Good afternoon, and welcome to the ADMA Biologics Second Quarter 2025 Financial Results and Business Update Conference Call on Wednesday, August 6, 2025. [Operator Instructions] Please be advised that this call is being recorded at the company's request and will be available on the company's website approximately 2 hours following the end of the call. At this time, I would like to introduce the company. Please go ahead.

Welcome, everyone, and thank you for joining us this afternoon to discuss ADMA Biologics' financial results for the second quarter of 2025 and recent corporate updates. I'm joined today by Adam Grossman, President and Chief Executive Officer; Brad Tade, Chief Financial Officer and Treasurer. During today's call, Adam will provide some introductory comments and provide an update on corporate progress, and then Brad will provide an overview of the company's second quarter 2025 financial results. Finally, Adam will then provide some brief summary remarks before opening up the call for questions. Earlier today, we issued a press release detailing the second quarter 2025 financial results and summarize certain achievements and recent corporate updates. The release is available on our website at www.admabiologics.com. Before we begin our formal comments, I'll remind you that we will be making forward-looking assertions during today's call that represent the company's intentions, expectations or beliefs concerning future events, which constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. All forward-looking statements are subject to factors, risks and uncertainties such as those detailed in today's press release announcing this call and in our filings with the SEC, which may cause actual results to differ materially from the results expressed or implied by such statements. In addition, any forward-looking statements represent our views only as of the date of this call and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update any such statements, except as required by the federal securities laws. We refer you to the disclosure notice section in our earnings release we issued today in the Risk Factors section in our SEC filings and our quarterly report on Form 10-Q for the quarter ended June 30, 2025, for a discussion of important factors that could cause actual results to differ materially from these forward-looking statements. Please note that the discussion on today's call includes certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP metric is available in our earnings release. With that, I would now like to turn the call over to Adam Grossman. Adam, go ahead.

Thank you, Skyler. Good afternoon, everyone. ADMA's second quarter 2025 performance underscores the strength of our operating model, the success of our strategic execution and our unwavering commitment to innovation. During the quarter, we advanced key growth initiatives, enhanced our supply chain infrastructure and further solidified ADMA's leadership position in the specialty biologics market. We are pleased to report that commercial scale production utilizing our FDA-approved yield enhancement process is now successfully underway. Initial production has achieved the expected 20% or greater increase in bulk IG output, validating this proprietary manufacturing advancement. We expect this efficiency gain to drive meaningful gross margin expansion and improved production throughput beginning in early 2026, with continued benefits expected in the years ahead. On the commercial front, ASCENIV continues to gain momentum with utilization reaching record highs in the second quarter. With expanded availability of high-titer plasma and strong forward demand indicators, we believe we are well positioned to deepen market penetration and broaden patient access. Medical community feedback remains positive, and the recent acceleration in new patient starts further highlights ASCENIV's differentiated clinical value. Our financial results for the second quarter reflect substantial growth and operational achievements. Total revenues reached $122 million on a reported basis. On an underlying basis, excluding the nonrecurring $12.6 million Medicaid rebate accrual reversal that benefited the second quarter of 2024, total revenue grew by approximately 29%. On the same underlying basis, second quarter 2025 adjusted net income and adjusted EBITDA grew approximately 85% and 59% year-over-year, respectively. We are constantly reaffirming all previously issued financial guidance with growth rates anticipated to accelerate significantly in the second half of 2025 and beyond. These results underscore the efficacy of our biologic therapies for immunocompromised patients across the U.S. as well as the dedication and expertise of our leadership team…

