Title

Presentation

Journey Medical Corporation misses on earnings expectations. Reported EPS is $-0.08 EPS, expectations were $-0.07.

Operator: Good afternoon, and welcome to Journey Medical’s First Quarter 2026 Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcasted live over the Internet and is also being recorded for playback purposes. A webcast replay of this call will be available approximately 1 hour after the end of the call for approximately 30 days. I would now like to turn the call over to Jaclyn Jaffe, the company’s Senior Director of Corporate Operations. Please go ahead, Jaclyn.

Jaclyn Jaffe: Good afternoon, and thank you for participating in today’s conference call. Joining me from Journey Medical’s leadership team are Claude Maraoui, Co-Founder, President and Chief Executive Officer; Joseph Benesch, Chief Financial Officer; and Ramsey Alloush, Chief Operating Officer and General Counsel. During this call, management will be making forward-looking statements, including statements that address, among other things, Journey Medical’s expectations for future performance, operational results, financial condition and the receipt of regulatory approvals. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Journey Medical’s most recently filed periodic reports on Form 10-K and Form 10-Q, the Form 8-K filed with the SEC today and the company’s press release that accompanies this call, particularly the cautionary statements in it.

Today’s conference call includes non-GAAP financial measures that Journey Medical believes can be useful in evaluating its performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. For a reconciliation of this non-GAAP financial measure to net loss, its most directly comparable GAAP financial measure, please see the reconciliation table located in the company’s earnings press release. The content of this call contains time-sensitive information that is accurate only as of today, Wednesday, May 13, 2026. Except as required by law, Journey Medical disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.

It is now my pleasure to turn the call over to Claude Maraoui, Co-Founder, President and Chief Executive Officer of Journey Medical.

Claude Maraoui: Thank you, Jaclyn, and good afternoon to everyone on the call today. We made solid progress in the first quarter of 2026, marking a strong start to what we believe will be a breakout year for Emrosi and Journey Medical. We delivered Emrosi revenues of $6.3 million in Q1, up significantly year-over-year and sequentially from the fourth quarter, as prescription volumes continue to grow and payer reimbursement improves. We are pleased with this performance, especially given the severe winter weather that occurred on the East Coast in the U.S. during Q1. Our total net product revenues for the first quarter increased by 21% year-over-year while operating expenses rose by just 6% compared to the first quarter of last year.

With Emrosi still early in its launch trajectory, steady revenue contributions anticipated from our other dermatology brands and ongoing disciplined investment in our commercial organization, we expect that operating leverage for our business will continue to increase as the year progresses. We also delivered another quarter of positive adjusted EBITDA, and we added to our cash balance during the first quarter, solidifying our strong financial position. Emrosi prescriptions totaled approximately 30,000 in the first quarter, up from about 27,000 prescriptions in the fourth quarter of last year. This represents approximately 11% sequential prescription volume growth for the product despite the typical seasonality that occurs in the beginning of each calendar year.

Notably, Emrosi revenues increased by approximately 26% from Q4 to Q1 as revenue per prescription increased sequentially. We remain focused on the twin objectives of growing Emrosi prescription volumes and increasing the mix of scripts reimbursed by health plans in order to accelerate revenue growth over the next several quarters. Recognition of Emrosi and its benefits continues to increase as we work toward establishing the brand as standard of care in the treatment of rosacea. Promotion of Emrosi reached its 1-year anniversary in early April, and currently, over 3,700 unique dermatology prescribers have written a prescription for the product. This compares to approximately 3,200 prescribers that were writing for Emrosi at the end of 2025 and demonstrates the effectiveness of our sales organization and prescribing momentum building behind the brand.

The superior head-to-head efficacy results demonstrated in our Phase III clinical trials comparing Emrosi to the only other branded oral rosacea treatment, Oracea, are becoming widely known throughout the dermatology community. And with the product on the market now for a little over a year, Emrosi’s placebo-like safety and tolerability profile is providing (sic) [ proving ] to be durable, which is another important factor in recruiting new prescription writers. From the patient perspective, Emrosi’s rapid onset of action and superior skin clearing effects compared to Oracea are creating loyal users of the product. The ratio to refills to new prescriptions is now approaching 1.5:1, an increase from the 1:1 ratio observed at the end of 2025.

