Biote Announces Definitive Settlement with Founder

Rhea-AI Summary

Biote Corp. (NASDAQ: BTMD) has settled outstanding litigation with its founder, Dr. Gary S. Donovitz, by repurchasing all of his 18.4 million shares at $4.17 per share. The Settlement Agreement includes mutual claims release, termination of advisory agreement, non-compete and non-solicitation agreements, and a voting agreement. The company plans to repurchase shares over a three-year schedule for a total of approximately $76.9 million to enhance shareholder value.

Positive

• Settling the litigation with the founder resolves prolonged and costly legal disputes, providing a positive legal outcome for the company.

• Repurchasing all of Dr. Donovitz's shares at a fixed price of $4.17 per share is beneficial for shareholders, enhancing the company's financial position and shareholder value.

• The company's strong capital position and cash generation capability allow it to execute on the multi-year share repurchase plan, demonstrating financial stability and growth potential.

Negative

• The repurchase of 18.4 million shares at $4.17 per share for a total of approximately $76.9 million may impact the company's cash reserves and short-term liquidity, posing a potential financial strain.

• The settlement's financial impacts on the company will be further disclosed when the first-quarter financial results are reported, potentially affecting investor sentiment and market reaction based on the disclosed figures.

Insights

Legal Expert

The settlement of litigation between Biote and its founder represents a significant resolution of corporate governance issues which can have a notable effect on investor confidence. The termination of the advisory agreement and the establishment of non-compete and non-solicitation terms provide the company with a safeguard against potential future competition from the founder. Furthermore, the repurchase of shares often indicates a belief by company leadership that the stock is undervalued, which could signal a positive outlook to investors.

Financial Analyst

The repurchase of 18.4 million shares at $4.17 per share, amounting to approximately $76.9 million, illustrates Biote's commitment to using its capital to potentially enhance shareholder value. This action may lead to earnings per share accretion, as the reduction in outstanding shares can increase the company's earnings per share if net income remains constant or grows. However, it's important to monitor whether this use of cash could have been better allocated for business expansion or debt reduction.

Market Research Analyst

Share repurchase plans are often interpreted by the market as a sign that the company's leadership is confident in the firm's prospects. It's imperative to scrutinize the potential impact on the company's strategic goals. In Biote's case, advancing preventive health care solutions and driving profitable growth remain the stated objectives post-settlement. The company's ability to maintain focus on these goals while managing the share repurchase's financial implications will be critical for long-term success.

Company to repurchase all of Founder’s 18.4 million shares at $4.17 per share

IRVING, Texas--(BUSINESS WIRE)-- biote Corp. (NASDAQ: BTMD) (“Biote” or the “Company”), a leading solutions provider in preventive health care through the delivery of personalized hormone optimization and therapeutic wellness, today announced it has entered into a definitive settlement agreement (the “Settlement Agreement”) that concludes outstanding litigation with Dr. Gary S. Donovitz (“Donovitz”), founder and stockholder of Biote.

The Settlement Agreement includes a mutual release of all claims relating to litigation between Donovitz and Biote; the termination of the founder advisory agreement by and between Donovitz and BioTE Medical, LLC; two year non-compete and non-solicitation agreements for Donovitz; and a voting agreement with customary terms acceptable to the Company. Additionally, Biote will repurchase all 18.4 million Biote shares beneficially held by Donovitz.

Terry Weber, Biote Chief Executive Officer, commented, “We are pleased to conclude this legal matter, which resolves prolonged and costly litigation. Backed by our strong capital position and cash generation capability, we are well positioned to execute on this multi-year share repurchase that we believe will be accretive to shareholder value. With this legal matter behind us, we are fully focused on advancing our strategic objectives and continuing to drive profitable growth.”

Under the terms of the Settlement Agreement, Biote will repurchase all of Donovitz’s Biote Class A common units of BioTE Holdings, LLC (“Holdings Units”), shares of Class V common stock of the Company (“Class V Shares” and, together with the Holdings Units, “Paired Interests”) and shares of Class A common stock of the Company (“Class A Shares”) for approximately $76.9 million in the aggregate. The average price for repurchased Class A Shares, Holdings Units and Class V shares will be $4.17 per share and will occur over the following three-year schedule:

1. Approximately 5.1 million Class A Shares and approximately 3.1 million Paired Interests were repurchased for approximately $32.2 million on April 26, 2024 (the “Closing Date”);
2. Approximately 4.1 million Paired Interests will be repurchased for approximately $15.1 million on the 12-month anniversary of the Closing Date;
3. Approximately 4.1 million Paired Interests will be repurchased for approximately $19.1 million on the 24-month anniversary of the Closing Date; and
4. Approximately 2.0 million Paired Interests will be repurchased for approximately $10.5 million on the 36-month anniversary of the Closing Date.

The Company plans to provide additional details concerning the anticipated financial impacts of the settlement when it reports first quarter financial results on Tuesday, May 7, 2024, after the close of the market.

About Biote

Biote is transforming healthy aging through innovative, personalized hormone optimization and therapeutic wellness solutions delivered by Biote-certified medical providers. Biote trains practitioners to identify and treat early indicators of aging conditions, an underserved global market, providing affordable symptom relief for patients and driving clinic success for practitioners.

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Some of the forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “hope,” “anticipate,” “believe,” “seek,” “target,” “continue,” “could,” “might,” “ongoing,” “potential,” “predict,” “would” and other similar expressions, are intended to identify forward-looking statements. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual results or developments to differ materially from those expressed or implied by such forward-looking statements, including but not limited to: the success of our dietary supplements to attain significant market acceptance among clinics, practitioners and their patients; our customers’ reliance on certain third parties to support the manufacturing of bio-identical hormones for prescribers; our and our customers’ sensitivity to regulatory, economic, environmental and competitive conditions in certain geographic regions; our ability to increase the use by practitioners and clinics of the Biote Method at the rate that we anticipate or at all; our ability to grow our business; the significant competition we face in our industry; the impact of strategic acquisitions and the implementation of our growth strategies; our limited operating history; our ability to protect our intellectual property; the heavy regulatory oversight in our industry; changes in applicable laws or regulations; the inability to profitably expand in existing markets and into new markets; the possibility that we may be adversely impacted by other economic, business and/or competitive factors, including recent bank failures; and future exchange and interest rates. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and other risks and uncertainties described in the “Risk Factors” section of Biote’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and other documents filed by Biote from time to time with the Securities and Exchange Commission. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and Biote assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. Biote does not give any assurance that it will achieve its expectations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240429200197/en/

Investor Relations:

Eric Prouty

AdvisIRy Partners

eric.prouty@advisiry.com



Media:

Press@biote.com

Source: biote Corp.

FAQ

What is the Settlement Agreement between Biote and Dr. Donovitz?

The Settlement Agreement concludes outstanding litigation between Biote and its founder, Dr. Gary S. Donovitz, involving mutual claims release, termination of advisory agreement, non-compete and non-solicitation agreements, and a voting agreement.

How many shares will Biote repurchase from Dr. Donovitz and at what price?

Biote will repurchase all 18.4 million shares beneficially held by Dr. Donovitz at a fixed price of $4.17 per share over a three-year schedule for approximately $76.9 million in total.

What is the impact of the settlement on Biote's financial position?

The settlement may affect Biote's cash reserves and short-term liquidity due to the repurchase of 18.4 million shares for approximately $76.9 million. The company will disclose further financial impacts during the first-quarter financial results announcement on May 7, 2024.