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Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to Journeys Medical's Second 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 broadcast 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.

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, who will participate in the Q&A portion of the call. 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 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, August 12, 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.

Thank you, Jaclyn, and good afternoon to everyone on the call today. We continue to make solid progress in our business in the second quarter as we delivered strong revenue growth and improved profitability during the period. Emrosi revenues were $8.1 million in Q2, up significantly year-over-year and sequentially from the first quarter on higher prescription volume, improving payer reimbursement and a significant step-up in the number of dermatology writers prescribing the brand. These metrics not only trended positively, but also showed acceleration, and we expect this progress to continue in the coming quarters.

Our total net product revenues for the second quarter rose by 23% year-over-year, while operating expenses increased by less than 1% compared to Q2 of last year. We remain focused on delivering strong top line growth and leveraging our proven dermatology commercial infrastructure. We are executing on these initiatives and as a result, we generated positive EBITDA in the second quarter. With this performance, we continue to believe that 2026 will be a breakout year for Journey Medical with respect to both revenue growth and profitability.

Emrosi prescriptions totaled approximately 36,000 in the second quarter, up from about 30,000 total prescriptions in the first quarter of this year. This represents approximately 20% sequential quarterly growth for the product, which is up from the 11% sequential quarterly prescription growth seen last quarter. Importantly, the growth is being driven by new prescriptions in addition to refills with successive increases in NRxs on a monthly basis.

In June, we saw a strong increase with over 5,300 new prescriptions filled, up from an average of 4,700 NRxs in the preceding 3 months. This was an all-time monthly high for the product. We reported last quarter that approximately 3,700 unique dermatology prescribers had written a prescription of Emrosi. Today, I am pleased to report that there are now over 4,500 unique prescribers writing for the brand. This is more than a 40% increase in Emrosi prescribers from the 3,200 prescribers that we had at the end of 2025.

We believe that these accelerating trends are encouraging and demonstrate that as more prescribers and patients gain experience with Emrosi, product loyalty will increase and the franchise value will continue to compound. As we had planned, we hired an additional 5 dermatology sales professionals into our commercial organization during the second quarter. These experienced representatives joined the company in late July and were recently deployed into the field. The time to fill these relatively large sales territories couldn't be better, and we expect that contributions from these new representatives will add to our already strong market penetration efforts.

With over 15,000 dermatologists in the United States, there is significant room for us to grow our base of prescribers. We are increasing our peer-to-peer marketing activities, and we remain active at key dermatology medical conferences to expand awareness of Emrosi superior clinical benefits in the treatment of rosacea. 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, continue to be central in driving adoption throughout the dermatology community. Emrosi placebo-like safety and tolerability profile is proving to be durable, which is another important factor in recruiting new prescribers.

From the patient perspective, Emrosi rapid onset of action and superior skin clearing effects compared to Oracea are key and real-world patient experiences are supporting a growing base of loyal end users. Helping us to further broaden awareness of Emrosi in the market, we expect to announce new journal publications for the product in the coming quarters, and we believe that Emrosi has potential to be incorporated into the consensus treatment guidelines for rosacea.

The payer community is also taking note of Emrosi's early success in the market, and we are continuing to make progress with the downstream health plans. Importantly, the calculated average selling price for Emrosi based on prescriptions increased in Q2 over Q1. After increasing previously in Q1 over Q4, as reimbursed prescriptions are becoming an increasing part of the business mix. As Emrosi's formulary status improves, we believe that our ASP will continue to rise. Earlier this year, we completed our agreements with all the top 3 GPOs in the nation, bringing plan access for Emrosi to over 169 million of the 192 million covered commercial lives in the U.S. With those agreements in place, our focus is to pursue high-quality formulary coverage with the downstream health plans, meaning a single step edit or better.

We made good progress in the second quarter as the percentage of commercial lives with high-quality formulary coverage increased from 34% in Q1 to approximately 38% currently. Supporting this positive trend, a large national health plan placed Emrosi on its formulary in early August, and we expect to see traction from that addition this quarter. And now I will turn the call over to our CFO, Joe Benesch, to review our second quarter financial results.

Thank you, Claude, and good afternoon to everyone on the call. I'll now review our financial results for the second quarter of 2026. Total revenue for the quarter was $18.5 million compared to $15 million in the second quarter of 2025, reflecting a 23% increase from period to period. This growth was primarily driven by momentum from continued commercial demand for Emrosi which generated $8.1 million in net revenue for the quarter.

Turning to gross margin. We reported a 67% margin for the second quarter of 2026, consistent with the prior year quarter. SG&A expenses were $10.9 million for the quarter compared to $11.9 million in the second quarter of 2025. The decrease was primarily due to the impact of launch-related spending for Emrosi in the prior year quarter. Our GAAP net loss narrowed to $300,000 or $0.01 per share basic and diluted compared to a net loss of $3.8 million or $0.16 per share basic and diluted for 2Q 2025. On a non-GAAP basis, both EBITDA and adjusted EBITDA were positive for the 3- and 6-month periods ended June 30, 2026. EBITDA reflected net income of $1.4 million and $1.1 million for the second quarter and the 6-month period ended June 30, 2026, respectively, compared to net losses of $1.9 million and $4.1 million for the prior year quarter and the prior year-to-date period, respectively.

Adjusted EBITDA, which is generally our EBITDA number less noncash share-based compensation expense, reflected net income of $2.9 million and $3.5 million for the second quarter and the 6-month period ended June 30, 2026, respectively, compared to net losses of $500,000 and $1.4 million for the prior year quarter and the prior year-to-date period, respectively. We ended the quarter with $25.6 million in cash compared to $24.1 million as of December 31, 2025. In summary, our second quarter results reflect the continued execution of our plan to become sustainably EBITDA positive through revenue growth, margin improvement and expense optimization, which we intend to remain focused on. Thank you very much. I will now turn the call back over to Claude.

