I guess my first question will be, how many of the other pre-existing CDMO contracts are nearing Stage 2? I know that I believe it was the pharmaceutical company had moved to Stage 2, but there’s also an existing cosmetics company agreement and then the Tate & Lyle agreement. Can you kind of give an update on some of those other pre-existing CDMO agreements?

Ilan Sobel: Yes. Thank you, Nick. So let’s first talk about the — we call it — let’s call it the cosmetic fragrance space. Obviously, we’re under a strict NDA. We can’t get too specific. What I would tell you there is that we’re making great progress. We have actually accessed multiple plants around the world. In fact, our R&D team came back on Thursday from a specific country that will remain nameless where they were actually doing work at a tissue culture level in the country, in local laboratories, which is a unique change that we’ve made in our overall methodology as it’s more efficient than trying to bring plants through the transportation system. And so we’re making continued good progress in building the cell plates — and now we’ve got to give the plates the required time to basically let biology do its work with obviously the different know-how that we apply to influence biology.

In the case of Tate & Lyle, we’ve already accessed one plant, and we’re making progress. And actually, now we’re in the process of sourcing a second plant as part of our relationship that we’ll be working to bring to the table as part of this overall deal in order to get — gives us a better chance of getting at least one over the line into Stage 2.

Nicholas Sherwood: Okay. Yes. That sounds like a lot of work is going on there. And then also on the CDMO side, can you kind of just give an update on any increased interest you’ve experienced from potential partners after the release of the exosome creation announcement? And just sort of also, can you talk about how that technology has developed further since you — announced it?

Ilan Sobel: So just generally, from a CDMO perspective, the pipeline is rich. I think we’re really fortunate that just given the multitude of factors from a global perspective, the world is really understanding the critical importance of going back to the future in the sense of actually going back to the plant kingdom. And so as a result, we’re seeing a significant amount of pharmaceutical customers all the way through to nutraceutical and cosmetic customers who are now really looking to find life-changing compounds from plants. And obviously, we at BioHarvest with our Botanical Synthesis technology, we have the critical role to play as the bridge between the plant kingdom and the industry and bringing these life-changing compounds to these customers given our ability to produce with consistency, with economic viability and with the patent protection that they’re looking for.

So Nick, the pipeline right now is intense. The deal flow is significant. It’s a lot of work that we have to go through in order to make sure that we’re prioritizing our R&D resources on the right big bets. And I think when you look at the nature of the four deals that we have already signed and you look at the potential revenue, the overall royalty revenue from a manufacturing agreement, you start to understand that if we’re able to get these compounds all the way through into manufacturing, these are significant, significant multibillion-dollar industries where the overall royalty revenues are very, very meaningful. So right now, we believe we will announce another deal before the end of the year. And there’s a number of opportunities that are quite deep in the pipeline.

So that just gives you, I think, just a perspective on the pipeline and on what’s coming in the immediate term, I would call it. And then understanding that there’s a lot that we’re working on that will bleed into the first quarter, but really significant opportunities. And we’re seeing major titans of industry, companies that are significant leaders in the industry who are now looking in a way at the validation of what we’ve delivered and achieved in our VINIA, overall VINIA operating model and looking at how they are able to do something similar across their different industries that they’re operating in. So it’s really helpful for us to have VINIA as a great validation of the power of our Botanical Synthesis technology. As it relates to exosomes, look, the exosomes opportunity is for us in the medium term is significant.

It’s not short term, but it’s more medium term. We are currently now doing further work — in the process of doing further work to really understand the downstream implications on how we most effectively move to actually drive the ultrafiltration process to be able to remove the exosomes from the media. And obviously, this is going to be an integral part of the process development work that we need to do over the next 12 months as part of the engineering design work for our new manufacturing facility that we — as a result of the capital raise that we’ve done, we will start to aggressively move forward with final overall engineering design, design drawings to start to actually build that facility. And obviously, the downstream exosome component to be able to go from exosome in a bioreactor all the way through to actual exosomes ready for market, that downstream process will be a critical component of our new facility.