We believe this metric is a good indicator of new patient satisfaction with the product, and we expect the refill to new prescription ratio to continue to increase going forward. With a significant number of dermatology practices and patients gaining experience with Emrosi in its first year on the market, we believe that critical mass is being established and that the product is on track to become a significant brand in the dermatology space. The solid 1-year efficacy and safety track record with Emrosi as well as the critical mass elements that we are generating in terms of strong prescription volumes and the high number of dermatology writers are also important to the payer community. As a result, we believe that we are making good progress in our efforts to ramp reimbursement for Emrosi.

In April, we announced that we entered into an agreement with the third of the 3 largest PBM-owned or affiliated group purchasing organizations in the United States. The 3 GPOs, known as Zinc Health Services, Emisar Pharma Services and the Ascent Health Services, collectively negotiate prescription drug pricing for approximately 85% of commercial lives in the United States. With the big 3 contracts in place for Emrosi, over 169 million of the 192 million commercial lives in the nation now have access to Emrosi. Importantly, these GPO agreements serve as a framework for broader downstream payer adoption as many individual health plans conduct their own internal review and P&T evaluations before including Emrosi on their formularies. As mentioned on our fourth quarter earnings call, we are actively engaged with downstream health plans on both national and regional level to broaden formulary inclusion for Emrosi this year.

Not only are we focused on the breadth of coverage, but also on the quality of coverage, including tier positioning, step edit requirements and prior authorization criteria, to ensure that the value of Emrosi’s differentiated clinical profile is recognized. We believe that Emrosi’s rapid onset of action, placebo-like safety and tolerability, and superior lesion reduction profile position it well for broad formulary inclusions. Our discussions with the downstream plans are also supported by the published Phase III efficacy and safety results for Emrosi in JAMA Dermatology, as well as the updated treatment algorithms published by the National Rosacea Society, which also cites Emrosi’s benefits as a safe, effective and convenient oral treatment for the condition.

These third-party validations and Emrosi’s strong clinical results are meaningful to plans that are assessing the clinical differentiation and long-term health economic impact of prescribing Emrosi. We expect to announce up to 3 new journal publications on Emrosi this year, and we also believe that Emrosi has potential to be incorporated into the consensus treatment guidelines for rosacea, which should further support market and health plan adoption. In addition, we remain active at key dermatology medical congresses as well as managed care conferences across the United States to expand awareness and reimbursement for Emrosi. In late April, we attended the Asembia Summit, a premier industry conference focused on the specialty pharmaceutical ecosystem, including pharmaceutical distribution, patient access, reimbursement dynamics and commercialization strategies.

With Emrosi now on the market for over a year, the conference was timely and enabled us to have productive discussions with payer representatives to broaden Emrosi’s formulary adoption. Operationally, we plan to add up to 5 new sales professionals to our commercial team this year, with the goal of having these representatives trained and in the field in early Q3. We believe the additional resources will increase our productivity in areas such as the promotion of our broad dermatology portfolio, the potential launch of up to 2 new niche dermatology products later this year and, importantly, the establishment of Emrosi as standard of care in the treatment of rosacea. And with that, I’ll now turn the call over to our CFO, Joe Benesch, to review our first quarter financial results.

Joseph Benesch: Thank you, Claude, and good afternoon to everyone on the call. I will now review our financial results for the first quarter of 2026. Total revenue for the quarter was $16 million, representing a 21% increase compared to $13.1 million in the first quarter of 2025. This growth was primarily driven by continued strength in Emrosi, which generated $6.3 million in net revenue, up from $2.1 million in the prior year period. These results reflect sustained demand and reinforce Emrosi’s role as a key driver of our growth. Turning to gross margin. We reported a 61% margin for the first quarter of 2026, compared to 63.5% in the prior year period. The decrease resulted from a $1.3 million noncash charge to cost of sales related to a write-down of API inventory associated with the 2021 Qbrexza acquisition.

