0001773751-25-000250
SEC filingQ2 2025 revenue grew 73% YoY driven by GLP-1 offerings, but gross margin contracted to 76% due to product mix.
Q2 2025 revenue reached $544.8M, a 73% increase YoY from $315.6M. The growth was primarily driven by the GLP-1 weight loss offerings, which generated approximately $190M in Online Revenue (up from near zero in Q2 2024). Subscriber count rose 31% to 2.44M, while Monthly Online Revenue per Average Subscriber increased 30% to $74, reflecting higher uptake of personalized solutions. Gross profit grew 62% to $416.2M, but gross margin contracted 490 bps to 76.4%, largely due to the lower-margin GLP-1 product mix and strategic pricing to attract customers. This was partially offset by improved Provider efficiency and fulfillment scale. Operating income surged 142% to $26.7M, with operating margin expanding 140 bps to 4.9%, driven by operating leverage in marketing (40% of revenue vs 46% prior year) and G&A (12% vs 13%). Net income more than doubled to $42.5M. Adjusted EBITDA margin improved to 15% from 12%.
Online Revenue (98.5% of total) grew 75% YoY to $536.9M, fueled by subscriber growth from both new GLP-1 users and continued organic growth in mature offerings. The company highlighted that GLP-1 revenues ($190M) came primarily from personalized compounded semaglutide/liraglutide, with commercial dosages contributing for partial periods. Wholesale Revenue declined 10% to $8.0M, attributed to no new material partnerships or campaigns; top partners remained consistent.
Management expects near-term headwinds from the FDA's resolution of the semaglutide shortage (February 2025), which constrained compounded semaglutide access and is anticipated to reduce Monthly Online Revenue per Average Subscriber in the coming quarters. However, the company continues to offer other compounded GLP-1s under statutory exemptions. Investments in fulfillment capabilities (including a peptide manufacturing facility) and the July 2025 acquisition of Zava Global GmbH (expanding into Europe) are expected to increase operating expenses in the short term but support long-term growth. No formal numerical guidance was provided, but the company noted expectations that marketing and operations expenses as a percentage of revenue will decrease over time. The liquidity position remains strong with $1.1B in cash and equivalents and a $175M revolving credit facility.
Net income of $92.0M closely aligns with operating cash flow of $90.0M (98% conversion), indicating solid earnings quality. Non-cash charges (depreciation $18.7M, stock compensation $60.6M, amortization $1.0M) were partially offset by a $10.3M deferred tax benefit and $1.3M other non-cash items. Working capital consumed $77.4M due to inventory build (likely for anticipated demand) and $38.1M increase in prepaids, partly offset by $23.1M deferred revenue growth and $11.7M higher accrued liabilities.
Capex intensity rose sharply: total capex of $109.4M (7.5x CFO in prior year) drove negative free cash flow of -$19.4M vs positive $59.4M in H1 2024. The $101.4M in property/equipment/intangible assets suggests significant investment in manufacturing or infrastructure.
Financing activities were dominated by $970M in convertible senior note proceeds (net of $47.8M capped calls and $3.0M debt costs), along with $9.5M from equity programs (options/ESPP) offset by $62.5M in tax withholding on equity awards. No share repurchases occurred vs $48.0M in prior period.
Overall, the company generated robust operating cash flow but invested heavily in growth, relying on debt capital to fund expansion and maintain liquidity.