Evolus, Inc.

Good afternoon, everyone, and thank you for standing by. Welcome to Evalyst's second quarter 2026 earnings call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, today's conference call is being recorded and webcast live. All participants are in a listen-only mode. After the speaker's remarks, there will be a question and answer session. I would now like to turn the conference over to Nareg Sagherian, Vice President and Head of Global Vestor Relations in Corporate Communications. Please go ahead.

Thank you, Operator, and welcome to everyone joining us on today's call to review Evelus' second quarter financial results. Our second quarter press release is now available on the Investor Relations section of our website at evelus.com. Joining me on today's call are David Moatazedi, President and Chief Executive Officer, Rui Avelar, Chief Medical Officer and Head of R&D, and Tatjana Mitchell, Chief Financial Officer. Today's call will include forward-looking statements. Actual results may differ materially due to risks and uncertainties outlined in our earnings press release and SEC filings. These forward-looking statements are based on current assumptions, and we undertake no obligation to update them. Additionally, we will discuss certain non-GAAP financial measures. These measures should be considered in addition to and not as a substitute for our GAAP results. A reconciliation of GAAP to non-GAAP measures is included in today's earnings release. As a reminder, our earnings release and SEC filings are available on the SEC's website and on our Investor Relations website. Following the conclusion of today's call, a replay will be available on our website at investors.evalus.com. With that, I'll turn the call over to our CEO, David Moatazedi.

Thank you, Nareg, and good afternoon, everyone. The second quarter represents a meaningful inflection point for Avalos. We delivered 21% revenue growth, generated our third consecutive quarter of positive adjusted EBITDA, expanded our international footprint with the launch of Esteem in Europe, and announced two strategic licensing agreements that further strengthen our long-term portfolio. Importantly, Evelus gained significant share across the U.S. injectable aesthetics market during the quarter, undergoing the growing momentum of our portfolio strategy across both neurotoxins and hyaluronic acid gels. Reflecting the strength of our first-half performance, we also raised our full-year 2026 financial outlook. As we enter the second half of the year, we are well-positioned to build on this momentum. Consumer demand continued to strengthen during the quarter. Treatment intervals remained stable, and practitioners reported healthy patient traffic and engagement. We estimate the U.S. neurotoxin market grew at a faster-than-expected mid-single-digit growth rate during the quarter, while the hyaluronic acid gel market returned a positive growth following two consecutive years of declines. Consumers continued to prioritize aesthetic treatments, and practices remain focused on products that deliver predictable clinical outcomes and high patient satisfaction. Against this improving backdrop, we continue to meaningfully outpace the market through disciplined commercial execution, which led to market share gains across our portfolio. That execution is evident through our business performance. Global toxin revenue exceeded 75 million during the quarter, driven by double-digit toxin growth across both the United States and our international markets. As our portfolio continues to expand, we're seeing customers increasingly adopt our products within their practices. Our portfolio focus is delivering particularly strong results among accounts participating in our Avalos portfolio growth bundle. In the first six months since we debuted the program, Approximately 70% of these customers purchased Avelis, compared with approximately 25% penetration of Avelis across our overall customer base. Javeau continues to strengthen its competitive position through growing customer loyalty and market share gains, while Avelis is following the same disciplined commercialization strategy that made Javeau successful. During the quarter, Avelis revenue increased by more than $2 million sequentially, reflecting increased customer penetration, reorder rates, and utilization within existing accounts. Together, these trends reinforce our confidence that our portfolio focus is gaining traction, enabling us to increase share across both neurotoxins and injectable hyaluronic acid gels, while deepening customer relationships and expanding our share of wallets. As a result of the continued strength across our portfolio, we remain on track for both Evelis and our international business to each contribute more than 10% of total company revenue this year. A key milestone in our evolution is our recent partnership with IPSA to exclusively develop and commercialize Profilo in the United States. Profilo is an asset we've been actively pursuing because it represents a gold standard in the rapidly emerging skin quality category. With the addition of Profilo, Avelis is expanding into a new third injectable aesthetics vertical of skin quality, further diversifying our differentiated portfolio and reinforcing our strategy of building a comprehensive injectable platform. Profilo defines the skin quality category globally and is widely recognized as a market-leading brand for skin quality in Europe, with no directly comparable product currently available in the United States. Similar to GEVO, we will own the U.S. regulatory filings and lead the clinical development and commercialization strategy for Profilo, creating long-term value on the asset, which has the potential to generate more than $100 million in peak annual revenue. More broadly, Our partnerships with companies such as Ipsa, Cimetase, and Daewoong demonstrate that leading global innovators increasingly view Avelis as a partner of choice to develop and commercialize quality aesthetic products. Our proven execution, deep customer relationships, and expanding global platform position us to continue attracting high-quality assets from world-class partners as we build the next generation of injectable aesthetics. Our international business is also becoming an increasingly important contributor to our long-term strategy. During the quarter, we successfully launched the esteemed collection of injectable hyaluronic acid gels in Europe, where early customer response has been very encouraging. We also announced the expansion of our relationship with Cimetase to include Canada, Australia, and New Zealand. Strategically, this is an important milestone as we now hold exclusive rights to commercialize our injectable hyaluronic acid gel portfolio in every market where we maintain rights for Nuceva, while expanding our global addressable market by approximately $200 million annually. The combination of a broader portfolio and expanded geographical footprint make our international business an increasingly meaningful contributor to our long-term growth and revenue outlook. While we continue to invest in our long-term growth strategy, we remain disciplined in our financial execution. Our third consecutive quarter of positive adjusted EBITDA demonstrates that we can deliver profitable growth while funding the strategic initiatives that will drive the next phase of our evolution. Through the first six months of the year, we delivered 14% revenue growth ahead of the pace implied in our original guidance, giving us the confidence to raise our full year 2026 Financial Outlook. Our results this quarter reflect the strength of our expanding portfolio, the effectiveness of our commercial strategy, and the operating discipline of our team in executing against our long-term objectives. With that, I'd like to now turn the call over to Rui.