Thank you, Joe. The second quarter was another productive period for Journey Medical with clear progress made on our business objectives. We are delivering on our goal to generate positive EBITDA for the remainder of the year and with our net product sales growing significantly faster than our expenses. We are making solid progress toward becoming sustainably earnings and cash flow positive.

Emrosi continues to gain market share in the rosacea treatment segment with prescription growth accelerating in Q2 and our base of new prescribers increasing at an impressive rate. With total prescriptions growing by 20% sequentially from the first quarter of this year, we believe that the promise of Emrosi is beginning to be realized broadly in the market. Importantly, patient experiences are validating that the superior benefits in our Phase III clinical trials are highly clinically meaningful.

We remain focused on achieving high prescriber and patient satisfaction rates as this is the cornerstone of our efforts to build a strong base and deliver compounding growth for the brand. With market momentum building, our payer coverage continues to improve as well. The trends of higher ASPs since the beginning of the year is a reflection of that progress. Emrosi was added to the formulary of a major national health plan earlier this month and with other payer initiatives in various stages of progress, we continue to expect our ASP to improve throughout the back half of the year, fueling Emrosi sales growth.

With our business moving in the right direction, we believe it was the perfect time to expand our commercial organization, and we did so by recently hiring and deploying 5 new sales professionals to fill new territories. We also executed on launching a niche dermatology product late in the second quarter called Eurax Cream. Our new sales professionals and this new addition to our product lineup are expected to augment our efforts to grow company revenues with Emrosi remaining as high priority detail in the Journey portfolio.

With regards 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 increase value for the company.

We continue to expect that 2026 will be a breakout year for Journey Medical, and we will remain committed to delivering on our core objectives to improve the lives of patients, offer innovative treatment options to dermatology health care providers and to create long-term value for our shareholders. Thank you. Operator, we are now ready to open the lines for Q&A.

[Operator Instructions] The first question today comes from Scott Henry with Alliance Global Partners.

Claude, you gave a lot of color on ASP. I'm just going to ask a couple of follow-up questions. So bear with me. Were there any inventory movements in the quarter that can sometimes inflate or even deflate that ASP on a specific quarter?

None. No.

Okay. So I mean, oftentimes, I'll see this where the ASP is drifting up, but it's not a straight line, but you sound pretty confident that we could get -- because this was about a 10% boost over first quarter, which is fantastic. But it sounds like you're looking for sequential gains in the next couple of quarters as well. Is that the correct interpretation?

That's correct. I think you'll see good progress from -- really from Q4 last year, Q1 to Q2, and our expectation is that we'll continue to gain better ASPs as more reimbursement from our payer strategy gets implemented and more reimbursements happening through the insurance companies.

Okay. Great. And I don't know if you can speak to the season -- I mean the Q2 was great, and you had some significant gains, but it's kind of plateaued for the past couple of weeks around 3,000 a week. Is there any seasonality where we may get a boost coming out of the summer months? Any thoughts on that?

Yes. It's a good question. Fair question. As I'm looking at market data and just looking in the past 6 quarters, 7 quarters of the total market, pretty consistent throughout. You would anticipate from summer going into winter with the cold weather coming into play in the next several months that there's some changes. It's minimal, and I would not put a lot of seasonality to it. Now we've had good growth consistent throughout the whole year. You'll see some weeks, Scott, that there's maybe several weeks that are at the same level and then we get a bump up. And that's what we've seen with this brand on a consistent basis as we've launched it here in 2026.

So we just got Symphony numbers, for example, for July. So we had about 13,000 prescriptions for Emrosi in June, and now we have approximately 14,000. So we've increased it in a good fashion. New prescriptions are up. The trends are very strong. We had about 5,300 new prescriptions. The last 3 months preceding that was about 4,700. So the trends are very positive. And in my opening remarks, we talked about unique prescribers. I will tell you, from closing out 2025, we had about 3,200 prescribers. We moved that up to approximately 3,700 prescribers ending Q1, and we're close to 4,500-plus prescribers right now. So more physicians are jumping on, and it's really looking positive.

Okay. So some great momentum going there. Just shifting gears, a couple of the other products. QBREXZA was down a little bit in the quarter. That's kind of the second product that really matters here now. How do you see that product? Is that a flattish product? Or should we think about that as a declining product? Just wanted to hear your thoughts on the big picture long-term view on QBREXZA in these next 4 quarters to 6 quarters?

Yes, sure. Now QBREXZA is a fantastic product, very meaningful to the company. Right now, it's second out of the bag in terms of promotion with our field sales force. Obviously, Emrosi's first out of the bag. And we have great contribution from QBREXZA, very consistent over the time that we've had it. It brings in roughly about $25 million to $26 million. You'll see some up and down quarters with the brand. And this past one was a little bit light. I would contribute that to probably a few things. One is patient mix, payer mix, right? We don't control that blend that's happening during the quarter. So that's certainly a big part of it. I think you'll have some residual effects from insurance deductible resets from the beginning of the year that leak into Q2.

We are going into a very good strong season for hyperhidrosis, the hotter summer months. And again, we had an extremely strong month of June. We hit over 14,000-plus prescriptions, about 14,500 to be exact. As I mentioned, with Emrosi, we just got the July numbers, and we're just shy of the 15,000 mark. So demand is increasing. Patient satisfaction with the brand is extremely high. And it's just very convenient. You can use this brand any time of the day or evening. There's no restrictions.

