What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-04 compared with 2024-03-07 · 145 added, 105 removed, 190 unchanged (57% of the section changed)

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We are a global performance beauty company with a customer-centric approach to delivering breakthrough products in the cash-pay aesthetic market.

Our first product, Jeuveau ® (prabotulinumtoxinA-xvfs), is currently sold in the United States, Canada and certain European countries.

We have commercial launch plans in additional countries where we have regulatory approval that we expect to implement in the next few years.

We are also actively pursuing regulatory approval of Evolysse™, a line of hyaluronic acid dermal fillers, and anticipate obtaining regulatory approval of the Evolysse™ line of products in Europe in the second half of 2024 and in the United States beginning in 2025.

Regulatory approval has already been received for the Evolysse™ nasolabial fold product in Europe.

Jeuveau ® is a proprietary 900 kDa purified botulinum toxin type A formulation indicated for the temporary improvement in the appearance of moderate to severe glabellar lines, also known as “frown lines,” in adults.

Evolysse™, a line of dermal fillers, is a first-generation cold technology hyaluronic acid line for products including mid face, nasolabial folds, lips and eyes.

Our first product, Jeuveau ® (prabotulinumtoxinA-xvfs), is currently sold in the United States, Canada, certain European countries and Australia.

We have commercial launch plans in additional countries which we expect to implement in the next few years.

We are also actively pursuing the commercialization and further regulatory approvals of Evolysse™, a collection of injectable hyaluronic acid gels that includes mid face, nasolabial folds, lips and eyes.

In October 2024, regulatory approval was received in the European Union for four products in the Evolysse™ line:

Evolysse™ Form, Evolysse™ Smooth, Evolysse™ Sculpt and Evolysse™ Lips.

In February 2025, we received approval from the U.S.

Food and Drug Administration, or the FDA, for Evolysse™ Form and Evolysse™ Smooth injectable hyaluronic acid gels for wrinkles and folds, such as nasolabial folds.

We anticipate launching Evolysse™ Form and Evolysse™ Smooth in the United States in the second quarter of 2025.

We also anticipate launching all four approved Evolysse™ products in Europe in the second half of 2025.

Our primary market is the cash-pay aesthetic market, which consists of medical products that consumers pay for directly out of pocket.

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We utilize this flexibility to drive customer adoption through programs such as our consumer loyalty program, co-branded marketing programs, promotional events and pricing strategies.

Recent Developments

Symatese Agreements

On May 9, 2023, we entered into a License, Supply and Distribution Agreement, or the Symatese U.S.

Agreement, with Symatese S.A.S (“Symatese”), pursuant to which Symatese granted to us an exclusive right to commercialize and distribute five dermal filler product candidates which we collectively refer to as Evolysse™, including the products we refer to as:

(iii) Sculpt;

and (v) Eye in the United States for aesthetic and dermatological uses.

We also have the right of first negotiation to obtain a license from Symatese for any new products developed using the same technology as the Evolysse™ line of dermal fillers.

Evolysse™ Lift, Smooth, and Sculpt are currently in advanced stages of clinical trials pursuant to an investigational device exemption, or IDE, from the U.S.

Food and Drug Administration, or FDA.

We have agreed to a cost-sharing arrangement with Symatese to gain FDA approval of the Evolysse™ Lips and Eye products.

Subject to FDA approval, we expect Evolysse™ Lift and Smooth to commercially launch in the first half of 2025, Evolysse™ Sculpt to launch in 2026 and Evolysse™ Lips and Eye to launch in 2027.

On December 20, 2023, we entered into a License, Supply and Distribution Agreement, or the Symatese Europe Agreement, pursuant to which Symatese granted to us an exclusive right to commercialize and distribute four dermal filler product candidates, which are referred to as:

(iii) Sculpt and (iv) Lips in 50 countries in Europe for use in the aesthetics and dermatological fields.

Regulatory approval has been received for the Evolysse™ nasolabial fold product in Europe and the remaining three products are anticipated to be approved in late 2024.

We will be licensing our neurotoxin, Jeuveau ® , to Symatese for distribution in France, marking the fifth European market that we have now entered.