Thank you, David. Edmunds is committed to building a best-in-class aesthetic portfolio. We started with Juveau, a neurotoxin manufactured under the HyPure manufacturing process supported by Phase III data against the industry standard that was subsequently validated by an independent study demonstrating that Gervaux had a fast onset, the highest peak effect, and the longest duration among the toxins tested. Then we brought in Nevalese, a hyaluronic acid injectable manufactured with a novel cold X cross-linking technology. The pivotal registration studies demonstrated both non-inferiority and statistical superiority against an established comparator. The first two HA products, I believe Form and Smooth, have launched. Sculpt, our premium mid-face HA injectable, has an anticipated approval in the fourth quarter and is expected to commercially launch in 2027. and Elise Lips is on track to be submitted to the FDA by the end of this year with an anticipated launch in 2028. Recently, we further expanded our portfolio and are very excited about the partnership with Ipsa, the developer of Profilo. Ipsa is a private Swiss multinational pharmaceutical company founded in 1945 and operates across 10 therapeutic areas in over 90 countries worldwide. Profilo is made of a unique blend of high and low molecular weight hyaluronic acid. And instead of the traditional cross-linking, it undergoes a patented thermal production process to create a hybrid matrix designed to address skin quality. With age, the components of skin break down and becomes less dynamic. Profilo helps rebuild the quality of the skin. It stimulates extracellular remodeling, improves the elasticity of the skin and its supporting function by stimulating fibroblasts and keratinocytes. Evelus will lead the U.S. clinical and regulatory approval process and then own the PMA. At this time, we anticipate approval around 2030 and will provide updates as the program progresses. With the addition of Profilo, we continue to expand our portfolio and expect to introduce three new products over the next four years. Lastly, as David mentioned, we have further expanded our geographical reach with Esteem and now also have Canada, Australia, and New Zealand. Incorporating the registration timelines, we expect to launch in these regions in 2028. With that, I'll turn the call over to Tatjana.