Excluding this onetime noncash item, the gross margin would have been approximately 69%, reflecting a favorable product mix and continued sequential and year-over-year improvement. SG&A expenses were $10.1 million for the quarter, compared to $10.6 million in the first quarter of 2025. The decrease was driven primarily by lower Emrosi launch related expenses as we transition from our initial launch investment to ongoing commercial execution. We reported a GAAP net loss of $2.2 million or $0.08 per share basic and diluted, compared to a net loss of $4.1 million, $0.18 per share basic and diluted, in the prior year period. This improvement reflects higher revenues and continued expense discipline. On a non-GAAP basis, adjusted EBITDA was positive $600,000 or $0.02 per share, compared to negative adjusted EBITDA of $900,000 or $0.04 per share in the first quarter of 2025.

This improvement highlights the operating leverage in the business as Emrosi continues to scale. We ended the quarter with $27.2 million in cash, compared to $24.1 million as of December 31, 2025, providing solid liquidity position to support our commercial and operational priorities. In summary, our first quarter results demonstrate strong revenue growth, improving profitability and disciplined execution. We remain focused on expanding Emrosi’s commercial reach, optimizing our cost structure and progressing towards sustainable profitability in the coming quarters. Thank you very much. I will now turn the call back over to Claude.

Claude Maraoui: Thank you, Joe. Our first quarter results demonstrate continued execution on our business plan and position us well for a year of strong financial performance. Our total net product sales grew significantly faster than our expenses during the quarter, and we expect that this trend will continue. Based on the quarterly results and the opportunities ahead, we believe that operating leverage for the company is now starting to come through in a meaningful way. Additionally, our cash position increased to approximately $27 million at the end of the first quarter, up from roughly $24 million at the end of last year. As a result, we believe that the company is well positioned to grow sales and profitability with the resources that we have in place.

While we plan to offer detailed financial guidance later this year, we are confident that the business will not only deliver positive adjusted EBITDA, but will also generate positive EBITDA for the remainder of this year and for the foreseeable future. Importantly, Emrosi continues to gain market share in the rosacea treatment segment, with revenue per prescription improving as we make progress on our payer reimbursement initiatives. We now have pricing agreements with all of the major PBM-led group purchasing organizations in the United States, and we are working to leverage these contracts to increase downstream health plan formulary access for Emrosi throughout the year. As our payer strategy gains additional traction, we expect a meaningful inflection in revenue conversion relative to the growing prescription demand.

The ratio of Emrosi refills to new prescriptions continues to increase, in addition to the number of unique prescribers writing for the product. We believe that these key metrics demonstrate the brand’s continued momentum in the market. Our decision to add headcount in our commercial organization underscores the opportunity that we see to grow product sales and our operating cash flow, and is also well timed given our plans to launch up to 2 new niche dermatology products later this year. With regard to business development activities, we continue to explore out-licensing opportunities for the commercial rights to our patented products in non-U.S. territories, in addition to the potential to in-license assets to expand our dermatology product offering and to increase shareholder value.

As we continue to execute on our strategic plan, we believe that 2026 will be a breakout year for Journey Medical, enabling us to deliver significant value for patients, our physician customers and our shareholders. Thank you. Operator, we are now ready to open the lines for Q&A.

Operator: [Operator Instructions] We have the first question from the line of Nelson Cox from Lake Street Capital.

Receive real-time insider trading and news alerts

Nelson Cox: Yes, this is Nelson on for Thomas. Congrats on the progress. Maybe I just want to start, and understanding you’re not providing more detailed formal guidance till maybe later in the year, but maybe directionally as we look across the portfolio and for the balance of the year. Can you help frame just how to think about that trajectory, both for Emrosi as coverage matures and for kind of the legacy products?

Claude Maraoui: Sure, Nelson. Yes, first, let’s talk about our base business. So our base business really is everything outside of Emrosi. We see that as very steady and consistent in 2026. We also believe that adding up to 2 new niche products this year will add incremental value in terms of revenue. So we feel very good about that. Even though we have had to take, for example, Qbrexza from the P1 position and putting it in P2, we’ve done a really good job from a commercial organization of keeping on track with our expectations. The real key driver and what — the majority of our time and efforts and resources are going in behind Emrosi. So I would continue to take a look at Emrosi moving forward. We did $61 million plus in revenues last year, and obviously, we’ll go north of that. But that’s about as far as I can tell you at this point.