And the simple use of it, Scott, makes it very friendly. The fact there's no aluminum containing ingredients in the brand makes it very appealing to a lot of people. So the brand is growing, and we see great contribution. So I would expect with consistency that you've seen over the last couple of years with this.

The next question comes from Mayank Mamtani with B. Riley Securities.

Maybe on the operating leverage, if I could start there. Your SG&A stayed unchanged while obviously, you're reporting on very strong commercial KPIs. I was wondering in second half with all the corporate developments you've talked about, including niche launch, should we expect a step-up in SG&A starting with 3Q? And I have a few follow-ups after that?

Joe, would you like to take that one?

Yes, sure. So Mayank, the answer is yes, somewhat, right? You're not going to see any surprises, but we do have some marketing programs, some advertising programs that will probably implement the third, fourth quarter. But overall, I expect to see the percentage of revenue from SG&A pretty consistent.

Okay. And then, Claude, you talked about the major national plan added in early August. I was obviously wondering how that impacts net ASP in second half or what you've seen already relative to this nice improvement you've seen in first and second quarter. And I was also wondering on the refill rate that continues to climb up. Is there like a year-end number that is in your mind, you can see kind of how trends are telling you? And is there any like how your unique prescriber number also is moving, how many physicians are writing Emrosi? Is there maybe a correlation between these 2 big KPIs you're tracking?

Sure. I'll start with the latter 2 parts of your question there. Refill rates are very important. We have been very committed on being on message in terms of our Phase III clinical trials. Our commercial team is executing, talking about 4-month trials. And I think it's resonating extremely well with our prescribers. So if they are prescribing Emrosi, which, again, we continue to see more and more prescribers each quarter, and then depending on how they are giving the refills, if it's 1 prescription plus 3 refills, that's according to our Phase III clinical trials. But dermatologists are artists, patients come in and present their rosacea in different parts, phases to the physicians. So they're going to vary on how many refills they get and what they're comfortable with. So that's going to go up and down.

And as we get these new prescribers on board, once they get those patients back, they're going to get more and more comfortable with the brand. So refill rates are important. The month of July that just came in, again, an all-time high with 14,000 prescriptions. Our refill rate for that particular month, for example, is at 1.5 plus the regular fill. So you're at about 2.5 right now, if you think about it. But you can also see a surge in new prescriptions. As I mentioned, we were averaging about 4,700 new prescriptions a month. Now we moved that up to about 5,300 prescriptions.

So the refill rate, even though that's compounding now with more physicians using this and giving refills to their patients, the refill rate is important, but I think you have to look at total prescriptions and that line continues to demonstrate very strong positive growth. So I would tell you that, that's how I would think about it, Mayank. In terms of the new national health care plan, I'm going to ask Ramsey to jump in here and talk about that a little bit and then potential for the rest of the year.

Sure. Mayank, thanks for the question. And I think the question was with this new national formulary on board, what is our sort of expectation from an improvement on ASP. Obviously, it's an upward trajectory. It's a very large national plan. As you know, as of April, we had signed all 3 major GPOs. So in the second quarter, we did have some number of lives come over from that third GPO. This will be in addition to that. This is a separate national formulary in which we were able to get Emrosi on formulary for. So we do expect improvement. We talk about 38% quality of the 192 million lives having access to Emrosi with a single step therapy or better.

And so adding this new national formulary is going to increase that number, right? So from the 70-plus million lives, it's going to go up from there. We think that's the least amount of friction that a patient really should have to be able to get a prescription through the adjudication process and pick up their prescription. We do have a number, and we've said this previously, a number of other sort of negotiations and presentations going on with other large national formularies. We think the fact that we were able to be successful with a positive add with the one we were just recently added to should help us in our momentum going forward. And yes, we expect good milestones to be hit throughout Q3, into Q4 and obviously into 2028 as well.

Great. And my final question on the ex-U.S. out-licensing efforts, including for Emrosi, is there anything IP related or thoughts like that may be also playing a role there? Or is it just these things can take a little while, especially ex-U.S. where our dynamics are very different.

Yes. And Claude, if you don't mind, I can take the out-licensing question as well.

Sure. Yes.

As you may know, Emrosi, QBREXA, AMZEEQ [indiscernible], those are our patented brands in which we acquired. We acquired global rights. We maintain global patent portfolio for all of those brands. QBREXZA is available in Japan with our partners, Maruho, and we did additional out-licensing in Korea, Taiwan and other ASEAN countries. AMZEEQ is available in China with our partners, [ QDIA ], commercially available. They launched about a year ago. We continue to have additional conversations with out-licensing with those brands, but more importantly, Emrosi, right? And in terms of ongoing negotiations, I can -- what I can tell you is that they are happening on a consistent basis. We do have IP, as I mentioned, globally, which includes Europe, Canada, Australia, New Zealand, Japan and other parts of Asia.

So in terms of the robustness of the IP and the market opportunity, it's there. But as you kind of mentioned, it does take some time, right, to get to the meeting of the minds to have the right structure in place to make sure all the right political climate is in place given certain new legislative or executive order actions that are kind of ongoing. Obviously, our primary focus is making Emrosi the standard of care, the gold standard in the U.S. for rosacea.

We certainly think and we have ongoing discussions with other companies that there's great opportunity in those regions as well. So we'll continue to update as we go. And obviously, once something definitive is available.

The next question comes from Brandon Folkes with H.C. Wainwright.

Maybe just 2 for me, staying on Emrosi you look to be making very good progress here on the gross to net and obviously on volume. But maybe just where is the remaining friction in access today, including paracet, especially that friction that you believe you could remove or loosen over the next 12 months?

And then secondly from me, just having to look at your Q, Eurax, I believe that's how you pronounced it, apologies if not. Can you just give us more color on your expectations for that product, maybe when it launched in the quarter? And how you envision that product growing over time?