In addition, we will sub-license its distribution rights for the Evolysse™ fillers line to a Symatese subsidiary for distribution in France.

“Extra-Strength” Clinical Trial

In November 2021, we announced the initiation of a Phase II clinical trial designed to investigate a higher strength dose of Jeuveau ® in the frown lines.

We completed our patient enrollment in the clinical study evaluating the “extra-strength” dose in the second quarter of 2022.

This program provides us with the opportunity to offer the first multi-strength neurotoxin, giving customers and consumers increased treatment options.

In June 2023, we announced the successful completion of the Phase II clinical trial and in November 2023, we presented the final results of the “extra-strength” clinical trial.

The clinical trial data showed that the “extra-strength” formulation of Jeuveau ® had a similar safety profile to the controls and demonstrated a median duration of at least 26 weeks based on the time for patients to return to baseline after treatment.

The Pharmakon Term Loans

On December 14, 2021, we entered into a loan agreement with BPCR Limited Partnership, BioPharma Credit Investments V (Master) LP, and Biopharma Credit PLC (collectively, “Pharmakon”).

Pursuant to the terms of the agreement, Pharmakon agreed to make term loans to us in two tranches (“Pharmakon Term Loans”).

The first tranche of $75.0 million was funded on December 29, 2021.

On December 5, 2022, we entered into a Second Amendment to the loan agreement to extend our option to draw down the second tranche of $50.0 million until December 31, 2023.

In exchange for the extension, we paid an amendment fee of $0.5 million to Pharmakon.

On May 9, 2023, we entered into a Third Amendment to the loan agreement, which provides for the advancement of the second tranche of $50.0 million in two installments:

(i) $25.0 million advanced on May 31, 2023 and (ii) $25.0 million advanced on December 15, 2023.

The Pharmakon Term Loans matures on the six-year anniversary of the closing date of the first tranche.

See “—Liquidity and Capital Resources—The Pharmakon Term Loans” for further information.

Impact of Settlement Agreements

In February 2021, we settled litigation claims related to a complaint against us filed by Allergan, Inc.

and Allergan Limited (together, “Allergan”) and Medytox, Inc.

(“Medytox”) in the U.S.

International Trade Commission related to Jeuveau ® (the “ITC Action”) and certain related matters by entering into a Settlement and License Agreement with Medytox and Allergan, which we refer to as the U.S.

Settlement Agreement, and another Settlement and License Agreement with Medytox which we refer to as the Medytox Settlement Agreement.

We refer to the U.S.

Settlement Agreement and the ROW Settlement Agreement collectively as the Medytox/Allergan Settlement Agreements.

We have completed all obligations to Allergan and the majority of our obligations to Medytox under the Medytox/Allergan Settlement Agreements.

The completed obligations consisted of (i) cash payments of $35.0 million , of which we paid the first payment of $15.0 million in the third quarter of 2021, the second payment of $15.0 million in the first quarter of 2022, and the final payment of $5.0 million in the first quarter of 2023, (ii) payment to Allergan and Medytox of certain royalties on the sale of Jeuveau ® , based on a certain dollar amount per vial sold of Licensed Products by or on our behalf in the United States, from December 16, 2020 through September 16, 2022, (iii) payment to Medytox, from December 16, 2020 to September 16, 2022, of a low-double digit royalty on net sales of Jeuveau ® sold by us or on our behalf in territories we have licensed outside the United States, and (iv) the issuance of 6,762,652 shares of our common stock to Medytox.

Going forward, our remaining obligation will be to pay Medytox a mid-single digit royalty percentage on net sales of Jeuveau ® in the United States and all territories we have licensed outside the United States through September 16, 2032.

As a result of the royalty payments that we are required to pay under the Medytox Settlement Agreements, our cost of sales and gross profit margin have been negatively impacted and will continue to be negatively impacted to a lesser extent from September 2022 to September 2032.

Contingent Royalties to Evolus Founders

We are obligated to make quarterly future payments to the founders of Evolus, which we refer to as the Evolus Founders, of a low single digit percentage of net sales of Jeuveau ® .