Nelson Cox: All right. And then maybe just an update on insurance coverage, specifically how the conversation from access to quality coverage is progressing and where you stand on tier positioning, step edits, prior auths and criteria with major plans.

Claude Maraoui: Sure. We’re just really thrilled that in the 1 year of launch, it was just a year, in April, that we finished our 1-year anniversary, we were very successful in completing all 3 GPOs, which now really allows us the full gamut of going out and reaching to the downstream health care companies. I’m going to have Ramsey give you some more color behind that. Ramsey?

Ramsey Alloush: Yes. So just to kind of look back a little bit. First year, we launched in April, we really focused on GPO contracting. And as you mentioned, that’s really just getting access to the brand, not necessarily converting into coverage. So we’ve now passed that 1-year new-to-market block. We’ve signed all 3 GPOs. We just signed the third one April 1, 2026. We did see an incremental bump in our coverage numbers. So that was positive. But you’ll have auto-adopters in terms of some of the plans and then you’ll have more of the custom plans, and those are the large national formularies. And now that we have contracts in place to pull from, we’re able to have those deeper discussions. And so from a clinical perspective, when you look at our drug versus Oracea and any of the other oral therapies, the comparable oral therapies, the Doxy 40s on the market, you can see that we have the superior efficacy, we have solid safety.

So from a clinical standpoint, it makes a lot of sense, and we work in about as half the time. So from a financial perspective, we’ve provided all of the financial detail in terms of their modeling and what net price needs to look like to get that quality coverage up. And when we talk about quality coverage in terms of prior auth criteria, step edit criteria and any utilization management control, we look at a benchmark of about a single step edit through any oral or topical agent with a lookback of 1 year or greater. And so we think that’s the right place for us to be in terms of positioning. And we’ve been pretty successful in having those discussions. We’re not ready to announce anything yet, but we’re in very deep discussions and far along in discussions with some of the national formularies.

So we expect to have some good news throughout 2027 that’s really going to help improve our coverage with respect to Emrosi. So from a quality perspective, we talk about 160 million, 170 million lives that Claude mentioned that have access to Emrosi. But when you look at that single step or better, no step, we’re looking at about 34% of the 190 million commercial lives. So about 60 million or so have access to Emrosi, coverage for Emrosi with a single step or better.

Operator: We have the next question from the line of Mayank Mamtani from B. Riley Securities.

Mayank Mamtani: Yes. Congrats on a very strong quarter here. So on the Emrosi revenue growth accelerating faster than the script volume growth that you talked about, and especially during the otherwise seasonally challenged 1Q. So would be great to hear, on a go-forward basis as you think about both volume and net price step-up and factoring in the prior comments on formulary dynamic on prior auth being more important than just having covered lives high level, are you able to comment on how quarter-to-date in the second quarter you’re seeing trends on refills, for example, when you think about volume, and then this net price kind of work-back where you were in 3Q and there was a step-down in 4Q, what level you’re trying to get at maybe at the end of the year, if you could comment on that?

Claude Maraoui: Yes. Sure, Mayank. We’re pleased, and we’re meeting our internal expectations in terms of NRx to total prescriptions. When you take a look at 2025, we ended the year with 52,000 total prescriptions. Our new prescriptions were at 26,000. And that’s again in 2025. So pretty much a 1:1 ratio. When you take a look at Q1, for example, we ended up getting to a ratio of 1 new script and 1.4 refills. So we like how we’re trending and how we’re moving that accordingly. And we do expect that to increase from quarter to quarter as we continue to gain more momentum with the brand, more prescribers and so forth. So we think that’s doing extremely well for us. Oracea, at the same time, if you take a look at their ratio for Q1, they have about 1 new prescription to 1.9 refills.