We have seen significant demand. What it also helps us is that for our CDMO customers and our future customers in our pipeline, there’s really an opportunity for them to get, in a way, buy one, get one free or in the sense of us also being able to really deliver more value because when we go after a specific life-changing compound from a plant, not only are they going to get the unique composition from the actual cell but they have an opportunity of also being able to leverage the power of the exosomes that those cells are actually producing. So there’s significant incremental — the value proposition that we provide now to our CDMO customers, obviously, specifically in the cosmetic industry and in the nutraceutical industry has been significantly strengthened, and that will allow us to get more deals over the line, create more value and even potentially allow us to take some pricing realization because of the significant incremental value that we’re taking.

And we’re just trying to figure out what the right balance is right now on that. And part of that is a learning process.

Nicholas Sherwood: Okay. Yes. I mean it sounds like a lot of really exciting progress. And then my last question is, can you just talk about some of the early success you’ve had with the Health Pros program? Any positive trends and maybe click-through rates from your Health Pros? Or have you found the recruitment for the Health Pros to kind of be accelerating as that program has been active longer since we last spoke?

Ilan Sobel: Yes, that’s a great question. So look, the focus for us in Phase 1 on Health Pro was getting the technology perfect. Because when you’re taking a doctor and you’re onboarding a doctor into the whole, let’s call it, Health Pro ecosystem from actual onboarding, getting all of their account details, taxation, social security numbers, educating them on the brand, educating them on what they can say, what they can’t say, all the way through to providing them with specific materials to help their creative process we had to make a significant investment in development, technology. What many of our investors see, obviously, is the technology being the Botanical Synthesis and how we bring Botanical Synthesis to market through our e-commerce machine.

But behind all of this is a huge amount of technology that we’ve built across each of the different aspects of our business. So over the last four months, we built like an end-to-end affiliate system with a very seamless onboarding process so that we can scale this. And we wanted to make sure that the overall user experience for all the doctors, the coaches, the nutritionists was a very, very good experience. And that’s why in Stage 1, we onboarded 75. We learned, we did interviews. We understood where some of the issues were, and then we overlaid additional development work, which we’ve now finished. And now we’re about to ramp it up. Between now and the end of the year, we want to bring on 300 Health Pros. What we have found is that, obviously, these — the Health Pros that have significant ecosystems of social media followers that are highly engaged when those Health Pros are posting information about VINIA, talking about the science, talking about the benefits.

We’re starting to see a very significant funnel build and very high conversion rates because of the trust-based relationship between these Health Pros and their social media ecosystems. And we started to see — you talked about click-through rates, very good click-through rates and more importantly, very good conversion rate. And for us, it’s a cost of acquisition, which is significantly lower than some of the other channels that we have. So for us, the next six weeks are critical. Also a really important product for the Health Pros is our hydration product. So now we have basically the integration of the hydration product coming out, Health Pros coming in. And because of just the ability to scale the hydration product, given the size of the category, every hydration is relevant to such a broad cross-section of consumers that it gives the Health Pros something to start to talk about, start to sell and actually start to see the scaling.

And we’ve actually also built a model now to be able to show the Health Pros what the recurring revenue looks like for them as they start to bring on board customers because our business is a subscription business. So we want to show that you bring on 100 customers now, right? This is what you get today, but understand you’re going to get this in 3 months, this in 6 months, this in 12 months. And that’s very, very important. That’s part of the education so they understand the size of the — or the return on the time that they’re spending.

Operator: [Operator Instructions] The next question comes from Susan Anderson with Canaccord.

Susan Anderson: I guess maybe just a follow-up on the CDMO business. It sounds like there’s definitely a lot of interest there. How are you thinking about that business longer term as a percent of the total versus where the product revenue is at right now? And then also, have you talked about the difference in margin of that business versus the product revenue?

Ilan Sobel: Susan, thank you. Two very good questions. So look, let’s just try and just dimensionalize like what does the business look like in, let’s call it, 5 to 7 years. We really see that, obviously, as we continue to bring more deals through the pipeline, we’re not going to be able to convert every single deal. We build into our economics roughly a 40% success rate. So 4 out of every 10 deals we bring in, we’ll be able to develop those compounds. We start to see end of ’27, ’28 those compounds coming to life and really starting to see the magnitude of revenue coming from royalties. Important to note that in Stage 1, Stage 2 and Stage 3, there’s still meaningful revenue, as you see already from today’s announcement, there’s meaningful revenue that we’re able to recognize.

