On Friday, HLS Therapeutics (TSX:HLS) discussed first-quarter financial results during its earnings call. The full transcript is provided below.
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View the webcast at https://app.webinar.net/d5b9MbO46zE
Summary
HLS reported Q1 2026 revenue of $12.9 million, a 2% year-over-year increase, driven by a 15% rise in Vascepa net sales.
The company is focused on launching new products, Nalemdo and Nexlzet, as growth catalysts, with Nalemdo already showing strong initial demand and coverage from major insurers.
HLS reaffirmed its 2026 guidance with expected revenue of $56 to $60 million and adjusted EBITDA of $18.5 to $21 million, with anticipated margin expansion in the second half of the year.
The company’s net debt reduced significantly to $31.9 million, down 52% over two years, strengthening its balance sheet and capital allocation flexibility.
Management expressed optimism about the cardiovascular portfolio’s potential to double the company’s size, given robust early indicators from Nalemdo’s launch and strategic positioning in the market.
Full Transcript
OPERATOR
Good morning and welcome to the Q1 Fiscal 2026 Financial Results Conference call for the HLS Therapeutics. At this point I would like to turn the call over to David Mason, Investor Relations for the introductory remarks.
David Mason (Investor Relations)
Good morning everyone and thank you for joining us today. With me on the call is Craig Million, Chief Executive Officer, John Hanna, Chief Financial Officer and Brian Walsh, Chief Commercial Officer. Earlier this morning we issued a news release announcing our financial results for the three months ended March 31, 2026. This news release, along with our MD&A and financial statements is available on our website and on SEDAR+. Please note that slides accompanying today’s call can be viewed via the webcast, a link to which is available in our earnings press release and on our website on the Events page. Certain matters discussed in today’s conference call or answers that may be given to questions could constitute forward looking statements. Actual results could differ materially from those anticipated. Risk factors that could affect results are detailed in the Company’s Annual Information form, which has been filed on SEDAR+. During the call we will refer to Adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA is defined in our press release and annual filings that are available on SEDAR plus and on our website. Please note that all financial information provided is in US Dollars unless otherwise specified and I would now like to turn the meeting over to Mr. Million. Please, please go ahead.
Craig Million (Chief Executive Officer)
Thanks, Dave. Good morning everyone and thank you for joining us today. On our call today, I’ll take you through our Q1 performance along with a corporate update. Brian will then follow with a deeper look at performance for each of our products with a focus on the Nalemdo launch. John will cover the financials in detail and then I’ll be back with a few closing thoughts before we open it up for questions starting with the big picture. We believe today’s HLS is in a very favorable position. VASCEPA is still growing in its seventh year on the market, Clozaril is showing resilience and Nalemdo is off to a great start, better than expected in many respects. Over the past couple years we’ve put HLS on a solid operational and financial footing, making necessary improvements to increase efficiency and profitability while delevering our balance sheet. In addition, we brought in two important new assets last year, Nalemdo and Nexlizet, that we believe will be important catalysts for growth. With a stronger financial foundation and expanded cardiovascular portfolio, we’re now focused on accelerating growth in the years to come. With that, let me start by walking you through the first quarter highlights starting with the top line. Revenue in Q1 was $12.9 million, up 2% year over year. That growth was led by a 15% increase in Vascepa net sales, the highest year over year quarterly growth we’ve seen since Q2 of last year.
Craig Million (Chief Executive Officer)
This is encouraging in that the leadership and staffing changes along with the commercial strategy that we put in place last year are having the desired impact. Adjusted EBITDA for The quarter was $3.5 million, down about 300,000 from the prior year and that is as expected. As previously discussed, we’re making a small increase in commercial investment to help ensure a successful Melendo launch. We expect that launch related expenses will be mostly front loaded in the first half of the year, with margins improving in the second half as spend normalizes and Nalendo revenue ramps up.
