Evolus (EOLS) - A performance beauty company

Evolus’s journey recently has been nothing short of remarkable, and as someone keenly watching their progress, I’ve been genuinely impressed and would therefore like to present Evolus (Ticker: EOLS) to the board.

Evolus, Inc. is characterized as a performance beauty company, providing medical aesthetic products primarily for physicians and their patients in the United States. Its flagship product is Jeuveau®, a proprietary 900 kilodalton purified botulinum toxin type A formulation. Jeuveau® is designed for the temporary improvement in the appearance of moderate to severe glabellar lines in adults, which are the lines between the eyebrows. This focus places Evolus in the competitive medical aesthetics market, aiming to offer innovative solutions within the realm of performance beauty. They are focusing on the underpenetrated marketer the younger demographic.

  1. Accelerated Revenue Growth: Evolus’s Q2 2023 revenue grew by an impressive 10 percentage points over Q1, demonstrating strong market adoption of Jeuveau® and effective execution of their growth strategy. This notable performance led them to raise their 2023 revenue guidance from $185-$195 million to $202 million. QoQ could get a bit lumpy, but YoY looks promising.

  2. Expansion and Innovation: The company has ambitious plans to expand its product portfolio to include a line of dermal fillers by 2025, aiming for a top-line growth of $700 million by 2028. This strategy underlines their commitment to innovation and leveraging their distribution model and loyalty program.

  3. 2024 Revenue Forecast: Looking ahead, Evolus estimates total net revenues for 2024 to be between $255 million and $265 million, indicating a significant growth trajectory. This forecast reflects their confidence in the company’s strategic direction and financial management.

  4. Strategic Market Expansion: Evolus plans to broaden its global footprint by expanding into additional European countries, most notably Australia and Spain. This expansion strategy is part of their broader goal to enhance their market presence and capitalize on new opportunities.

  5. Regulatory Milestones: The company anticipates submitting Premarket Approval (PMA) applications for the first two Evolysse dermal filler products with the FDA by mid-year 2024, with expectations for regulatory approvals in the second half of 2024. These steps are crucial for their product portfolio expansion and entering new markets.

  6. Financial Health and Management: Evolus has demonstrated prudent expense management and strong sales growth, as shown by the increase in cash reserves from $38.7 million in Q3 2023 to $62.8 million by year-end. This financial stability is a cornerstone of their strategy to achieve sustained profitability by 2025. Gross Profit Margins are increasing and are currently nearly 70%.

  7. Evolus Rewards Program: The Evolus Rewards Program is a patient loyalty scheme designed to provide financial benefits to patients using Evolus products, including their flagship product, Jeuveau®. Here’s a breakdown of how the program works and its benefits from various aspects:

    For Patients:

    • Instant Savings: Patients can enjoy an instant $40 discount on treatments using Evolus products, up to a total of $160 per year. This discount is available once every 90 days, making treatments more affordable and encouraging ongoing use of Evolus products.
    • Ease of Use: The program is designed for simplicity; there are no rebates or waiting periods involved. Moreover, it’s a text-based program, eliminating the need for patients to remember any passwords.
    • Wide Accessibility: Evolus is continually adding new specialists to the program, making it easy for patients to find a participating provider nearby.

    Program Enrollment and Redemption:

    • Enrollment: Patients can enroll in the program via the Evolus Practice App or My Evolus Portal, provided they meet the minimum purchase requirement of six vials in the current quarter.
    • Redeeming Rewards: The program offers a straightforward redemption process. Once enrolled, patients are eligible for the discount immediately and every 90 days thereafter. The program sends out rewards and reminders to patients when their discounts become valid again.

    Benefits for Practices:

    • Financial Incentive: While practices incur the discount cost offered to patients, they are reimbursed through credits towards Reward Vials for each $40 patient check-in. These credits accumulate and can be redeemed with the next purchase. Every nine credits earn the practice one Reward Vial.

    • Patient Engagement: The program includes tools for practices to track check-ins and treatments due soon, enabling them to send reminders to patients to book appointments, thereby enhancing patient engagement and retention.

    • Evolus Rewards stands out as a modern loyalty program in the aesthetic space, offering significant benefits to both patients and practices, driving loyalty, and promoting repeat treatments with Evolus products. It’s a strategic approach to enhance patient satisfaction while supporting the growth of practices that use Evolus products.

These highlights underscore Evolus’s robust performance and strategic initiatives aimed at driving growth and expanding their footprint in the medical aesthetics market. I have a long position of roughly 10%.