Thank you, Rui. The second quarter represented another strong step forward in the execution of our financial strategy. As I approach one year as CFO, I am proud of the foundation we have set and our proven ability to deliver double-digit revenue growth across the portfolio while driving significant operating leverage and profitability. In the second quarter, we posted revenue growth above 20%. delivered our third consecutive quarter of positive adjusted EBITDA and strengthened our confidence and outlook for the remainder of the year. We achieved these results while continuing to invest in customer experience and education, consumer rewards, and the launch of the Esteem portfolio in Europe. Beginning with revenue, our global net revenue for the second quarter was 84.1 million, representing an increase This performance reflects continued strength across our diversified portfolio, with global toxin revenue of 75.2 million and injectable hyaluronic acid gel revenue of 8.9 million. As expected, the recent launch of a steam in Europe contributed modestly during the second quarter. From a geographic standpoint, we continue to see balanced performance across both our U.S. and international business. Jouveau and Nesteva delivered another quarter of healthy growth, supported by improving procedure volumes and continued market share gains, while Avelis continued to build momentum through increasing customer adoption and reorder behavior. Turning to gross margin. Reported gross margin for the second quarter was 68%, while adjusted gross margin, which excludes the amortization of intangibles, was 69%. Gross margin benefited by approximately 120 basis points from a tariff refund recognized during the quarter. Adjusting for the tariff refund, our first half gross margin remained flat year over year, reflecting a modest improvement in U.S. gross margin that was offset by a higher mix of our international business. Moving to operating expenses. GAAP operating expenses for the second quarter were $61.7 million compared to $55.7 million in the first quarter. Non-GAAP operating expenses for the second quarter were $53.3 million compared to $49.1 million in the first quarter. As expected, operating expenses increased sequentially from the first quarter as we continue to invest in customer education, marketing programs, and international portfolio expansion. These investments remain very disciplined, allowing us to efficiently scale the business while maintaining our profitability objectives. As a reminder, non-GAAP operating expenses exclude stock-based compensation Revaluation of the contingent's royalty obligation and depreciation and amortization. Within operating expenses, selling general and administrative expenses for the second quarter were $57.1 million compared to $52 million in the first quarter. This included $5.2 million of non-cash stock-based compensation, similar to the prior quarter. In the second quarter, our adjusted EBITDA improved by 12.6 million compared to the prior year period, resulting in positive adjusted EBITDA of 4.7 million and marking our third consecutive quarter with positive adjusted EBITDA. As we've discussed, our commercial infrastructure was intentionally built to support a broader portfolio. As additional products contribute to revenue, We expect that scalability to become increasingly evident through improving profitability. Turning to the balance sheet, we ended the quarter with $45.2 million in cash and cash equivalents, compared to $49.8 million at the end of the first quarter. Cash used during the quarter primarily reflected interest expense and planned capital expenditure investments. We believe that our cash position Profitability trajectory and the capacity under our revolving credit facility provide ample financial flexibility to support our commercial priorities, invest in portfolio expansion, and execute on our long-term growth strategy. We continue to have access to $100 million of additional liquidity under our Pharmacon debt facility, which is intended for potential transformative business investments. As we've said previously, we remain funded to profitability and do not anticipate the need for additional equity financing. Another important point regarding the balance sheet. While our position on the announced tariffs remains unchanged, as a prudent measure, we expect to bring approximately one year's worth of Chiveau inventory into the U.S. We will effectively be relocating Chiveau safety stock from South Korea to the U.S. This will be reflected as an increase in inventory and an increase in accounts payable on our balance sheet, but will not impact our cash use, given the negotiated payment terms. Turning now to guidance. Our first half performance provides us with increased confidence in the trajectory of the business. As a result, we are updating our full year 2026 financial outlook. Through the first six months of 2026, we delivered 14% year-over-year growth in revenue, exceeding the pace implied by our original four-year outlook. We are raising the lower end of our revenue guidance to $330 million, while maintaining the upper end of $337 million, effectively raising the midpoint of our guidance range to $333.5 million. We are also raising our full-year adjusted gross profit margin guidance to between 67.0 and 67.5%. This reflects our first-half performance and confidence in the margin trajectory of the business. We are narrowing our non-GAAP operating expense guidance range to between $212 million to $216 million. This reflects our continued disciplined approach to expense management. while incorporating incremental strategic investments, including upfront payments for the recently announced expansion of our esteemed partnership into Canada, Australia, and New Zealand. Our previously announced partnership with IPSA reflects the same disciplined, capital-efficient approach to business development, with no upfront or milestone payments. As a result, we are reaffirming our low-to-mid single-digit adjusted EBITDA margin outlook for the full year 2026. Finally, I'd like to emphasize that our long-term financial framework remains unchanged. We continue to believe Evelus is well positioned to achieve $450 million to $500 million in annual revenue and 13% to 15% adjusted EBITDA margin in 2028. The progress we have demonstrated over the past three quarters reinforces our confidence that we're on track to achieve these long-term objectives. With that, I'll turn it back to David for closing remarks.

