NexGel (NASDAQ:NXGL) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.

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Summary

NexGel reported first quarter 2026 revenue of $2.65 million, a slight decrease from $2.81 million in the same period last year, primarily due to lower sales from the Silly George product line.

The company recently completed the acquisition of the BioNx division, anticipated to triple annual revenue to approximately $35 million and be immediately accretive to profitability.

NexGel raised $13.8 million to fund the acquisition, with $8.8 million in cash and a $5 million convertible note issued to Cellularity.

Management highlighted the strategic partnership with Sequence Life Science, which invested $5.5 million, enhancing NexGel's manufacturing, product development, and distribution capabilities.

Dave Hazard was appointed as Vice President of Sales for Bionic Surgical, expected to drive sales growth for NexGel's new regenerative biomaterial products.

Three 510k devices are in development, with commercialization targeted for 2026, 2027, and 2028, representing $4.6 million in invested paid-in capital.

The company appointed Ian Blackman as the new CFO to oversee the integration of the acquisition and accelerate growth.

NexGel plans to provide further updates on the integration and financial performance in its second quarter financial results in August.

Full Transcript

OPERATOR

Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero and a member of our team will be happy to help. Please stand by. Your meeting is about to begin. 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

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. The 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. Adam Levy. Adam, please go ahead.

Adam Levy (Chief Executive Officer)

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 MediGel brand during the quarter. The increase in our SG&A was due primarily to costs incurred relating to the acquisition of our Bionics 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 Cellularity 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 Bionics was led by Sequence Life Science 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 which with a long term strategic partner who is focused on supporting the long term growth and execution of our business. Brian J. Keizer and Kevin Harris, CEO and COO of Sequence Life Science, 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 Bionics 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 US and represent a large opportunity for bionics in several surgical specialties as well as wound care. To lead this effort, we recently appointed Dave Hazard as Vice President of Sales for Bionic 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 Bionics division. In addition to our existing products, we currently have three 510k 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, 27 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 represent 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. Lastly, I am excited to introduce Ian Blackman as our new CFO. Ian is a veteran financial and M and 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 in into the integration and execution of our bionics division. With that, I'll turn the call over to the operator and I'm happy to take any questions.

OPERATOR

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 and our first question today will come from Naz Rahman with Maxim Group. Your line is now open.

Naz Rahman (Analyst)

Hi everyone. Congrats on closing the deal and the progress and thanks for taking my questions. I just have a few now that you've closed the bionics transaction, how long has the field force I guess been out there promoting the product? I realize it's only going to be a limited amount of time, but how long have they been out promoting the bionics product and 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)

So okay, three parts. I'll try to go through them in order. So 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, there is a little bit of a lag in terms of getting the salesforce re engaged and going out there. Right. We have our own contracts that to be approved by legal. We have to do our own training because of various rules like sunshine laws. So we're really now just Getting the contracts back and guys are going out there. So 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 cellularity to Bionics. All of these things are small things that happen in a matter of a few weeks, but. But they do need to get done before you can really ramp. So we're kind of excited for what the second half of May and what June are going to look like. But we're really just getting started.

Naz Rahman (Analyst)

Understood. That's. 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 binance business or businesses stay flat or are you showing any growth peers? It seems like that non bionics business is basically flat at this point.

Adam Levy (Chief Executive Officer)

Yes, it is. We don't expect it to stay flat. Silly George had a uncharacteristically bad fourth quarter and kind of a meh first quarter. Year over year, down a little bit. So we see already a recovery in April on that product line. So we think there'll be some growth, but we were kind of modest in that we have very little growth built in for this particular segment. Got it.

Naz Rahman (Analyst)

And one last question, if I may. I guess what? Normalize with all the additional sales reps and the R and D team, how much do you expect operating expenses to be, I guess on a quarterly basis or how much you expect it to increase annually on a normalized basis?

Adam Levy (Chief Executive Officer)

So we probably have added. And our CFO Ian is on the call as well. So correct me if I. If I'm mistaken in this, Ian, but I think that we've added. In fact, why don't I just ask you what the. What we think the operating overhead.

Ian Blackman (Chief Financial Officer)

Yeah. So it'll be an approximate monthly run rate of 500,000, all in salaries, marketing and commissions and so on.

Naz Rahman (Analyst)

Got it. That was helpful. Thanks for taking my questions.

OPERATOR

Thank you. And once again, if you'd like to ask a question, please press star and one on your keypad now. And we'll take our next question from Bess Mihailov as a private investor.

Bess Mihailov (Private Investor)

Thank you for taking my questions. Adam, good morning.