Yes, certainly. Brandon, we want -- and you nailed it Eurax is the correct name, 10% crotamiton. This is an anti-inch, antipruritic product. It's nonsteroidal, nonhistaminic and fragrance-free. We worked diligently to change this formula. This is a brand that we picked up a number of years ago from another pharmaceutical company, and we really believe it's an enhanced formulation, and it will be welcomed in the dermatology community for their patients that suffer from significant itching.

We trained our commercial team in June, and we launched the brand in July. So brand new out there. When you take a look at our portfolio, this is coming in right behind Qbrexza in the third position. So Emrosi first, Qbrexza second and then followed by Eurax right now. So it's brand new. It's just starting out. We're starting to see some traction. We're getting some positive feedback from our dermatology base of physicians. So we like what we're hearing so far. But again, it's relatively early. And we think it's going to be a good strong contributor to our base business.

Nothing in terms of giving any guidance here, but we're going to be obviously tracking prescriptions and physician counts and all the major KPIs that you would think regarding the brand. So that's where it's at right now. It is in the compensation plan for our commercial team. So there is focus and attention and promotion happening behind it.

In terms of -- I believe you wanted to maybe look at more managed care and some of the points that we're having in the discussions with the various payers. Is that correct?

Yes.

Yes. Ramsey, did you want to jump back in here for that, please?

Yes. And I think more specifically, Brandon, you were looking at where the friction is out in the market in terms of barriers, if you will, UMs. And we talk -- again, we talk about what the quality of lives are, and that's that 72 million, that 38%. But we also talked about access, which is pathway to a prescription, and that's more like 169 million lives.

So if you look at the delta between the 2, you're going to see that the, let's call it, 80 million, 90 million lives, right, that potentially have access to Emrosi might have a larger barrier, right, in terms of that friction. That could be, for example, a prior auth or a double step that's in place, right?

And so our job is identifying where those bottlenecks are, and we've been doing that on a consistent basis and speaking with those plans to see what it takes to get Emrosi down to sort of our benchmark, which is that quality single-step therapy or better. Obviously, from a clinical perspective, we have a strong value proposition. There are other drugs obviously available to them in the market from a rosacea treatment standpoint.

And our category, again, we're saying a single step through any of those either oral or topical agents. Typically, when prescribers do prescribe for rosacea, they're using an oral and they may -- they also may supplement with a topical. But again, with our head-to-head data, the fact that our drug works in essentially half the time as rosacea, right, 8 weeks, we achieved the results greater than what rosacea did in our study in 16 weeks with strong value proposition, not only from a clinical perspective, but from a financial perspective.

And this is resonating very well with the payers. But this isn't a very highly managed category, right, in terms of rosacea and kind of what the payers have on their plates, right, when you think of GLP-1s, other oncology, rare disease orphan drugs. So it takes a little bit more time. We are having -- again, we have great contacts with the important plans that we think are going to make the difference that, for example, may have a double step or a PA and why we think it's not appropriate to have sort of that UM in place for our drug, given the data and the financial profile for it.

And so yes, I'd say the scripts that are going through with those are still going to continue to grow through, but they could go through at a higher rate, which covered, which is going to improve our reimbursement if we're able to remove and reduce those barriers, and that's what we're going to continue to do through Q3, Q3, Q4 and into 2028 as well.

Yes. Brandon, in terms of negotiation, that's what our market access team is doing. I think Ramsey set it up very well here. But we're negotiating potential look backs. It could be 6 months, 12 months, a year plus. Those -- if they've tried a topical or if they've tried an oral, we're playing with the and/or part of it here.

So again, I think where we stand today at about 38% quality, one step at it or less, is a good position. We could certainly increase that number significantly, but we are holding to our strategy of trying to get the least resistance and to simply get the patients on what we believe to be the best treatment for rosacea orally right now. So those are the types of things that we go back and forth with. And we think taking that time is important, and it makes a lot of business sense.

[Operator Instructions] The next question comes from Thomas Flaten with Lake Street.

Congrats on the Emrosi performance. Just a few for me. Claude, with respect to the new reps that were hired, can I assume those were white space hires? Or are you already territory splitting?

So out of the 5, most of them are in white space, but we do have some areas where the number of dermatologists and the penetration is better well served with splitting it. So you have a little mix of both, Tom.

Got it. And then with respect to physician utilization, have they queued in on a specific element of your efficacy, I mean, time or overall resolution erythema that's the driving reason for their use?

In terms of just physician feedback, it is astounding, how they are looking at the efficacy. The superiority factor that we have that the FDA gave us is resonating well with patients. And when the physicians are seeing them back a month or 2 after their initial prescription, the reinforcement from the patient and what the clearance rate is rather incredible.

Again, we're doing the -- what rosacea did in half the time. And I think that's really a major part of it. Plus the other factor is you're talking about a fantastic safety profile, very tolerable. They're not getting that pushback that they could have had, for example, with acne and immediate release minocycline, they're not getting that same pushback with this proprietary formulation of Emrosi. So they like what they're getting, and I think they're building confidence.

And then back to the physicians again, if I may. Are there specific subtypes of rosacea patients that they're primarily using it on? Or are they kind of using it more broadly than having identified a subtype?

Well, we're indicated for papulopustular rosacea. So certainly, that severe -- moderate to severe, our indication allows us to go broader. But you're talking about moderate and severe patients, I would say, are what they're putting Emrosi in that category. And I'm generalizing here, but I would tell you that, that would be where the niche is for the brand right now.

This concludes our question-and-answer session and concludes the conference call today. Thank you for attending today's presentation. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Good afternoon, and welcome to Journey Medical's Third Quarter 2025 Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this call is being broadcast 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 call for approximately 30 days. I would now like to turn the call over to Ms. Jaclyn Jaffe, the company's Senior Director of Corporate Operations. Please go ahead, Jaclyn.