Now with our messaging and our 16-week clinical trials, we do see many dermatologists not just writing for 1 prescription, but they’re also writing for the refills. And we’re seeing anywhere between 2 refills, 3 refills, 4 refills and, in some cases, more than that. So we do believe that that will continue to grow. Switching to our gains in the managed care coverage and quality coverage. We do expect that to continue to grow incrementally from quarter-to-quarter. And when that happens, of course, we’ll get more reimbursement on prescriptions that will be profitable for the company. There will be less reliance on our co-pay bridging program. And we believe that that has the capability to enhance our ASPs. I think when you take a look from Q4 to Q1, Q4 of ’25 to Q1 of 2026, you’ll see a nice growth rate already with the average ASP that you see with Emrosi, and we think that that will continue.

So again, without giving any guidance, I think we’re showing a great step forward here in Q1. Prescriptions are growing. We went from 27,000 prescriptions to 30,000 prescriptions. I’d like to also add that I think we’re making the right strategic decisions. We’re going to be increasing our sales force, we’re going to be moving from 35 to 40 salespeople across the United States. Our reach will be better. Our frequency will be better. And I think that will also complement our goal to continue to grow Emrosi and become the standard of care.

Mayank Mamtani: Very comprehensive answer. And on the guidance comment you had for the back half of the year, is that fair to assume that you’d have both on top line and also on the bottom line, because you clearly have a profitability goal here? And I was just curious how you think about adding, I think you’ve talked about 1 to 2 products, how that fits in versus maybe also some of the sales adds, some of the costs that you’ll have on the G&A. And is that more a first half loaded where you can have the benefit on driving more script volume for the back half of the year? Could you just maybe fine-tune a little bit of how you’re thinking about guidance top and bottom line?

Claude Maraoui: Yes, sure. In due time we’ll come out with that. We’re already seeing some variability with ASPs, for example, with Emrosi. Honestly, I think we’ll see a good range from launch about 18 to 24 months. So we’ll get into a pretty consistent range being stable. But we will continue to increase the profitability as the year progresses. The salespeople for the additional headcount, they’re actually due to get trained in June and then they’ll be out in the field in July. So the expenses are more on a second half of the year basis. We’ve also put some really fantastic tactical programs in place. One of them, Mayank, just really started this past week, where we’re focused in targeting direct messages via cell as well as e-mails directly to Oracea patients, and including Oracea generic patients.

So there’s resource allocations and expenses that are committed to that. And you’ll see that continue throughout the year, again, more heavily weighted in the second half of this year, in 2026. We have other unique programs that are also kicking off in the later half of Q2, into Q3, where we have a switching trial program, where we’ve had some dermatologists who haven’t jumped on to the Emrosi brand right away, we’ll be giving them free [ trades ] to put a certain amount of patients when they come in for refills or when they see them. And we’ve got a really nifty program where we’ll be able to get great patient feedback. So all of those types of programs certainly do add to our SG&A, and we think the allocation is wise in how we’re doing it.

We also have these 5 additional reps coming onboard as our managed care coverage is better. So we think we did that in a timely manner as well. Hopefully, that gives you some good information.

Operator: We have the next question from the line of Brandon Folkes from H.C. Wainwright.

Brandon Folkes: Congrats on the progress. Can you just talk about adding these 2 additional products into the rep’s bag potentially this year while Emrosi is still in a growth phase? Just any color in terms of how promotion-sensitive those products may be and in terms of the share of voice that they may require during the Emrosi launch?

Claude Maraoui: Sure. Absolutely. Look, these are good additional niche-type of products. First and foremost, our focus is on Emrosi. Our second brand will continue to be Qbrexza. And we will pulse these products into the third position as the year continues. So no time will be taken away, no emphasis in terms of how the sales representatives will be compensated, will not change to move their behavior away from those top 2 products. We do believe that these 2 additional products, we’ll definitely launch one, we’re hoping to launch both, are really incremental value that will be into our base business. And that third position product, sometimes it could be Accutane, another time it could be one of the niche products, but we’ve got a really good market plan for them.