Adam Levy (Chief Executive Officer)

Hi, Beth. Good to talk to you again.

Bess Mihailov (Private Investor)

I wanted to ask you about the offering. Is it still open? You just filed an 8k for another million dollars. Are you still conducting this offering? Is it still open for additional investors and do you intend to file an 8K and a press release stating when it's completely closed?

Adam Levy (Chief Executive Officer)

Yes, we do and it's pretty much closed. There's a couple of smaller investors, particularly board members that are kind of coming in at the end. And by the way, now if you look at the million we filed. They're also a board. He's also a board member at this point. So this was really mostly an investor and kind of there's a couple of smaller investors that have been a long term friends of the company. But we'll be wrapping that up in the next day or two and then we'll make an announcement in AK early part of next week.

Bess Mihailov (Private Investor)

Okay. Just want to alert you that there's like 350,000 shares sold short. So I think that 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, the next question is I want to 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 Stata, we had, what was it, Irhythm you announced in an 8K obviously still at George, we were growing 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)

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 and building a modest, maybe 10% growth in there. We hope to do a lot better. And one of the reasons, one of the things that. First, let me talk about what happened. So Silly George had an exceptionally bad fourth quarter. The new products like the lip gloss products did not do what we expected and was very slow as well as just a general downturn given all the competition that was out there at that time, especially in the popular ones. Now we've repositioned some things. We've added a couple of new. We have a new tweezers doing extremely well. So we're seeing the growth kind of 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 didn't really get to market until mid February due to some. Amazon had some stickering issues, but 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. So there's lots of areas for growth. But as a matter of being sort of conservative, we're not, we're not going to. There's consumer products. We're not going to really go out on a limb again because sometimes they don't work out the way you think they are. So it's just a conservative estimate more than anything else.

Bess Mihailov (Private Investor)

How is the eradimed relationship going? Is that ramping up? It was supposed to be 3, $400,000 a year business.

Adam Levy (Chief Executive Officer)

I think you mean I rhythm. Who are you talking about? I didn't catch you. You were talking about. That's. I'm sorry, correct. So they, 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, you know, eating it up. And I don't have a daily update on the expansion of their business. We are the gel pad that they use. And I expect that, you know, their sales will also kind of increase over the course of the year. But so far we haven't seen them be a huge customer yet. But they are steady customers.

Bess Mihailov (Private Investor)

On previous conference calls, you had mentioned that you thought there were an additional three to $400,000 deals in the funnel in the pipeline, so to speak, similar to this one to the irhythm.

Adam Levy (Chief Executive Officer)

Yeah, right now it's more like. It's more like. It's more like 200.

Bess Mihailov (Private Investor)

Okay, so are they still in the funnel? Have some of them come through? You know, is the funnel growing?

Adam Levy (Chief Executive Officer)

Oh, you mean other, other accounts away from iRhythm? No, there's still a funnel there. But, you know, and I've talked about this before, you know, the development and the release of these products is 510k clearance associated. So it's hard to pinpoint the exact quarter that they're, you know, these things are going to start to ramp and grow. But we are expecting growth. We are expecting more products. And in fact, the, as I said, partially offsetting the disappointing. Silly George, was that we did see some growth in contract manufacturing and we did see some growth in the Medi gel products, which includes the STADA products. So that growth is still there and we expect it to continue in 2026.

Bess Mihailov (Private Investor)

Okay, and 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)

Yeah, we didn't because everything kind of got like overshadowed by what we're doing right now. But I'm happy to tell you that that 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 was 7% efficacy. But if you want vested, reach out to me on email and I'll send you the link. It is a published study, so we certainly can talk about it.

Bess Mihailov (Private Investor)

I mean, what does it mean for nextgel 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)

So Innovative Optics sponsored and paid for that study. They are the company that deals and has business relationships with all the large laser manufacturers. So they are using that study now, which actually was published only about three weeks ago. They're using that study to market. So I don't really know exactly where they are with it because they're going to market and they buy the goods from us and they take a transfer price. So they're really just have just got the study in their hands and they're just getting started. So you know how successful they'll be in marketing. They seem very excited. Is yet to be determined.

Bess Mihailov (Private Investor)

Thanks Adam for all the great answers. And just one 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. So, 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. But thank you very much again for all the great work you've done and the whole team at Next Jail.

Adam Levy (Chief Executive Officer)

Thank you, Beth.

OPERATOR

Thank you. And as a reminder, ladies and gentlemen, it is Star and One. If you'd like to ask a question. And 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)

I think we're fine. Thank you, operator.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.