Thank you, Adam. Earlier today, we issued a press release outlining our second quarter 2025 financial results. I'll now summarize key highlights from the quarter. Total revenue was $122 million, up 14% year-over-year or approximately 29% when adjusting for the nonrecurring $12.6 million Medicaid rebate accrual reversal that benefited the second quarter of 2024. This growth was driven primarily by continued strong adoption and utilization of ASCENIV across physicians, payers and patients. Gross profit increased to $67.2 million with gross margins improving to 55.1% from 53.6% a year ago. Adjusted for the prior year Medicaid rebate accrual, underlying gross margin expanded by 7.7%, reflecting a favorable mix of higher-margin IG sales and improved manufacturing efficiencies. GAAP net income was $34.2 million, while adjusted net income increased to $36 million, representing an 85% underlying growth year-over-year when normalizing for the prior year Medicaid rebate accrual. Adjusted EBITDA grew to $50.8 million, up 59% on an underlying basis after adjusting for the Medicaid rebate accrual benefit. Including a strategic step-up in inventory of $19.3 million quarter-over-quarter to support ASCENIV demand, we delivered robust free cash flow, ending the quarter with $90.3 million in cash. Continued EBITDA growth and cash generation are expected to further strengthen our balance sheet in the second half of 2025, positioning ADMA to weather broader credit and equity market volatility. Reflecting this financial strength, we repurchased approximately $15 million of common stock under our $500 million program during the second quarter. We continue to view buybacks as a value-enhancing capital allocation strategy, supported by our growth trajectory and our earnings outlook. As Adam mentioned, this week, we executed a new $300 million senior secured credit facility led by JPMorgan, consisting of a $75 million term loan drawn at closing to replace previously held debt as well as an…

Thank you, Brad. ADMA is executing across all fronts, commercially, operationally and strategically. The success of our yield enhancement production process, record ASCENIV utilization, debt refinancing and infrastructure investments all provide clear visibility into anticipated sustained margin expansion and earnings growth in the immediate quarters ahead. As we scale toward both our near-term and long-range financial goals, our focus remains centered on operational excellence, disciplined capital allocation and innovation that puts patients first. We believe our fully U.S. domestic vertically integrated model continues to provide us with unique supply chain control and long-term resilience. We remain unwavering in our mission to deliver high-quality differentiated IG therapies to those who need the most. Every investment we make, whether advancing SG-001, expanding U.S.-based operations or strategically repurchasing shares is guided by a long-term growth mindset focused on maximizing value for stockholders and patients alike. With strong stakeholder partnerships, a growing base of treated patients and a passionate team driving us forward, we believe ADMA is uniquely situated to be one of the most durable and compelling growth stories in all of biopharma. We're proud of what we achieved and are energized for what lies ahead. With that, I'd now like to open up the call for questions. Thank you.

First question comes from the line of Rick Miller at Cantor Fitzgerald.

This is Rick on for Kristen Kluska. I've got a couple here. You mentioned seeing record high ASCENIV utilization. Are you seeing any changes in trends in how physicians are deploying the specialized product and prioritizing different cases for ASCENIV?

Thanks, Rick. We're seeing the same thing that we've been seeing throughout ASCENIV's growth period, and we're seeing it into the third quarter. We've defined appropriate use. Again, it's this refractive highly comorbid PI patient that has been on IG, and we're seeing new patient starts, patients switching off of standard IG therapies, moving on to ASCENIV, and we're seeing the same trends continuing. Same-store utilization looks great. We're adding new docs all the time. We've got more product coming off the line. And everything we said, Rick, is happening right now. All the guidance that we provided previously is coming to fruition, and we're seeing really good utilization uptake in the market and expanding into new clinics. So it's pretty much the same as it has been, and we expect it to continue to compound as we progress throughout the second half of this year and into 2026.

Okay. And hoping to ask a question also on the science behind yield enhancement. What does the actual process here for the yield enhancement process look like? Is your team basically working with different purification columns to sort of get back some of the IVIG that was previously lost? Anything to kind of help us understand what's going on sort of under the hood?

Sure. As we've explained previously, so when you produce IG, there are certain waste streams that are separated out of the final product. These waste streams contain some IgG. They also contain different aggregates and impurities that you want to remove. So the team here at ADMA developed a methodology where we can take one of the waste streams where we lose the largest portion of IG in the manufacturing process, resuspend that paste, purify it, put it over some chromatography columns, some filtration steps and then blend it back together with the original part of the process. So really, what it's doing is it's taking something that was waste and really bringing it back into the downstream purification part of our process. And we are seeing the anticipated gains of 20% or more from every batch of product that we are producing. We've been producing at this yield enhanced scale since I believe it's the middle of May, and we're seeing great results as expected. So taking something that was trash and turning it into 20% more bulk IG yield, again, this is going to enhance gross margins for our IG portfolio, BIVIGAM and ASCENIV and ultimately provide more product to patients that still seem to be in an undersupply situation in a growing IG market in the U.S.

