Nexgel Revenue Jumps 100% in Fiscal Q2

Nexgel (NXGL -9.59%), a maker of hydrogel-based wound care and beauty products, released its second quarter results for fiscal 2025 on August 12, 2025. The key news from the release was strong year-over-year growth in both revenue and profit margins, though results fell short of analyst estimates on both sales (GAAP revenue of $2.88 million vs. $3.08 million estimate) and earnings (non-GAAP EPS of -0.42 vs. -0.07 estimate). The company reported $2.88 million in GAAP revenue, up 100.3% from the prior year but missing the $3.08 million GAAP average forecast. Gross margin (GAAP) improved to 43.6% from 20.3% in Q2 2024. However, it recorded a GAAP net loss of $0.09 per share and a Non-GAAP adjusted EBITDA loss of $0.42 million. Management reaffirmed its yearly targets for $13 million in revenue and positive EBITDA, though achieving these will require acceleration in the second half. Overall, the period showed progress in business diversification and margin improvement, but ongoing net losses (GAAP) and slow sequential revenue growth ($2.88 million, up from $2.81 million in Q1 2025) pose challenges ahead.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview & Strategic Focus

Nexgel produces hydrogel-based products for both the medical and beauty markets. Its business includes contract manufacturing for external brands and the sale of its own consumer brands, such as Kenkoderm (for psoriasis relief), Medagel (wound care), and Silly George (beauty accessories). The company's core technology uses electron-beam cross-linking for hydrogels, providing a skin-friendly, high-water content material suitable for medical and cosmetic uses.

Recently, Nexgel has focused on expanding beyond contract manufacturing by acquiring and developing its own branded products. The acquisition of Silly George and the introduction of new product lines illustrate an effort to create more diversified, higher-margin revenue streams. Success in these areas relies on achieving strong demand for branded offerings, efficient use of its advanced manufacturing facility, and the ability to bring new products to market while maintaining regulatory compliance.

Quarter Highlights & Key Developments

During Q2 2025, Nexgel's GAAP revenue more than doubled compared to Q2 2024. Growth was driven by increased sales in both its branded consumer products and contract manufacturing businesses. Integration of the Silly George beauty accessories brand made a notable contribution, particularly as management continues optimizing its profitability. According to the company, Silly George's performance supports expansion in margin and validates the roll-up approach to branded products.

Contract manufacturing remained a solid contributor, with new partnerships and customer onboardings. Notably, Nexgel extended its partnership with STADA, a European pharmaceutical company, which included a $1 million advance to facilitate several upcoming product launches and marketing efforts. The first STADA product, Histasolv, reportedly exceeded expectations, with additional launches planned for late 2025 and into 2026. Other new products under development include additional offerings for Medagel wound care and new beauty and skincare items for Kenkoderm and Silly George, scheduled for release in the second half of the year.

Profitability metrics improved substantially, as gross profit margin increased to 43.6% (GAAP) from 20.3% in Q2 2024, and Adjusted EBITDA (non-GAAP) loss narrowed to ($0.42) million from ($0.79) million in Q2 2024. Gross profit (GAAP) increased by 334.5% from $0.29 million in Q2 2024, and gross margin (GAAP) rose by 23.3 percentage points year-over-year. The company attributes this improvement primarily to growth in both contract manufacturing and consumer branded products. Selling, general, and administrative expenses (GAAP) also grew (up 49.1% year-over-year to $1.89 million), reflecting higher investment in personnel, marketing, and support for new business lines.

Despite the progress in top-line and margin, the company continued to report negative EBITDA (non-GAAP) and net loss, though net losses narrowed compared to previous quarters, with net loss attributable to NEXGEL stockholders of $0.67 million, compared to $0.71 million in Q1 2025 and $0.89 million in Q2 2024 (GAAP). Sequential revenue growth was limited, with GAAP net revenue only $0.07 million higher than in Q1 2025, Sequential revenue growth was limited, with sales only $0.07 million higher than the prior quarter, leaving significant room for further revenue scale without major new investment.

Outlook and the Road Ahead

Nexgel continues to target full-year revenue of $13 million and expects to turn positive on an EBITDA (non-GAAP) basis. This implies substantial acceleration in the latter half of the year, since first-half GAAP revenue reached $5.69 million for the six months ended June 30, 2025, and over $7 million in GAAP revenue is needed in only two quarters (Q3 and Q4 2025) to achieve the $13 million annual target. Management points to a "seasonally strong" second half, new product launches, and new contract manufacturing customers as the primary sources of this expected ramp.

While cash at the end of Q2 2025 stood at $0.73 million, subsequent advances and financings after Q2 2025 brought in $2.05 million, which the company says will support upcoming growth initiatives. However, there was no new detail or revision to forward guidance, and operating expenses remain high. Investors will likely focus on the pace of product launches, conversion of the company's sales pipeline, cash usage, and whether margin trends can be sustained as the business scales.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.