These obligations will terminate at the end of the second quarter of 2029.

The fair value of the obligations are valued quarterly and are referred to in our consolidated financial statements as the contingent royalty obligation.

Market Trends and Uncertainties

The global economy, including the financial and credit markets, has recently experienced extreme volatility and disruptions, including uncertainty regarding the stability of certain financial institutions, increases in inflation rates, rising interest rates, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, and uncertainty about economic stability.

We expect elevated levels of cost inflation to continue, potentially impacting consumer

discretionary spending for aesthetic medical procedures.

The global economy, including the financial and credit markets, has recently experienced volatility and disruptions, increases in inflation rates, rising interest rates, new and threatened tariffs, severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, and uncertainty about economic stability.

We expect elevated levels of cost inflation to continue, potentially impacting consumer discretionary spending for aesthetic medical procedures.

Markets experiencing uncertainty could have substantial high rates of inflation.

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Year Ended December 31,

(in millions) 2023 2022

(in millions) 2024 2023 Change

Product revenue, net $ 264.3 $ 199.7 $ 64.6 32 %

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Total net revenues 266.3 202.1 64.2 32 %

Cost of goods sold 84.0 64.5 19.5 30 %

Gross profit 182.3 137.6 44.7 32 %

Operating expenses:

Product cost of sales (excludes amortization of intangible assets) 61.6 55.9

Selling, general and administrative 198.0 164.9 33.1 20 %

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Year Ended December 31,

(in millions) 2023 2022

(in millions) 2024 2023 Change

Total net revenues $ 266.3 $ 202.1 $ 64.2 32 %

Cost of sales:

Product cost of sales (excludes amortization of intangible assets) 61.6 55.9

Amortization of distribution right intangible asset 3.0 3.0

Total cost of sales 64.5 58.9

Cost of goods sold

84.0 64.5 19.5 30 %

Gross profit $ 182.3 $ 137.6 $ 44.7 33 %

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Net revenues during the year ended December 31, 2024 and 2023 consisted of $2.0 million and $2.4 million of service revenue, respectively, from the sale of Jeuveau ® through a distribution partner in Canada.

We anticipate our continued sales growth will depend on our ability to grow our customer base and increase purchases by our current customers in the competitive aesthetic market as well as on regulatory approval for the Evolysse TM dermal filler product line in the United States and Europe by Symatese.

Cost of Sales

Product Cost of Sales

Product cost of sales, excluding amortization of intangible assets, primarily consisted of the cost of inventory purchased from Daewoong.

In addition, during the period from December 2020 to September 2022, product cost of sales, excluding amortization of intangible assets, also included certain royalties on the sale of Jeuveau ® payable to Medytox and Allergan pursuant to the Medytox/Allergan Settlement Agreements, partially offset by reimbursement receivable from Daewoong pursuant to the Daewoong Arrangement with respect to such royalties.

We anticipate our continued sales growth will depend on our ability to grow our customer base and increase purchases by our current customers in the competitive aesthetic market as well as the success of the commercial launch of Evolysse TM Form and Evolysse TM Smooth products in the United States and the

Evolysse TM hyaluronic acid gel product collection in Europe, and on regulatory approval for the Evolysse TM Sculpt, and Lips products in the United States.

Cost of Goods Sold

Cost of goods sold, primarily consisted of the cost of inventory purchased from Daewoong and amortization of intangible asset distribution right.

In addition, cost of goods sold includes certain royalties on the sale of Jeuveau ® payable to Medytox related to the Medytox Settlement Agreements.

Our royalty obligations to Medytox are a mid-single digit percentage of net revenue through the expiration of our Medytox royalty obligation in September 2032.

Cost of goods sold, increased by $19.5 million, or 30%, to $84.0 million for the year ended December 31, 2024 from $64.5 million from the year ended December 31, 2023 primarily due to higher sales volume.

We anticipate that our cost of goods sold will fluctuate in line with changes in revenues until the expiration of our Medytox royalty obligation in September 2032.

Gross Profit Margin

Our gross profit margin was 68% and 68% for the years ended December 31, 2024 and 2023, respectively.