Thank you, Tatjana. As you heard today, Evelus is on track to deliver our seventh consecutive year of above-market performance with double-digit top-line growth. and we've continued to gain market share for both Jeveaux and Evelisse. I'm particularly pleased with the debut and early success of our portfolio growth bundle, which resulted in customers committing more of their injectable business to Evelisse and driving the highest overall growth across our customer base. Over the past 18 months, we have transformed Evelisse into a diversified injectable aesthetics company with three distinct growth verticals. We began by establishing GIVO as one of the fastest-growing neurotoxin brands in the market, continued that momentum with the launch of Avelis, the first new injectable hyaluronic acid gel in more than a decade, and most recently entered the skin quality space with Profilo. At the same time, we've built a commercial platform that is increasingly scalable, increasingly diversified, and increasingly attractive to both customers and strategic partners. Before I close, I want to thank our employees for their relentless focus on execution. I also want to thank our customers for their continued trust in Evelus and our strategic partners for their collaboration. And lastly, our shareholders for their ongoing confidence in Evelus. Our progress this quarter reflects what we can accomplish when we work together with a shared commitment to innovation, operational excellence, and delivering long-term value. Operator, you may now begin the Q&A.

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from and Abel Samimi with Stifo. Please proceed.

Hi, guys. Thanks for taking my question. Congratulations on a good quarter. I'm really interested in your new licensing of Profilo for skin quality. As usual, U.S. is catching up with international markets. I want to understand this product a little better. What is it going to require clinically to get on the market here? Do you still expect to maintain profitability with the additional R&D here? And second, would you view this maybe I guess a little bit more like a filler light to perhaps expand a category or be a sort of gateway into fillers? Or is this a completely different market, different price point, different commitment altogether?

Great. Annabel, thanks for the questions. I'll have Rui comment on the clinical development and then Tatjana comment on the expense associated with Profilo. I'll just open with this last weekend we had an advisory board meeting with a number of key customers from both the U.S. and international markets. Interestingly, the U.S. doctors were all very well aware of Profilo. They've heard of this brand because it's well known as the gold standard for skin quality. And the international doctors made a simple comment. They use toxins to relax muscle. You use our injectable hyaluronic acid gels like Evalis to replace lost volume. in the tissue. And products like Profilo are used as more like a moisturizer on the skin surface. So it's not adding volume, it's changing the overall texture of the skin. So I'll let Rui talk a little bit more about clinical development and what you would see going on.

Sure. Maybe I'll touch on kind of what you also touched on. It is a different product. When we think about HAs, the mechanism of action is they take up space. That's why they're regulated as a device. This is a different way of actually creating an HA gel. As I mentioned, it doesn't undergo the traditional cross-linking. It has like a special thermal process, and you end up with these light hydrogen bonds. And what it does is it actually hydrates the skin internally. So what you do is you actually put it in. And if you look at kind of the DFU from Europe, you can actually see where the injection points are correlate where the skin quality is deteriorating. The skin turgor is low. There's kind of more redundancy and looseness, and even the skin tone is low. Those are all components of skin quality, and this is what this works on. So mechanistically, it works effectively by hydrating the skin from within. In terms of the process and how we get it through, this will be a full PMA. It's considered a Class III device, and it will go through a full PMA process, which is where we kind of tie in those timelines. We're talking about 2030 right now. I think I've captured most of your components.

Great. And maybe I will add. All right, go ahead. I will just add on the question around, does this impact profitability? And the short answer is no. Rui and his team have a great track record and will be supporting the clinical development and regulatory approval of this product. And this is already contemplated in our guidance for Just Viva Doc to 2028 of 13% to 15%.

Got it. And if I could just ask a follow-up, can you talk about, I mean, I heard in your comments how you're feeling about the state of the solar market. It does look like we've got a bit of a tale of two cities here with, you know, I guess one player seeing declines, another player seeing stabilization. What are you seeing as far as interest level and I guess being a new player on the market, do you feel like you're reframing the conversation around fillers right now and any impact that you're seeing yet from GLP-1s? I know that Galdorma is starting to talk about it, so how are you seeing that play out in the market?

