Biote Revenue Slips 8% as Supply Recall Stalls Growth

Biote (NASDAQ: BTMD) reported a challenging first quarter for 2026, with revenue declining 8.3% to $44.9 million. The primary driver of this contraction was a 13.2% drop in procedure revenue, which fell to $31.3 million. This shortfall is directly attributable to a voluntary product recall of hormone pellets manufactured by Asteria Health, an event that forced the company to impose inventory allocations on its clinical partners throughout the quarter.

The Mechanism of Supply Disruption

The recall, initiated in late January, targeted products compounded and manufactured prior to October 2025. This created a dual-front problem for Biote: a sudden loss of available inventory and a significant distraction for its newly expanded sales force. Management noted that the recall required the company to rely more heavily on third-party suppliers, which increased costs and compressed gross profit margins to 68.9%, down from 74.3% in the year-ago period.

Asteria Health, which produced over 50% of the company's pellets in Q4 2025, saw its contribution drop to approximately 30% during the first quarter of 2026. This shift toward third-party sourcing, while necessary to maintain some level of service, acted as a drag on margins. The company has since implemented a second production shift at Asteria to accelerate output and rebuild safety stock, a process management expects to normalize within the coming weeks.

Pipeline and Practitioner Dynamics

Despite the supply-side headwinds, Biote reported a 19.1% increase in dietary supplement revenue to $11.0 million, bolstered by growth in its e-commerce channel. The company also maintained its full-year 2026 revenue guidance of over $190 million, signaling confidence that the current procedure revenue shortfall is a temporary timing issue rather than a structural loss of demand.

Management emphasized that practitioner training remains at near-full capacity, with over 200 new practitioners onboarded in the first quarter. Because these practitioners typically require six months to contribute meaningfully to financial performance, the company views this as a leading indicator of future growth. Furthermore, the company has expanded its sales force to 120 territory representatives. While these reps were largely occupied with managing supply constraints during the first quarter, the company expects them to pivot back to growth-oriented activities as inventory levels stabilize.

Valuation and Risk Factors

Biote ended the quarter with $5.3 million in cash and cash equivalents, having fully repaid its remaining share repurchase liabilities in January 2026. Net income for the quarter was $2.7 million, compared to $15.8 million in the first quarter of 2025, with the year-over-year variance heavily influenced by changes in the fair value of earnout liabilities. Adjusted EBITDA fell to $8.7 million, reflecting the combination of lower sales volume, reduced gross margins, and higher operating expenses related to the recall and legal costs.

Investors should note that the company is currently operating under a constrained inventory model where some clinics are receiving only two to three weeks of supply, compared to their typical two-month buffer. The path to recovery depends on two specific milestones: the successful ramp-up of the second production shift at Asteria Health and the ability of the expanded sales force to convert the existing pipeline into higher procedure volumes in the second half of 2026. If the supply normalization process extends beyond the anticipated few weeks, the company may face further pressure on its ability to meet its second-half growth targets. Conversely, the absence of significant clinic attrition, as noted by management, suggests that the underlying demand for bioidentical hormone optimization remains intact despite the recent operational friction.