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; and Joseph Benesch, Chief Financial Officer. Joining for the Q&A portion of the call will be 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, November 12, 2025. 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.

Thank you, Jaclyn, and good afternoon to everyone on the call today. The third quarter of 2025 was another period of solid execution for Journey Medical as we delivered 21% year-over-year revenue growth. I am pleased to report that EMROSI, our best-in-class oral treatment for the inflammatory lesions of rosacea contributed $4.9 million to our top line in Q3, an increase of 75% compared to Q2.

Our legacy and core products, including Qbrexza, Accutane and Amzeeq and Zilxi were essentially flat sequentially compared to the second quarter of 2025. On a year-over-year basis, revenue for this product group in the aggregate declined 16%, mainly due to the impact from Accutane generic competition. Overall, we grew our product revenues by more than 16% compared to the same period last year, while our operating expenses rose just 9%. This highlights the leverage that we are beginning to generate with the launch of EMROSI and our established dermatology commercial infrastructure. We believe that this leverage will continue to increase as EMROSI's sales ramp has significant growth potential and our operating expenses are expected to remain relatively consistent.

EBITDA continues to improve, and we continue to expect that Journey will become sustainably EBITDA positive in the fourth quarter. EMROSI achieved third quarter total prescription growth of approximately 146%, with 18,198 prescriptions in Q3 compared to the second quarter of this year with 7,394 prescriptions in Q2 as we have shown strong execution on our commercial plan. As is typical with pharmaceutical product launches, contracts are initially negotiated broadly with the 3 major GPOs, Ascent, Emisar and Zinc, and we have been very successful in the first phase of our payer strategy.

As we previously announced in July, over 100 million of the 187 million commercial lives currently have access to EMROSI. Our market access team has successfully contracted with 2 of the 3 largest GPOs. And as we continue to pursue our strategy to broaden access further, we believe that contracting with the remaining GPO for EMROSI will be completed early next year.

We are very pleased with our GPO contracting progress so far. However, downstream health plan formulary adoption and implementation takes time, up to 3 quarters on average once contracts are secured, which is standard for most drug launches. While some plans have immediately begun covering EMROSI prescriptions, many will take time to implement coverage and formulary adoption. In the interim, our patient co-pay assistance program is bridging the gap. As time progresses and as drug coverage increases, we expect reliance on our co-pay assistance program to decrease.

Physician feedback, which has been a key driver in EMROSI's strong initial launch continues to be very positive with prescribers noting that their patients are doing exceptionally well on treatment. The feedback emphasizes EMROSI's clinical benefits, notably that EMROSI's early onset of efficacy in as little as 2 weeks of therapy. In line with this feedback, initial refill rates for EMROSI have come in strong. During the third quarter, refills and new EMROSI prescriptions were tracking at a 1:1 ratio. We believe that this metric indicates both prescriber and patient willingness not only to try EMROSI, but also to continue on therapy beyond an initial prescription. In addition to anticipated continued growth in new prescriptions, we expect that the ratio of refills to new prescriptions will also increase, which should help accelerate total prescription growth.

Another key performance metric that we use to measure our launch traction is unique dermatology prescribers. On our last earnings call, we noted that approximately 1,800 prescribers had written a prescription for EMROSI out of the 3,200 oral rosacea treatment writers that we are targeting during the first phase of the launch.

Today, I am pleased to report that the number has increased by approximately 50% to over 2,700 unique EMROSI prescribers, demonstrating substantial progress toward this objective and a key driver of initial product adoption. As our commercial team continues to recruit new EMROSI writers, we have now begun to focus on developing the base of prescribers that have already written an EMROSI prescription into consistent writers.

In addition to our activities in the field, we remain active at key dermatology medical conferences across the United States to build awareness and momentum behind the EMROSI brand. To illustrate, we presented data from EMROSI's Phase III clinical trials at the SDPA 2025 Summer Dermatology Conference in June of this year. These data highlighted that EMROSI provides consistent relief of key rosacea symptoms with no adjustments needed for patients based on body weight.

Additionally, EMROSI's proprietary formulation of a modified release 40-milligram dose comprised of 10-milligram immediate release and 30-milligram extended release, which is the lowest strength oral minocycline approved by the FDA, which we believe contributes directly to the safety, efficacy and tolerability, making EMROSI a best-in-class rosacea therapy.

And more recently, we presented pooled Phase III data in a podium presentation at the 2025 Fall Clinical Dermatology Conference in Las Vegas, showcasing EMROSI's favorable safety profile results and superior efficacy compared to Oracea, the most widely prescribed oral rosacea treatment. Our pooled results featured data from a robust study population of 653 patients was impressive and our statistically significant superiority to Oracea was well received.

The fall clinical meeting was well attended this year with over 1,800 prescribers at the conference. As key opinion leaders and dermatologists focused on what's new in dermatology treatment, we believe that EMROSI's podium presentation gained significant visibility at the conference.

Reflecting on the year so far, EMROSI is off to a great start, and our focused dermatology commercial team is executing at the highest level. As a result, we believe that the ground is prepared for EMROSI to become a standard of care in the treatment of rosacea and for the product to generate significant revenue and cash flow for the company.

And with that, I'll now turn the call over to our Chief Financial Officer, Joe Benesch, who will review the financial results of the third quarter.

Thank you, Claude, and good afternoon to everyone. I'll now take you through our financial performance for the third quarter of 2025. Total revenues for the quarter were $17.6 million, representing a 21% increase compared to $14.9 million in the third quarter of 2024. This growth reflects incremental net product revenue related to successful U.S. commercial launch of EMROSI, which has continued to meet our expectations since its introduction.