Craig Million (Chief Executive Officer)
Cash from operations was up 80% year over year and on the balance sheet, net debt at the end of Q1 was $31.9 million, down 52% in just two years. This delevering has strengthened our financial position and will increase our options for deploying capital. Now a few comments on our business performance turning to Clozaril Q1 results were in line with expectations. As discussed on the last call, Clozaril encountered some contracting dynamics in Ontario in the latter part of 2025 and as expected, this is impacting year over year
Craig Million (Chief Executive Officer)
comparisons in the first half of 2026. And while we are seeing those residual impacts, we’re also seeing positive signs that our business is stabilizing.
Craig Million (Chief Executive Officer)
Most encouraging is that we saw a sequential return to Clozaril monthly patient growth in Ontario specifically and across Canada more broadly in both March and April. Month to month growth in our patient base is a positive leading indicator suggesting business results should follow. Regarding vascepa, we’re encouraged by the strong prescription and net sales growth seen in the first quarter.
Craig Million (Chief Executive Officer)
For full year 2026, we’re projecting double digit growth in both prescriptions and revenue. With sustained demand growth, an increasingly stable payer mix and a cost structure that’s now spread across multiple products, VASCEPA should contribute growth along with margin expansion for years to come. Now let’s turn to Nalendo, which had its full commercial launch in April.
Craig Million (Chief Executive Officer)
With just over one full month on the market, we’ve shipped nearly a quarter million Canadian dollars worth of Nalendo. Multiple wholesalers are placing reorders based on strong initial demand and the weekly run rate for ex factory sales is growing.
Craig Million (Chief Executive Officer)
On the private payer side, Canada Life and Sun Life, two of the largest plans in Canada, are already listing Nalemdo with full coverage and without restrictions. These two plans cover about 40% of all privately insured patients in Canada. Although early we’re pleased with how this launch is progressing, regarding nexlzet, the fixed dose combo pill combining bempedoic acid and ezetimibe, we expect to respond to Health
Craig Million (Chief Executive Officer)
Canada on their outstanding queries this quarter, keeping us on track to launch in the first half of 2027. The sequencing of the Nalemdo launch in Q2 followed by Nexlizet in the first half of 2027 gives HLS two distinct growth catalysts within 12 months. From a big picture perspective, HLS is becoming a leading Canadian cardiovascular company. We have a growing portfolio of oral first in class medicines, each with compelling outcomes data, long patent runways in Canada and a distinct role in addressing cardiovascular risk.
Craig Million (Chief Executive Officer)
And although we’ll be tripling the number of products in our CV portfolio, the incremental investment required is modest. We believe these dynamics add up to a unique and perhaps underappreciated opportunity as the economics of our cardiovascular franchise model are compelling. First, there are the expanding margins. We’re leveraging existing infrastructure with no need to expand our customer base and footprint with a stable cost structure as we introduce these new medicines and as sales volumes increase, the cardiovascular portfolio will become significantly more profitable in years to come.
Craig Million (Chief Executive Officer)
And second, the revenue opportunity here is significant. Based on what we believe are conservative assumptions, the Nalendo and NEXT Closet franchise has the potential to more than double the size of the company.
Craig Million (Chief Executive Officer)
For those of you on the webcast, we’re showing a slide with an illustrative example of how we’re thinking about revenue potential for the Nalendo Nexlizet franchise. Based on conservative estimates for peak market penetration of the target population, along with preliminary assumptions around patient compliance and gross to net, we get to a revenue range of 50 to 100 million Canadian dollars. Again, at that level we would essentially double the size of the company and we believe there could be additional upside to our assumptions. That said, I want to caveat that we will have a more fully formed view on peak sales potential once we finalize public payer negotiations by early next year.
Craig Million (Chief Executive Officer)
The bottom line is that Nalendo and Next Lizette are entering a sizable market targeting a well defined patient population with unmet need and we are in a great position to capture this opportunity.
Craig Million (Chief Executive Officer)
Let’s move on to guidance where we are reaffirming our 2026 outlook revenue of 56 to $60 million reflecting mid single digit growth and adjusted EBITDA of 18.5 to $21 million, which is relatively flat as we absorb the Nalemdo launch costs. As I mentioned, the launch investment is concentrated in the first half. We expect to see margin expansion as sales momentum picks up in the second half …
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