We’ve got good expectations. And we believe there’s going to be good demand for them, a good need in the dermatology community for these types of products. I will tell you one is, again, in the anti-itch, antipruritic products. And that’s always needed and they’re always looking for something. So that will be a very positive welcome, I believe, by the dermatology community. And the second product is really a strong life cycle management with one of our existing brands that we think will enhance and grow our base business nicely. So no real distraction from our focus of Emrosi and, secondarily, from Qbrexza.

Operator: We have the next question from the line of Scott Henry from AGP.

Scott Henry: I’m going to start with kind of a specific metrics question just to get your sense, really drilling down on the revenue per script. If we go back, Q3, it was about $271. Then we had the surprise in Q4, it dropped down to $188. In the first quarter of this year, it bounced back, we expected it to bounce back, but all the way to $202. Depending — everyone’s numbers may be a little different, but they should be similar. My question is, do you think $202, is that all the way back, or do you think that number can grow higher? And sometimes inventory changes can impact that number as well with inventory pretty consistent in first quarter.

Claude Maraoui: Yes. So that’s definitely one of the variables and that’s why we’ve been really holding back from giving more specific guidance, Scott. We definitely had a nice bump from Q4 to Q1, as you just mentioned. And we believe with the third GPO that we’ve gotten contracted as well as what Ramsey was mentioning, lots of serious negotiations where we believe we’re going to have some good wins that will help incrementally put quality coverage regarding Emrosi on a national and regional level, so that being the case, this certainly has significantly more upside. And we believe in the dermatology realm, 20% to 40%, it’s a wide range I’m giving, but 20% to 40% net is the range that we would expect once it’s stable for Emrosi to be over time.

Scott Henry: Okay. And I think that’s an interesting point you make. So when you add the third GPO, I think we always think of it adding covered lives, which ultimately drives scripts, but it sounds like as well, it can make those scripts you already write potentially more profitable because they have less discounting because they are now covered. Is that a fair statement?

Claude Maraoui: Absolutely. We’ve really tried to make the path of least resistance, for the dermatologist as well as the patient. Once they decide and get a prescription for Emrosi, we want them to get it. And our co-pay bridging program where it’s not covered really fills that and makes it an easy transition. Once coverage comes along, those patients, because this is a chronic condition, whenever they come back for a relapse or an episode, and they’ve had a great experience with Emrosi, they’ll be back to get more, hopefully, from their physicians. And then hopefully, that coverage now is there, where prior it was getting picked up by the co-pay. So exactly to your point, Scott.

Scott Henry: Okay. And so you’ve got some really nice underlying trends. What about seasonality? As it gets warmer out, people are outside or in the sun, maybe it clears it up a little bit, they see their dermatologist a little less in the summer. How big of a factor is that in the rosacea category?

Claude Maraoui: There is some seasonality, there’s no doubt about it. It’s not significant in terms of being too specific in what quarter can we see that. Looking historically over the last 8 quarters, we see it going up and down, but it’s really not that significant for me to point to one specific time. It’s not only the warmer months, it’s the colder months as well. And it’s alcohol consumption, it’s spicy foods. There’s a number of different factors. And I think that’s why it evens out over time. And every patient is different. So we do expect prescriptions to continue to grow. We just received Symphony April numbers. I’m glad to let you know that it’s an all-time high. We just hit 11,400-plus prescriptions. And we’re seeing strong redemption weeks as we are getting deeper into May.

So momentum is picking up. Perhaps it’s the warmer months that you’re talking about right now. But it’s also, I think, the basis of just a highly efficacious product. It’s the best product that they have now orally to treat rosacea. And I think we’re up to 3,700 prescribers, right, unique prescribers. And when I look at, for example, the month of March, we had over 2,500 prescribers just in that month alone. So as they start to pick up and as those numbers continue to grow, it’s going to be more meaningful for the product. You’ll see some good momentum built.

Scott Henry: Okay. Great. Congratulations on the progress. I know you guys have been working hard at it.

Claude Maraoui: You’re welcome.

Operator: Ladies and gentlemen, that was the last question. The conference has now concluded. Thank you for joining in. You may now disconnect.

Receive real-time insider trading and news alerts