We also anticipate our gross profit margin will fluctuate as we implement various marketing p rograms that may affect the average selling price for Jeuveau ® and as we expand internationally.

Selling, General and Administrative

Selling, general and administrative expenses increased by $33.1 million, or 20%, to $198.0 million for the year ended December 31, 2024 from $164.9 million for the year ended December 31, 2023, primarily resulting from increasing personnel costs and related to our commercial activities.

Selling, general and administrative expenses may fluctuate in the future primarily due to potential changes in marketing strategies and international launches.

Research and Development

Research and development expenses increased by $2.6 million, or 39%, to $9.2 million for the year ended December 31, 2024 from $6.6 million for the year ended December 31, 2023.

The increase was primarily attributable to increasing our clinical operations and research and development expenses related to Evolysse TM .

We expect our research and development expenses to continue to increase if and when we develop further product candidates and as we pursue regulatory approvals in other jurisdictions.

In-process Research and Development

For the twelve months ended December 31, 2023, we recorded $8.9 million of in-process research and development expense in connection with the Symatese agreements.

Basis of Presentation and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Revaluation of Contingent Royalty Obligation Payable to Evolus Founders

The change in the fair value of the contingent royalty obligation payable to the founders of Evolus, or Evolus Founders, is recorded in operating expenses in each reporting period.

During the years ended December 31, 2024 and 2023, the revaluation charges of $7.2 million and $4.3 million, respectively, were primarily driven by changes in management assumptions relating to revenue forecasts, the discount rate used and the timing of cash flows.

Depreciation and Amortization

Depreciation and amortization increased by $0.1 million, or 5%, to $2.3 million for the year ended December 31, 2024 from $2.2 million for the year ended December 31, 2023, primarily due to an increase in amortization of internal-use software and leasehold improvements.

Non-Operating Expense, Net

Non-operating expense, net, increased by $3.0 million, or 24%, to $15.3 million for the year ended December 31, 2024 from $12.3 million for the year ended December 31, 2023, primarily due to interest expense on the Pharmakon Term Loans which

increased due to higher average outstanding borrowings during the year ended December 31, 2024.

Interest on the Pharmakon Term Loans is based on a variable interest rate, which we expect will continue to fluctuate with the market.

Income Taxes Expense

There was minimal income tax expense for the years ended December 31, 2024 and 2023.

Comparison of the Years Ended December 31, 2023 and 2022

The following table summarizes our results of operations for the periods indicated:

Year Ended December 31,

(in millions) 2023 2022 Change

Product revenue, net $ 199.7 $ 146.6 $ 53.1 36 %

Service revenue 2.4 2.0 0.4 20 %

Total net revenues 202.1 148.6 53.5 36 %

Cost of goods sold 64.5 58.8 5.7 10 %

Gross profit 137.6 89.8 47.8 53 %

Operating expenses:

Selling, general and administrative 164.9 141.8 23.1 16 %

Research and development 6.6 4.7 1.9 40 %

In-process research and development 8.9 2.0 6.9 345 %

Revaluation of contingent royalty obligation payable to Evolus Founders 4.3 5.8 (1.5) (26) %

Depreciation and amortization 2.2 0.8 1.4 175 %

Total operating expenses 186.8 155.1 31.7 20 %

Loss from operations (49.2) (65.3) 16.1 (25) %

Non-operating expense, net (12.3) (9.0) (3.3) 37 %

Loss before income taxes:

(61.5) (74.3) 12.8 (17) %

Income tax expense 0.2 0.1 0.1 100 %

Net loss $ (61.7) $ (74.4) $ 12.7 (17) %

Unrealized loss, net of tax (0.1) (0.3) 0.2 (67) %

Comprehensive loss $ (61.8) $ (74.7) $ 12.9 (17) %

The following table summarizes our gross profit margin for the periods indicated:

Year Ended December 31,

(in millions) 2023 2022 Change

Total net revenues $ 202.1 $ 148.6 $ 53.5 36 %

Cost of goods sold 64.5 58.8 5.7 10 %

Gross profit $ 137.6 $ 89.8 $ 47.8 53 %

Gross profit margin 68 % 60 %

We currently operate in one reportable segment, and all of our net revenues are derived from sales of Jeuveau ® .