Yeah, this is David. Overall, we're hearing improving conditions from clinicians all around in the HA market specifically. In our case, as you saw the step up in Q2, part of that was driven by by our ability to talk about these weight loss patients. And we've incorporated that into our co-branded media. And we saw a lot of interest from accounts that want to capitalize on what they're seeing, which is the increasing number of GLP-1 patients coming into their clinics and the ability to advertise to that segment with Evelis and the mention of weight loss that we currently have in our patient label. So we've been able to capitalize on it. We do believe it's a very early innings of both the market recovery and that GLP patient entering clinics, but that's exactly where these practices are focused, and that's something we'll continue to take advantage of as we get into the back half of the year, as that's a unique differentiation in the Evelis line from a consumer standpoint.

Great. Thank you.

Our next question is from Mark Goodman with Learing Partners. Please proceed.

Yeah, just one additional question on this profilo. Is it safe to use that product at the same time as a filler and at the same time as Juveau? I'm just wondering if you need studies to kind of show that it's safe or is it just going to be well understood by the doctors? And then second question is just on the performance of the toxin market just throughout the quarter. Was it Improving throughout the quarter and like July is a continuation of that improvement. Was it kind of steady throughout? I'm just trying to get a sense of like what has been going on this year. I think you said at the first quarter you thought that the market grew low to mid and now you're saying the second quarter was mid. So it does feel like it's getting better as time goes on. Just wondering if you're seeing that improvement into July as well. Thanks.

Hi, Mark. I'll start with your question. Yes, when you look at where this is used, they're used simultaneously with the other products. So this product is put into, if you will, more superficially in the skin if we think about how it works. If you look at a toxin, that usually goes into a muscle, so it's a different layer. And generally, when you're using an HA injectable and you're trying to take up space for a wrinkle or fold, that's usually put in a different plane. So we see them used quite similarly. And then if we think about part of the reason why there was a lot of excitement here, In the U.S., as we had our advisory board, is they really like the concept of the cadence of this product. It brings patients in with another excuse to get a treatment, and then it helps them with kind of managing, you know, the other treatments such as aging injectables and toxins. So it's a very synergistic treatment for all the stuff that we currently offer.

That's right. As a matter of fact, we had conversations with the team at Profilo. They did not view hyaluronic acid injectable products as competitors. They very much viewed them as complementary in the European market and had a lot of success with that. And then go to your second question, Mark. We saw a sequential improvement in the market. You see that reflected in both toxin procedures, NHAs turning to positive growth. Underneath that, we're also seeing that segments of The consumer are also strengthening. And that younger demographic, which is, you know, well into her 40s now, the millennial, the Gen Z, they both show that their spend on beauty and healthcare is only rising. And we do believe that contributes. And we expect that to carry forward into the back half of the year. So we have no reason to believe that the momentum doesn't continue. And that's reflected in the guidance that we provide.

Thanks.

Our next question is from Navan Tai with BNB Paribas Asset Management. Please proceed.

Hi. Question on your market commentary, which sounded more positive than the market leaders. So can you clarify whether the comments are U.S. or global for toxins and fillers? And if possible, can you let us know your current U.S. and global market shares in toxins and fillers and what drove the significant share gains? Thank you.

As far as the two markets, we've seen Europe over the past several years, we did not see a slowdown. And coming into this year, we continue to see a healthy market environment. Now, HAs, of course, in both U.S. and Europe did see a dip. And in both markets, we're seeing an improvement. It's hard for us to gauge whether Europe is in positive growth or in some stage of improvement, but it is consistently the same messaging that we hear back from clinicians that they see the HA market strengthening off of several years of the market being depressed. So we feel good that these markets are moving, let's call it roughly in parallel with one another. And then as it relates to shares, We entered the year with roughly mid-teens market share. We expect to continue in that mid-teens range. It's hard to pin a share on an exact order, but clearly our share is strengthening. We see that in the numbers reflected year-to-date, our business growing at a healthy double-digit clip in the U.S., and the same is the case on the filler side. Now, in Europe, on the toxin side, we've just reestablished A position in a couple of major markets in Europe. So it's too early for us to be giving a view on share. Although we do say that in the UK, which is our most established market, this year we are getting really close to that double digit market share, which is an important metric for us that we continue to track because they were the lead market to enter inside of Europe and the UK. So that continues to be a strong market lead for us. We're seeing the markets that followed after UK continue to strengthen in terms of their revenue, and that's why the international business has been such an important growth driver for us.