Turning to margins. Gross margin was 67.4% in the third quarter compared to 69.4% in the same period last year. The decrease from quarter-to-quarter primarily reflects the favorable nonoperational adjustments and product mix that benefited Q3 2024. More importantly, we continue to see steady quarter-over-quarter gross margin improvement in 2025 from 63.5% in Q1 to 67.1% in Q2 and now 67.4% in Q3. This ongoing improvement is driven by higher revenues from EMROSI and Qbrexza, both higher-margin products, combined with lower overall inventory period costs.

SG&A expenses totaled $12.1 million, up approximately 6% from $11.4 million in the third quarter of 2024. This increase reflects additional operating activities tied to the launch and commercialization of EMROSI. SG&A for the quarter also includes noncash stock compensation expense of $1.9 million compared to $1.5 million in the prior year quarter. We reported a GAAP net loss of $2.3 million or $0.09 per share basic and diluted for the third quarter of 2025. This compares to a GAAP net loss of $2.4 million or $0.12 per share basic and diluted for the same period last year.

On a non-GAAP basis, both EBITDA and adjusted EBITDA improved from the prior-year quarter. EBITDA improved by $500,000 from a loss of $1 million in the third quarter of 2024 to a loss of $500,000 in the current quarter. We achieved positive adjusted EBITDA of $1.7 million for the third quarter of 2025 compared to $300,000 for the third quarter of 2024. We ended the quarter with $24.9 million in cash and cash equivalents as compared to $20.3 million at December 31, 2024.

Looking ahead, we remain focused on disciplined expense management and margin expansion as we continue to scale EMROSI's commercial footprint and strengthen our product portfolio. With this focus, we believe we are well positioned to deliver improved profitability and sustained revenue growth over the coming quarters.

Thank you very much. I will now turn the call back over to Claude.

Thank you, Joe. We delivered strong results in the third quarter with EMROSI already making a positive impact on our business. Total prescriptions for EMROSI more than doubled from Q2 to Q3, and the fourth quarter is already off to a strong start. The number of EMROSI prescription writers is now at its highest level to date, and we expect to develop the current prescriber base into consistent writers over the next several months.

With the positive physician feedback that we have received so far, we believe that EMROSI is starting to gain brand recognition as the preferred oral solution for the treatment for rosacea. We have executed well in terms of our early payer strategy, and the focus remains on increasing access to EMROSI, as well as enlisting more of the downstream health plans to adopt formulary coverage for EMROSI in order to drive more covered prescriptions.

All of these activities are key steps in developing EMROSI into the standard of care treatment for inflammatory lesions of rosacea, and we believe that we are on track to accomplish this. Based on the initial strong momentum we are seeing with EMROSI's launch, we are confident that EMROSI can reach its full potential in the rosacea treatment market. We continue to believe that EMROSI can achieve peak annual net sales of over $200 million in the United States and over $300 million globally.

Meanwhile, financially, EBITDA for the company continues to improve from quarter-to-quarter, and we expect to become sustainably EBITDA positive in the fourth quarter of this year. We set out to make 2025 a transformational year, setting up the company for potential strong growth and cash generation, and our progress indicates that we are delivering on that promise. As such, I believe that we are well positioned to continue executing on our core objective to improve the lives of patients, offer dermatology health care providers innovative treatment options and create long-term value for our shareholders.

Thank you. Operator, we are now ready to open the lines for Q&A.

[Operator Instructions] And our first question for today will come from Brandon Folkes with H.C. Wainwright.

Congratulations on all the progress. I guess, can you just talk about how you view the usage of your patient assistance program on EMROSI at this stage of the launch? And when you talked about it improving, do you see an improvement in 4Q or sort of in 2026? How should we think about that aspect of the EMROSI launch?

Sure. Brandon, it's Claude. So first of all, I think it's important to take a look at the progress we're making here commercially with EMROSI in particular. Again, when you take a look at revenues from Q2 to Q3, we've increased that by 75%. So we certainly like how things are being directed.

Additionally, when you take a look at the strength of the commercial organization being able to create demand, we've gone from approximately 7,400 prescriptions in Q2 all the way up to about 18,200 prescriptions in Q3. So our focus is really to drive demand as quickly and continue to grow that month-over-month, quarter-over-quarter, and we're successfully doing that.

Now where the co-pay assistance program comes into play, we've talked about the 3 major GPOs. We now have 2 of these GPOs on board. We certainly expect the last one to come on board in early 2026. So I think you're going to see additional value for that in terms of payers reimbursing for the claims as they come in. Our co-pay assistance program will have less balance in terms of more reimbursements will come as time continues. It takes about 2 to 3 quarters for that to adjust with each GPO and then the PBMs and the downstream health plans.

So we are patiently waiting for that time to go. It's just the way the health care system has worked, it works out, and we see that continuing. More so, I would tell you, in 2026, where I think you'll see some significant gains and less reliance on the co-pay program.

Great. And maybe one just follow-up. You touched on the growth of EMROSI. And breadth of prescribing has obviously grown with the unique prescribers. It looks like depth of prescribing is growing quite nicely as well. So can you just talk about sort of the focus between breadth and depth of prescribers in 4Q and maybe in 2026 as well? What's going to be the focus? Where do you see the most significant growth for EMROSI near term in terms of depth or breadth of prescribing?

Yes. Okay. Well, I'll tell you, I think it's a combination of what you're mentioning here. We focused in on 3,200 physicians at the beginning of our launch. Again, brand-new launch, only 2 quarters deep into it so far. As I mentioned, we're up to 2,700-plus unique prescribers. And those are brand-new physicians breaking a 20-year habit of being reliant on Oracea. That was the only product that was indicated orally for inflammatory lesions.

