Evolus posts Q3 loss of $0.09, revenue tops estimates

What changed

The loss narrowed from $0.14 per share a year earlier. Revenue rose from $68.97 million in the year-ago quarter, which works out to growth of roughly 13% year over year. Zacks also notes Evolus has topped revenue consensus in each of the last four quarters, but it has beaten EPS consensus only twice in that same span.

The prior quarter was break-even, against an expected loss of $0.01. So the company went from a small surprise to the upside in June to a loss that landed well below the Street's view in September.

Zacks's figures are adjusted for non-recurring items. The article does not say what those items were, and it does not break out gross margin, operating expenses or product-level sales. Anyone comparing this to Evolus's own filing should pull the company's release for the line items.

What it means for practices (analysis)

Evolus is a supplier, not a clinic, so the quarter's direct effect on a med spa runs through pricing, availability and the company's staying power as a vendor. Revenue growth at that pace suggests demand for the company's products is not slowing. A loss that is still widening on the bottom line suggests the company is still spending ahead of margin, which is the kind of thing a practice should watch before signing a multi-year supply or capital-equipment deal with any aesthetics vendor.

I would not read a single quarter as a verdict on the company. I would read it as a reason to ask the rep for current order terms in writing.

What owners can do

Pull the company's own third-quarter release and check the adjusted-to-GAAP reconciliation before you repeat any loss figure to a lender or partner. Zacks's numbers are a consensus-comparison product, and the article says so.

If you buy from Evolus, ask your account representative three things: whether pricing or rebate terms have changed since the second quarter, whether there are any supply constraints on the products you order, and whether the company is changing its payment or return policies for practices. Get the answers by email.

If you are weighing a competing product, the same logic applies. A vendor that beats revenue and misses EPS is growing and still losing money. Ask for the vendor's most recent audited financials before you commit to a long contract.

What we don't know yet

The Zacks piece gives no guidance from management. It gives only consensus estimates: $0.10 per share on $99.59 million in revenue for the coming quarter, and a loss of $0.03 per share on $333.9 million for the current fiscal year. Those are analyst expectations, not company commitments. The article also does not describe the earnings call, which Zacks says will drive the stock's near-term move. Evolus's own commentary on product launches, pipeline or pricing is not in this document, so those questions stay open until the company's release and call transcript are checked.

Zacks rates the stock a Zacks Rank #3 (Hold), which it describes as expected to perform in line with the market. Shares are up about 10.8% year to date against the S&P 500's gain of 10.6%. Those are market numbers, not operating ones, and they do not change what a practice should do next.

Business information, not medical or legal advice. Verify regulatory status at FDA.gov.