Thank you.

Our next question is from Doug Sao with HC Wainwright. Please proceed.

Hi, good afternoon. Thanks for taking the questions. Just maybe trying to understand what we're seeing, or maybe if you could help us understand how you think the Evelisse line sort of growth should go. We've obviously seen some nice sequential growth on percent basis. It's still off a relatively smaller base. Just given some of the macro dynamics, I know you've sort of guided to 10% to 12% of the total revenues for this year. Do you see 2027 as being a more important year just with the additions of new products to the portfolio? Thank you.

Yeah, well, Doug, I think the way we look at the Avelis line is it's a very important part of building out a portfolio strategy that we've competed as a single product up until the second quarter of last year for six consecutive years and established a meaningful presence in the aesthetic space on that single product. Avelis is clearly opening the door for us to go into clinics and have a deeper partnership with them. As a matter of fact, when we look at accounts that purchase both Jebeau and Avelis together, they're purchasing two and a half times greater volume year-to-date than accounts that are only purchasing one product. So clearly Avalis is an important next stage in us telling the portfolio story, but that's not it. The announcement of Profilo has added another dimension to the conversations we're having with clinicians because that signals even further Thank you for joining us. In addition to that, the following year, we expect to improve the lip product. So when I look at our pipeline over the next four years, we're going to introduce three more new products. So I'm really excited about what we're going to be able to bring customers over the coming years. But more importantly, we've got to execute in the near term. And I think the operating leverage we've been able to demonstrate without compromising growth is a reason why we've been able to grow double digits in both the U.S. and internationally.

And David, just as a follow-up on the Profilo, sort of bringing that into the portfolio, you had spoken for some time about being interested in biostimulators, and I guess Profilo is kind of a biostimulator. So do you see that as sort of filling that sort of interest that you had, or do you think that you might still be looking at the biostimulator space as something that might be I'll jump in on that one, Doug.

What we've been talking about in particular on the R&D front and business development front are three big categories. One was skin quality, and we put that in its own category. That's profilo. The other one that we've talked about that we have high interest in is hair, which, of course, is a separate category. And then the third one, and we put it in its own category as we think about mechanistically, is biostimulators. So we've really highlighted three of them. One, we just checked that box. And then the other two, we continue to work on.

Okay, great. Thank you so much.

Our next question is from Sam Eiler with U.S. Bancorp BTIG. Please proceed.

Hi, good afternoon. Thanks for taking the questions here. Just to start out, it's a little bit of a higher-level question, but you're ramping on Avelis in the U.S., expanding OUS with the new SIMITASE agreement. You signed this Profilo agreement. Maybe just talk about your ability to execute against all of these initiatives and your own bandwidth. particularly when it comes to still achieving your profitability targets.

Yeah, so maybe I'll divide that up and let both Tatjana and Rui comment on it. So I think when you talk about our ability to execute, I think about it on three levels. One is our ability to commercially execute. And then the second part is, can we get these drugs through the development program? And then lastly, how do we fund them all collectively as you think about our long-term outlook? I'll just start with commercial execution before Rui gets in the pipeline. Look, we've got a great commercial team. You've seen the performance on Avelis in its first year in what's been a challenged HA market, and we've been the fastest share gainer in that space with that product. And we still have several more to go. But the cadence of these approvals that we expect put us in a really strong position as I mentioned earlier, as you think about the next four years, you're talking about three product launches over that time window that are all facial injectable products that drop into the same bag that are injected by the same clinicians. So in our view, it only strengthens our message in front of the customer to continue to have that cadence of new products to build around our portfolio strategy. Now let Rui talk about the development pathways.