Our next question comes from Anthony Petrone with Mizuho Americas.

Maybe Ad am and/or Brad want to just kind of go through moving parts on the reaffirmed guidance and the outlook through '26. You are getting the record RSV collections from, I would assume, the external supply contracts signed earlier in the year. Yield enhancement is now here. You're not baking it in. Just curious the calculus there. It sounds like there's more visibility on the supply front. What is going to be the trigger to sort of seeing that come through to fruition in the guidance as we look into the second half of the year and the start of next year?

Sure. I mean I'll just start off by saying, Anthony, our guidance was strong as we ended last year and entered this year. We're conservative as always. The approach that we take to guidance construction has not changed. We are aiming to beat the guidance that we currently have out there, but we feel really, really good about where we are from a raw material perspective. Manufacturing has been going extremely well, especially with yield enhancement now. We're seeing that step-up in inventory valuation. And we're working expeditiously to work through all of the previous process produced product that we would be selling at a lower margin and trying to accelerate to where we can realize revenue from the new FDA-approved yield enhancement process. It's not in 2025 guidance. It's heavily risk-adjusted for '26. And as we continue to progress, I mean, we do expect to see accelerating margin expansion and obviously, top line sales in the back half of this year. And that's the guidance that we've been given since January. So again, conservative approach. We always said the beginning part of 2025, we're going to see growth, but it's going to be modest growth. And where you're going to see that acceleration is in the back half of this year. We've been making more ASCENIV. We made more ASCENIV at the end of last year, beginning of this year, working down some of our inventories. Our third-party suppliers, as you mentioned, have been delivering really, really well for us. Really very, very pleased with the relationship between Grifols and Kedrion. We're getting more plasma than we anticipated, and we feel really good about the inventory levels, and we're turning it into finished goods and the finished goods are moving off the shelf. So everything is coming together as we planned.

Exactly. And I mean, you saw the strategic $19.3 million RSV investment. And obviously, we're doing that as we anticipate accelerated growth in the back half of 2025 and to support 2026 as well.

That's helpful. Just a couple of follow-ups here. One would be on just kind of looking at how it's set now, if you take your first half and look at the second half of the year with the guidance unchanged, it's a little bit of a deceleration. So again, you don't have yield enhancement in there or the benefit of supply, but I would assume you're not signaling any major change in sort of the demand picture in the back half of the year. And the last one, if I could just sneak it in. Can you give just a high-level overview, Adam, of the cost benefit analysis to hospitals specifically here with an ASCENIV patient. These patients are typically hospitalized for quite a bit. It does appear there's literature out there that you get a sooner discharge. I'm just wondering if there's any numbers you can put around that.

Anthony, can you repeat that part again? This is with respect to ASCENIV in the hospital?

Yes. So first is on the guide, just again, there's an implied decel in the second half. Just want to make sure that the demand picture is steady. And then just the cost benefit of using ASCENIV. You're certainly getting the benefit with these patients. Just wondering when you compare that head up to standard therapy, whether it's IG or combination therapy, how that stacks up?

Sure. Understood. So first half of the year, total revenues are -- I'm just doing the math, like $236 million. Back half of the year will be growing at least, call it, $265 million. So there is growth that is going that is baked into our current guidance. Again, as I've said, we take a conservative approach, and we are expecting to beat. And the way it looks from my vantage point is we've got the inventory in work in process and coming off the line, and we should have more product to deliver to the market. As I stated with Rick's question, the demand indicators are still very, very strong. We're still working through our health economics outcomes work, Anthony. So we'll have information on that hopefully later this year. But I can tell you from a clinical perspective, patients that are on standard IG and that continue to suffer chronic and persistent infections costing the health care system money, taking up time at their physicians' offices, in and out of the ER, that are getting hospitalized for serious bacterial and viral infections, when these patients are switched from standard IG to ASCENIV, they don't go to the hospital. They don't suffer from these chronic and persistent infections that they have been experiencing for sometimes years. So the value proposition is still there. You're taking these problematic patients that are causing tremendous problems for their treaters, for their families that are not living a normal quality of life. And we're giving them a renewed chance to live a productive and normal life while keeping them out of the hospital. So from my view, we're modeling a reacceleration of growth starting in the third quarter, that's what our guidance outlook tends to.