Now that EMROSI is here, I think our commercial team has done a great job building awareness that EMROSI is here, talking about the great benefits from the Phase III clinical trials. If I may, just highlight 2 things. One, we're showing a superiority in IGA success over a 60% greater than what Oracea demonstrated. And then when you take a look at inflammatory lesions, EMROSI is showing approximately a 30% better inflammatory lesion reduction.

So I think that message is penetrating well. Physicians, dermatologists, HCPs and so forth are trying it on new patients right now. And as those patients come back in for their second visit to the dermatology community, they're seeing that those results from Phase III are actually happening in their own practices with their own patients. That's going to help build reinforcement, take those physicians that are writing maybe 1 or 2 prescriptions to doubling that and tripling that and so forth. So I think you'll see a snowball effect taking place there.

And those are really new patients. I think you're going to see the fact that as there's more confidence that's built with the dermatology community, our sales organization, marketing organization will be asking for switches as well from Oracea over to EMROSI. And again, that takes time and just a little history to start to happen, and I think that will take place. There's about 14,000 dermatologists. We're only at 2,700 right now, and we're focused on a core. But naturally, we are calling altogether in our universe more than 5,000. So you'll see that number expand as well, and we're going to get more out of the ones that have been trying it and waiting to observe their patients coming back in.

So the NRx to TRx ratio is going to benefit from this as well. So right now, it's about 1:1. In October, we're seeing about 1:1.2. And we expect that to go up to hopefully 1:3 and maybe even more than that, Brandon. So there's a lot of variables in play here, which really gives us great potential for fantastic success in becoming the standard of care in time.

The next question will come from Scott Henry with AGP.

Congratulations to the whole team on the EMROSI launch. It's been very impressive so far. Just a couple of questions, and I know I ask about this a lot. Revenue per script, looked like it was about $380 in 2Q, about $275 in the third quarter. Do you think the third quarter is probably a pretty good reflection? Or was there any stocking or destocking that could maybe move that number around? Just trying to get a sense of how we should think about that net revenue per script.

Sure. Always a good question, always a fair question, Scott. Gross to net is going to continue to vary as reimbursement for the product it's just very early. We're only 2 quarters into it, and it's just dynamic at this point. As I mentioned, we are going to be getting a third GPO into play here early in 2026. And I think we'll see some nice improvements with that once that takes place. And that's just part of the system. We have to give it a little bit of time. And that's really why we aren't giving any particular guidance to gross to net at this point in time.

So I don't think I can give you any further precision on that than what you're coming up with right now. But again, it's going to vary from our co-pay assistance program. It will be used less as there's better reimbursement from managed care companies. Joe or Ramsey would -- I'm sorry, go ahead.

That's helpful. I appreciate that color. I don't know if any of the other team members want -- did you want them to mention anything?

Yes, I was just going to ask Joe or Ramsey, if you wanted to add anything to that.

No, I think just in summary, the more reimbursement we get, like you said, the less on the co-pay program. And we just can't give a number right now.

Okay. Fair enough. That's helpful. And then sort of a bigger picture launch question is we're trying -- always trying to get an idea of what the launch curve looks like. And from my perspective, it looks like at worst, it's a consistently growing launch curve, but probably more likely an accelerating launch curve. How do you view the launch curve based on the 4 or 5 months you've had? And any thoughts on that?

All indicators are pointing to a very positive launch. We're meeting our internal expectations for sure. I like what the sales force is doing out there. Again, those key indicators adding additional prescribers on board with our focus on 3,200 physicians to start. We're well on our way to attaining that. I would expect that we will get there and then we'll expand from that. So that's just one part of it. And I think the ratio between one new prescription to one refill will expand as well.

And in time, think about it, we're getting 700, 800, 900 new prescriptions on a monthly basis now. Those are new patients coming into the market each and every single month coming on to the EMROSI brand. And if they continue getting those refills and getting -- expanding more than that first refill to 2 or 3, you can see that potential momentum really accelerate. So time will tell. We're definitely moving in the right direction here.

Okay. Great. Final question, just quickly. Among the other products, Accutane, you mentioned the generic competition. I think I just saw the Q come up. It looks like it did about $2.8 million in the quarter. Do you think that's starting to base out? Or is there some more -- another leg down? How should we think about that Accutane franchise?

Yes. I would tell you that Accutane is off to a good start here in Q4. I think that when we're looking at it, we're on a good position right now. We believe it's stable. You never know what the other generic competitors do if they really play with price again to drive that down and potentially take more market share. But all indications, we just had a nice uptick. We received October numbers right now. It's looking like it's stabilized from our vantage point right here. It's got a great name to it, lots of recognition. And this is a highly promotional sensitive area here. And I think with our team speaking to dermatologists about this, keeping it in front of their mind, I think we're in a good spot right now. So that's what I would say.

The next question will come from Thomas Flaten with Lake Street Capital Markets.

You may have mentioned it, and I probably missed it, but did you mention at all, Claude, what your retention rate has been of those 22 prescribers since launch? How many of them have continued to prescribe regularly since launch?

We didn't speak to retention of the 2,700 prescribers, I think you're saying. So we continue to gain, and we've got it split out, obviously, the ones that are writing 1 to 5 and then 5 to 10 and so forth all the way up to 20, 30, 40, et cetera, Scott, so. But we didn't break it down, but it's a wide array. And obviously, as we bring on new prescribers, they fall in the lower buckets. And over time, they get to move into the secondary and tertiary and so forth. So no specific guidance on that yet.

