Market Demand Decline and Consumer Sentiment Impact
The market environment in Q2 was the most challenging in recent years, with Jeuveau experiencing its first YoY decrease since launch over 6 years ago.
Procedural volumes across the U.S. toxin market decelerated further, with Jeuveau demand impacted in the last 2 weeks of the quarter.
Consumer sentiment and macroeconomic factors contributed to a broad softness, especially affecting the lower-income consumer segment earning $150,000 or less.
Market demand declined high single digits in units, but Evolus gained a few percent market share, indicating share resilience despite overall softness.
A significant slowdown was observed in the last 2 weeks of the quarter, with accounts holding back order volumes due to macroeconomic concerns.
Management expects an incremental improvement in demand in the second half of 2025, supported by survey data indicating a rebound in patient volume.
Impact of IV Solutions Joint Venture on Gross Margins and Business Strategy
The IV Solutions joint venture (JV) became operational, contributing to a 3 percentage point expansion in gross margins, which exceeded expectations.
Management highlighted that the JV's contribution improves gross margin visibility and underscores the strategic importance of this platform for future growth.
The JV's impact on gross margins is primarily due to deconsolidation effects, which make the company's underlying gross margin more transparent and highlight the core portfolio's profitability.
The company expects the JV to help offset tariff impacts and support long-term margin expansion despite current headwinds.
Management emphasized that the JV's contribution to EBITDA is not expected to continue at the same level, but it remains a key part of their strategic growth plan.
Adjusted EBITDA was $82 million in Q2, negatively impacted by $7 million in severance and sign-on bonuses.
Cash and short-term investments ended Q2 at over $1.1 billion; free cash flow was negative $69 million due to investments in new capabilities and working capital.
G&A costs improved 1 point year-over-year but deleveraged 4 points quarter-over-quarter due to new executives and organizational restructuring.
Gross margins expanded 3 points quarter-over-quarter to 76%, driven by growth outside weight loss specialty.
Marketing spend was 40% of revenue, with slowed investment due to volatility in marketing efficiency.
Monthly average revenue per subscriber declined quarter-over-quarter to $74 from $84, primarily due to offboarding GLP-1 subscribers.
Revenue grew 73% year-over-year to $545 million in Q2 2025, with an adjusted EBITDA margin north of 15%.
Subscribers increased by 73,000 quarter-over-quarter to over 2.4 million, reflecting 31% year-over-year growth.
Technology and development costs increased to 7% of revenue, reflecting investment in technology talent.
Dafinchi