Yes, Anthony, I would say it's similar to how Adam is saying it is our guidance implies we are confidently reiterating a growth reacceleration in the third quarter and beyond. And we are preparing our supply chain and our manufacturing processes to meet and exceed that reaccelerated growth.

Next question comes from Gary Nachman with Raymond James.

So first, Adam, you noted more physicians are using ASCENIV. So maybe talk about some of the initiatives that you have to expand physician use of ASCENIV. If it's currently about 100 physicians or so, that's a number you've said in the past that are using it and maybe the target group is about 300, how do you bridge that gap? And when can you be more aggressive promoting to the docs? I mean do you need to have the supply in a certain place before you do that? And as they're putting new patients on, are they getting any pushback at all from the payers? So just give us an update also on the whole reimbursement situation.

Sure. So Gary, new docs are coming online all the time. From an aggressive standpoint, I mean, look, we've alleviated what we believe have been the bottlenecks in producing product. And for the forward-looking periods, we believe that we've got product on the shelf ready to go to start these patients aggressively, and you're going to see that again beginning what we believe is this period in the third quarter throughout the back half of this year into 2026. Nothing is easy with payers. But again, in the appropriate use cases, we're seeing limited payer pushback. We do have to jump through hurdles like all IGs do. Again, about 70% of IG requires prior authorization. And we built out our team from a field reimbursement perspective, and we're working hand-in-hand with these clinicians, providing them with data from the literature and helping them to alleviate any reimbursement hurdles that they may find. Patients who should be on ASCENIV are getting on to the product. It may take a couple of weeks, it may take a couple of months. But ultimately, these patients, if their doctors are advocating for it, they're getting therapy. Again, about half of our business for the immunoglobulin portfolio is through Medicare. The other half is through commercial payers. It's spread across 60 to 100 different commercial payers. So there isn't one payer bearing the burden. But things look very good. Medical education is really what triggers the light bulb in these patients', in these doctors' minds, targeting the IG infusion nurses, the nurses that are dealing with the patients directly or their families. And we're seeing no decline in level of interest or excitement about the product. And certainly, the experiences that have been reported to me from new clinics and new clinicians in the field when they've started with ASCENIV have nothing but been positive feedback to me.

Okay. And then just on that point regarding medical education and what you just responded before to Anthony regarding the HEOR data, you said you should have that later this year. Can you put a little bit of a time frame around that and what maybe we hope to see with that data? And how important you think that might be going out to the physicians and the payers, so they have a little bit more data and evidence about the benefit with ASCENIV?

Sure. We're continuing to generate data all the time through investigator-initiated grant studies and investigations A number of publications have been coming out poster presentations at various conferences around. We are culling the database and looking at claims data. And look, what I'm hoping to see is exactly what I've been explaining over the last couple of years is that you're going to see a large clinical benefit when you take an appropriate use patient who's been receiving IG and is in and out of the hospital, when you put them on ASCENIV. You're keeping them out of the hospital, you're reducing all total health care expenditures. And obviously, we believe that the clinical outcomes for ASCENIV in this patient population are certainly going to be great data. So later this year is all I can tell you. I'm not the statisticians, and I'm not the one digging in there, but we will keep you and the Street abreast of data as it comes available, and we'll make appropriate publications and presentations at medical conferences throughout the rest of this year and into next year.

Okay. Great. And then just on the gross margins, which obviously are expected to improve. Just as we're thinking about the pace of this improvement, are there any headwinds maybe just in terms of, I don't know if just the cost of ensuring that you have appropriate plasma supply or rebates that you're offering your customers or things like that? So is there anything going in the other direction that might be holding back gross margin a little bit? And I don't know if maybe you could bookend so we have a sense of how to think about gross margin expansion this year and maybe the magnitude of how that can improve next year?