And also, we do make money. In Stage 1, we make money. In Stage 2, we make more money. In Stage 3, we make more money as the work becomes more efficient. And then obviously, the huge upside is in the royalty-based manufacturing revenue. And just remember, on a number of deals, we also have a piece of those specific compounds as a result of the structural agreement that we have with those companies. So like, for example, in the case of Saffron, we own 25% of the future compound that we will be developing. So for us, we will see, whilst today, the large proportion of the revenue, obviously, is coming from the products business, we’ll start to see, I believe, this flipping over time, whereby in the course of the next 5 to 7 years, probably 75% of the revenue will come from the CDMO, 25% from the products business.

But obviously, the size of the pie is going to obviously be significantly larger. From a margin perspective, where we see and specifically, you’ve seen we’ve been very purposeful and strategic on the compounds, life-changing compounds that we’re going after with our technology. We’re not going after the coffee, we’re not going after cocoa. We’re going after really strategic profit pools where our technology has the greatest utility value. And when you look at the margin structures that we will be able to achieve from a royalty-based manufacturing revenue, it’s significantly north of 70%. You’re looking at 70%, sometimes going up to 80%. And obviously, this kind of business has a significant earnings multiple versus the direct-to-consumer business where today, we’re around about that 60% mark.

We do believe we will move it over the course of the next 6 to 9 months, closer to 65% with a potential of getting even further with scale. But the CDMO business, just given the nature of the business and the very strategic surgical approach we have to the selection of life-changing compounds we’re going after, combined with the ownership that we have in the compounds, this is when you start to get to those kind of margins, which are north of — well north of 70%. And ultimately, we’re going to drive that mix very, very hard. And it’s also — and I’ll leave you with this, anchored in the North Star of the company because if you look at the North Star of the company that drives us every single day, it’s all about discovering, developing, manufacturing.

And then for me, the most important word is democratizing life-changing compounds to affect the lives of hundreds of millions of people from a health and wellness perspective. And whilst our direct-to-consumer business is a great business, and we’ve been really successful in the U.S., and we will scale to other markets over time, the CDMO is going to get us to touch with our compounds, the tens and hundreds of millions of people. And that’s what we’re really, really focused on ultimately as the future of the company and the North Star that we’re tracking on.

Susan Anderson: Okay. Great. That was very helpful. Maybe if I could just follow up on the VIP early adopter launch of the VINIA BloodFlow Hydration. I’m just curious if there’s been any feedback from the early adopters or learnings that you’ve come across that you maybe can apply to the overall launch? Or just any color on how that’s gone so far?

Ilan Sobel: Yes, sure. So literally, we started on Monday evening. We sent our first e-mail out to our existing customers, giving them basically special rights to be — to have access to the first 1,000 variety packs. And I would say we’ve sold a significant amount of those variety packs as I sit here on Thursday evening with not a lot of effort. Just one e-mail is going out. We have another e-mail going out in a few hours’ time, all talking about the different aspects and benefits of the BloodFlow Hydration proposition. What’s going to be critical is when those people receive their first shipments, their overall reaction to the product. First of all, the sensory reaction to the product. We’ve worked endlessly. This is a 2-year project.

We’ve worked with probably the best of the product developers of the Coca-Cola Company, Louis Heinsz, who’s partnered with us. Louis runs a company called BevNology out of Atlanta. I personally made about six trips to Atlanta to drive the optimization of the product. And we really believe this is going to be the best tasting product in the category. And then obviously, we’ve got all the benefits of VINIA in the product. So you’ve got hydration powered by BloodFlow. And as we know, you’ve got to have really good blood flow to be able to transport all the fluids and the electrolytes to your body, tissues and cells. So it’s a very strong, simple, easy-to-understand proposition for consumers, and we believe quite differentiated and disruptive. And obviously, for us, leveraging the power of our marketing machine we’re cautiously optimistic that this is going to build a significant future revenue base for us.

What’s going to be critical is that the first moment of truth for the consumers. What we are seeing is when people are going to our landing page, we’re seeing a really good conversion rate. So that’s pretty encouraging. The next step now is the repeat purchase rates based on the overall flavor profile and the efficacy of the product, which we know delivers because it’s got the equivalent of one capsule VINIA in every single stick pack plus all the benefits of the naturally sourced electrolyte. So we’ve done a lot of homework on this. We’ve put all the right building blocks to drive differentiation. We’re focused on learning from every single step to make sure we scale smarter. But the initial signs — the early, early initial signs are encouraging.