Yeah, and your question was really aimed at how do we manage the development pathways and et cetera. And I think David's comments are kind of fitting also for R&D. There's a cadence. You know, if we look at Sculpt, hopefully that's towards the end of its process. LIPS is in a different part of the development. Profile is in a different part of the development. And then if we can execute on some of the other deals, like we were saying hair, for instance, they're all in different parts of development. and if we look at our internal capabilities, we have a really skilled group that focuses on late stage development. That's a lot of our expertise. So all of this really fits in our wheelhouse. So we think looking at the cadence of the things that we're targeting, we're able to maintain kind of our expenses, at least on the R&D side, kind of just as we've suggested and shared with you previously.

Yeah, and maybe I'll chime in to the last part of your question, Sam. We had talked about 2025 really being an investment year. And in 2025, we really set up our commercial infrastructure, both in the United States and internationally, to sell the portfolio. And that's really important. We have great talent in that commercial organization. Rui just talked about his team. Similar comment, right? We have great talent and a great track record there in terms of taking these assets through their development journey. and in terms of our capital efficiency, you just heard us talking about expansion geography with Cimetase. We talked about the IPSA deal, very capital efficient. So across the board, whether it's balance sheet or we're looking at our OpEx, right, we feel very confident in being able to deliver on this pipeline here and more.

Okay, really helpful there. Maybe if I could just squeeze in a follow-up here on the second half outlook and, you know, how we should be thinking about cadence, any seasonality. in terms of modeling considerations for the toxin business. Thank you.

Yeah. So we have modeled our outlook really looking at the sequential step-ups and step-downs that you would see seasonally in the industry. So we grew 14% in the first half. We're giving this guidance, right, where we're sort of up the midpoint of the revenue a bit. and what you see there is just really our confidence in the second half following through the same approach. If you look at the year-over-year growth rates, I would just remind you last year in H1 in the first half we grew high single digits and then in the second half we stabilized. We were 14% growth, right? So just those comps I would consider when you think about our second half guide.

Our next question is from Serge Belander. with Needham & Company. Please proceed.

Hi, this is John on for surge today. Congrats on the quarter and thanks for taking our questions. So first, I wanted to kind of follow up on the last question and look to the second half of the year. You guys are coming off a solid first half and updating your full year guidance. So for the second half, it kind of applies over 10% growth there. So curious of any specific initiatives you guys have planned for the seasonally important second half, whether that's through Everlist Rewards or digital marketing, GLP-1 related messaging, and so on, and how we should kind of think about the impact of these programs on revenue growth this year. And then, Tatjana, you touched on the topic of tariffs in your prepared remarks. If you would just clarify whether toxins still remain exempt at this time and similarly with the AHAs, I believe they had been subject to 10% tariffs previously. So, curious if anything has changed there and what your outlook is. Thanks.

Great. I'll just touch on our back half views at a high level. First is, you know, the back half is as important as the front half is, as you can imagine. Given the scale of the organization, we have a heavy investment in marketing, education, and promotional activities every quarter. As a matter of fact, this year we'll train over 14,000 clinicians hands-on. and that continues each and every quarter and education is a critical part of driving that confidence gap. Our consumer loyalty team has done a really effective job of not just maintaining patients coming back but recruiting new patients into the category and our co-branded media is a great complement to helping advertise and recruit some of those patients where our clinics will advertise both our Avalis Rewards program as well as the brands in a lot of their co-branded media. So I would say the mix of all of our investment is complementary in order to continue to drive fast growth with the accounts that partner with us. And as you said with Avalis, that GLP-1 target is a key strategic area of focus for us. It's one that worked very well in the second quarter, and it's one that we're going to focus on in the back half of the year as well. And then lastly, you know, fourth quarter is the heavy promotional season of the year for our category. So we collaborate with beauty brands. We've done it multiple times in the past, and we'll do that again in the back half of the year. That's something our accounts really look forward to when they can offer a consumer a gift with purchase. And we also do something unique each year around 11th day. that we've supported now for seven consecutive years. So I know our customers get excited about that, want to learn more about it, and we'll introduce those as well. But it's part of our overall cadence. There's nothing unique in there that would present any unique dynamics from a financial standpoint. It's just part of our operating model.

Great. And on the tariffs, our position there remains the same. I think you mentioned for Avelis that has been subject to a 10% tariff and continues to be. and Jiro at this time is still exempt. There is a pronouncement regarding patent and pharmaceutical tariffs. And as we await clarity on that, we are prudently bringing in some inventory into the U.S. and we have a mechanism with our partner there so that it is not going to impact our cash use.

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