Yes. No, what I was trying to get at was, if there are those that might have trialed it a couple of months ago and not come back to it, I'm just curious if there are any learnings for why those doctors haven't rewritten prescriptions either for the same patient or for other new patients, if you have any learnings from that -- from those docs.

I see. So far, no real key learnings in that front of it. What we are seeing, I guess, to my point of view is we're getting trial for new patients, for doctors that have not initially tried it. So they're starting to dip their toe in the water. And then I think you have a month or 2 until they get to see those patients back. You have the representatives going in, doing the regular call schedule, reminding the doctors, dropping off samples, talking about our co-pay program or managed care coverage and so forth. Like I said, that number continues to evolve. And we really see a lot of patients -- excuse me, HCPs that are writing more than one, but that takes about 3 months or so and then they start to catapult to the next level.

Physician feedback has been exceptional. They really like the way the product is working. They like the side effect profile. Again, it's really just habit breaking of Oracea that they've been used to for so long. So we haven't gotten any critical feedback on the product.

That's great. And then just one final one, if I may. Qbrexza was down year-over-year, but up sequentially, but less than it was in Q3 '24. What impact has the launch of EMROSI had on how you manage around Qbrexza? Like what's the overlap of those 3,200 with Qbrexza writers? How are you trying to ensure that Qbrexza also maintains a good clip of growth?

Yes. So fortunately, for us, in terms of Qbrexza, we are in a real good position. We're seeing prescription growth compared to last year, even with the new entrant, the new competition that came in early this year. So prescription-wise, we are right on schedule, and we're going to have good single-digit growth year-over-year, again, with Qbrexza.

The overlap with EMROSI is working out just fine because right now, you've got Qbrexza in a P2 position because EMROSI is here now, and that's going to be first and foremost. We've been calling on these doctors. We've had this product, Qbrexza since middle of 2021. Zilxi, which is part of our portfolio, was also -- gave us a great segue into introducing EMROSI, but those are the same doctors. Our called-on universe hasn't necessarily changed. So we're still reaching the physicians with the right frequency in a way that's been targeted.

Our sales force is compensated heavily on Qbrexza. It's currently our #1 revenue generator for the quarter, for Q3, for example. And that will eventually become our #2 revenue generator as EMROSI continues forward. But we're in a good spot with it. And I think the competition has just increased the noise level of hyperhidrosis, and we've benefited from that.

The next question will come from Mayank with B. Riley Securities.

Congrats on a strong quarter. So on this ratio of paid scripts, how do you expect this to evolve with some of the payer updates you shared today? And I'm obviously just trying to reconcile sequentially revenue growth versus the TRx growth. And it looks like in October, you are month-over-month on TRx is about roughly 15%. So yes, if you could maybe just give us some color on how to think about sequential revenue growth versus sequential TRx growth? And then I have a follow-up.

Yes. Ramsey, would you like to start that off?

Yes, sure. In terms of -- as you're mentioning sort of covered claims, look, we're executing well against our market access plan. We are seeing some solid progress month-over-month. Claude had mentioned that early next year, we'll have the third of the 3 large GPOs contracted with. And it very much is a top-down approach. And there are multiple layers between GPOs, PBMs and the downstream health plans, right? And each one operates on its own schedule.

But from our side, everything we can control is on track. Our market access team does have the strong relationships. There is value proposition for EMROSI that's resonating and payer feedback has been positive. So overall, we're pleased how these things are developing. It's exactly what we'd expect at this stage of launch. And as more plans and formularies adopt, you'll start to see that revenue -- that shift in revenue generation as well.

Yes. Mayank, I just want to add one thing here. Our focus right now is to continue to generate -- you were asking about the prescription and the payer relationship, if you will. We are going to continue to drive prescriptions. And each and every passing day, we expect to make more incremental gains on the payer front. And then early next year, I think we're going to see a larger access, which will mean better reimbursement for the company. So time is going to be our friend over time here over the next few quarters. But it does take a little while.

Yes. No, I totally hear you. And then on the duration of therapy that you've seen so far, I know you gave this refill to NRx 1:1 ratio, but is there any real-world data you have on persistence? And we have this concept of long-term responders or [ duratia ]. So I was just curious if you have learned anything in the real world on how -- what the duration of therapy would trend.

It's a great question. It's a difficult question to give you anything with hardcore data. Anecdotally, what we continue to hear is that they are seeing and appreciating the results the patients have. The feedback from patients has been very good. In terms of getting refills. We're seeing that. I think in another 5, 6 months, we'll be able to give you a more precise answer. But every indication looks like refills are going in. We're able to capture refill data internally with, in fact, our co-pay program as well as just reading the prescription numbers from Symphony and IQVIA. So all trends are positive. But we're hoping to see 3 to 4 refills at least through a 12-month period.

You also have to take into effect rosacea, we have a very quick effect as little as 2 weeks, patients are seeing very good results with EMROSI. And obviously, it varies. Some people will take longer, some people will be at 2 weeks. But depending on how the flare-ups are, how long the rosacea stays calm until the next flare-up is another part of this that we're learning and keeping a close eye on.

Understood. And lastly, for Joe, on the financial piece. Your expectation for OpEx growth next year based on how launch is progressing, and it does seem -- you're tracking high single digit year-over-year this year. Is that a similar trend you'd expect next year? Just thinking about operating leverage also.

Thanks. Yes. So really, the key is leveraging our current infrastructure. The increase in expenses, any incremental expense should be more than offset by increases in revenue. Like we said in our prepared remarks, we expect to remain relatively consistent from period to period and into 2026. So as revenue grows, we think the leverage in our operating results will continue to come through. And any increase in revenue should support a higher revenue base also.

And this will conclude our question-and-answer session as well as our conference call for today. Thank you for attending today's presentation. You may now disconnect.