And importantly, everybody that consumes this product, they love the taste. And I’ll give you one small anecdote. We were — we had like a shoot with models where we were shooting obviously, multiple different scenes with them consuming the product. And what the producer told me is that like normally, when all the models come in and they have to drink a product, they just take a sip because they have to. They’ve got to do it as part of the overall — their job. They had to do consumption shots. And what they said is that with our product, people were just drinking and enjoying the product and literally taking extra sachets or stick packs of the product. So all these anecdotal feedback on the taste is very, very encouraging because when you’re dealing with a product like this, taste is king and then efficacy is so critical.

So early signals are encouraging, but watch — we all got to watch the spot.

Susan Anderson: Okay. Great. Yes, I remember tasting it at our conference, and it does taste really good. Last question, I guess, for me, I wanted to just see if there is a time frame or how long you think it’s going to take to get to that Phase 2 of the Health Pro affiliate program to get to that 300? Like when do you think you’ll reach there? What time frame are you expecting…

Ilan Sobel: In our company, I think our shareholders understand this, we’re very operationally focused. And we — in our company, we work on missions. We have like missions. And one of those missions now is 300 Health Pros by December 31. And we have a team working on that. We have resources working on that. So that’s the mission that I’ve set the marketing organization and I believe we can do that. We have access to the ecosystems. We have the right people bringing in the networks. We’re now working on trying to convert. We have one network of gyms, over 200 gyms across the U.S. So we’re working to convert gym by gym. And it’s — we’ll be reporting out more about this, I guess, when we do the end of year results. But yes, this is an important milestone.

And then when we get to 300, we’ll move to 500. And from 500, maybe to 700, I want to get to 1,000 as soon as possible. I think now we have the product portfolio that really gives the Health Pro the ability to, in a way, generate scalable revenue for their time. Because these are people that are professionals. We’re dealing with doctors, nutritionists, coaches, trainers, their time is precious. For them to go and post on social media, they’re very professional. It takes time out of their day, and they’ve got to see the revenue coming in, in their bank accounts every single month. And now we have almost like the scale, the heft of products with hydration, with tea, with coffee, with capsule, with the chew business. And so this is now really — we’ve been waiting some time to do this.

It took us a while to get the technology right and to get the whole onboarding experience really perfect. So getting customer success and if they got a problem, there’s a help line. Again, these are people that are busy people. So we’ve got to get the onboarding right. And now we have the portfolio for them to get the return on time, which is so critical for them. So watch the spot, 300 by the end of December, and then we’ll ramp it up again.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Ilan Sobel for any closing remarks.

Ilan Sobel: So thank you, everybody. I appreciate you taking the time to be with us today. I personally enjoyed the questions. It’s great to see all of our analyst partners really understanding the granularity of our business. I hope from the results that we’ve delivered to the marketplace as reflected in the Q3 results and specifically the events of the last four weeks where we had some significant milestones for the company that you’ll start to see the continued maniacal focus on execution. Yes, we do have, as a result of a lot of hard work, the required treasury, the cash in the bank. The company is now obviously fully funded for all of our critical activities in the foreseeable future. That means that management can really focus another degree of intensity on executing and driving results.

Those results are obviously anchored in continuing to grow revenue, continuing to squeeze every single possible margin point on the product side of the business and the CDMI side of the business as well as being very, very responsible stewards of resources to make sure we continue despite the cash that’s in the bank, we continue with a culture of ownership to be really ensure we’re spending every dollar in a very, very thoughtful way. And this is a commitment that I make to shareholders that there’s going to be a really purposeful use of the funds. We are going to be using a proportion of the funds initially to start to build our second manufacturing facility, which we need to have operational by the second quarter of 2027. We are actually going to be building this in a modular way so that we’re able to manage the capital very, very cautiously and carefully, and we’ll continue to ramp up the scale as the business continues to scale, which I think is quite appropriate.

And ultimately, this is going to allow us to deliver the revenue growth, the gross margin progression and the adjusted EBITDA trajectory and cash discipline that’s going to get us to adjusted EBITDA breakeven in the near term and then continue to improve those margins in the medium term, so that becomes a really nice profitable business that ultimately is delivering on the North Star every single day. So — thank you for your time. And on this note, I think we’ll end the call.

Operator: Ladies and gentlemen, this does conclude today’s teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.