Gary, right now, we are not seeing any headwinds to gross margin. We have secured RSV plasma supply, which allows us to make the ASCENIV and products that we need. We will start monetizing yield-enhanced production batches, hopefully at the end of this year, certainly all of 2026. You'll continue to see margin accretion with yield enhancement and with IG mix shift. But again, right now, we are not seeing anything in our way from expanding and accreting gross margins. And we are expecting as we continue to accelerate our growth in Q3 and beyond, we will continue to expect and you will see margin accretion in a meaningful way.

Okay. And then just last question regarding the new facility that you acquired, which I think is sort of a bullish statement that you think potentially there's a lot more to grow here. When you talk about expanding capacity by 30% potentially, and you're only going to have a modest level of CapEx behind that. what's a realistic time frame for you to be able to achieve that level of capacity expansion? Just so we could also think of how much you're going to be allocating in terms of your cash flow towards that capacity expansion?

Thank you, Gary. So you're obviously referring to the real estate that we announced that we purchased in July, 5-acre piece of land, there's a building on it. In the near term, our focus is scalability. This building is going to provide us the ability to enhance supply chain, cold storage, testing distribution. It was a reasonable purchase price. And the capacity expansion is really because we're looking at the future here. We are operating in a market that continues to grow rapidly. IG utilization is not slowing down. The demand for our products in that is growing at a very rapid clip. You see with yield enhancement, we're reporting that we are experiencing the 20% plus increase in both drug as well as finished goods. We need a place to keep it while it's finishing its testing and a place to distribute it from. So we're looking at this as it's really going to help support and sustain the durable growth outlook that we're looking for. With regard to capacity expansion, we figured someone would ask this question. We're thinking about the future. And the press release today talks about some encouraging developments with SG-001. That's our follow-on high-titer hyperimmune product with high levels of neutralizing antibodies targeting strep pneumonia. The data is very encouraging there. And we want folks to understand that our Board and the management here is looking at building a highly durable cash-generating business into the future. And I think everyone understands this, at least those that are following ADMA, we've got multiple buildings on our existing campus. And I'm speaking to you today from an office in the building that houses our GMP manufacturing area. Well, the best thing to do is to get rid of all the offices at some point in time and move those offices and turn what is office space today into GMP production space. So we don't have any plans to start it today, Gary. So from a CapEx perspective, we're not looking at expanding capacity today. But what this infrastructure enhancement has done by acquiring this building adjacent to our campus here is allowing us to plan for the future, allowing us to really think about -- we don't want to take away capacity from one of our existing products if and when SGL-1 comes on board. If ASCENIV continues to outperform like it has been, our current capacity, we now can look at investors and other constituents straight in the face and say, we've got the ability to really expand here in a meaningful way. So we've given top line guidance of $1.1 billion. That doesn't bake in anything from this. So it could -- this is going to help us to support a multibillion-dollar revenue entity.

Yes. Gary, just to further Adam's point. So we mentioned a $1.1 billion top line prior to 2030. We do not need this building or additional capacity to achieve that $1.1 billion, and I'll call it a milestone because it's a milestone. What this additional capacity does is it turns that milestone certainly not into a ceiling. This is part of our journey. This is part of what Adam is talking about, our future growth. So again, I just want to reiterate that, that $1.1 billion top line is not dependent on this additional capacity. This additional capacity will continue to help and grow our future.

This will conclude our question-and-answer portion of the call. I'd like to turn it back over to Adam for additional closing remarks.

Thanks again, everyone. Thanks for dialing into our call. Again, really excited about the performance. I want to take my hat off to the ADMA team. Yield enhancement is a tremendous achievement, and now we've got more product to treat more patients. So thank you to everybody. Donate plasma, and we look forward to speaking to you next quarter. Take care.

Ladies and gentlemen, this does conclude the conference call for today. We appreciate your participation, and you may now disconnect.