Net revenues consist of revenues, net of adjustments primarily for customer rebates, rewards related to the consumer loyalty program and co-branded marketing programs.

Revenues are recognized when the control of the promised goods is transferred to the customer in an amount that reflects the consideration allocated to the related performance obligations and to which we expect to be entitled in exchange for those products or services.

Net revenues of Jeuveau ® sales increased by $53.5 million, or 36%, to $202.1 million for the year ended December 31, 2023 from $148.6 million for the year ended December 31, 2022, primarily due to higher sales volumes.

Net revenues during the

years ended December 31, 2023 and 2022 consisted of $2.4 million and $2.0 million of service revenue, respectively, from the sale of Jeuveau ® through a distribution partner in Canada.

We anticipate our continued sales growth will depend on our ability to grow our customer base and increase purchases by our current customers in the competitive aesthetic market as well as on regulatory approval for the Evolysse TM hyaluronic acid gel product line in the United States and Europe by Symatese.

Cost of Goods Sold

Cost of goods sold, primarily consisted of the cost of inventory purchased from Daewoong and amortization of intangible asset distribution right.

In addition, during the period from December 2020 to September 2022, cost of goods sold also included certain royalties on the sale of Jeuveau ® payable to Medytox and Allergan pursuant to the Medytox Settlement Agreements, partially offset by reimbursement receivable from Daewoong pursuant to the Daewoong Arrangement with respect to such royalties.

Our royalty obligations to Allergan concluded on September 16, 2022, and beginning on September 17, 2022, our royalty obligations to Medytox were reduced to a mid-single digit percentage of net revenue through the expiration of our Medytox royalty obligation in September 2032.

Product cost of sales, excluding amortization of intangible assets, increased by $5.7 million, or 10.1%, to $61.6 million for the year ended December 31, 2023 from $55.9 million from the year ended December 31, 2022 primarily due to higher sales volume, offset by reduced royalty obligations to Medytox.

We anticipate that our product cost of sales will fluctuate in line with changes in revenues until the expiration of our Medytox royalty obligation in September 2032.

Cost of goods sold, increased by $5.7 million, or 10%, to $64.5 million for the year ended December 31, 2023 from $58.8 million from the year ended December 31, 2022 primarily due to higher sales volume, offset by reduced royalty obligations to Medytox.

We anticipate that our cost of goods sold will fluctuate in line with changes in revenues until the expiration of our Medytox royalty obligation in September 2032.

Gross Profit Margin

Our gross profit margin was 68% and 60% for the years ended December 31, 2023 and 2022, respectively.

Our gross profit margin was impacted negatively and materially through September 2022, by our payments under the Medytox/Allergan Settlement Agreements.

Our gross profit margin was impacted negatively and materially through September 2022, by our payments under the Medytox Settlement Agreements.

Our gross profit margin has been and will continue to be negatively impacted to a lesser extent from September 2022 to September 2032 as we pay royalty obligations to Medytox at a mid-single digit percentage of net revenue.

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Research and development expenses increased by $1.9 million, or 40%, to $6.6 million for the year ended December 31, 2023 from $4.7 million for the year ended December 31, 2022.

The increase was primarily attributable to increasing our clinical operations and research and development expenses related to the Phase II “extra-strength” clinical trial.

The increase was primarily attributable to increasing our clinical operations and research and development expenses related to Evolysse TM .

We expect our research and development expenses to continue to increase if and when we develop further product candidates and as we pursue regulatory approvals in other jurisdictions.

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Agreement and Symatese Europe Agreement, respectively.

Basis of Presentation and Summary of Significant Accounting Policies for additional information.

Revaluation of Contingent Royalty Obligation Payable to Evolus Founders

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Liquidity and Capital Resources

As of December 31, 2023, we had cash and cash equivalents of $62.8 million, positive working capital of $64.1 million and stockholders’ deficit of $20.7 million.

As of December 31, 2024, we had cash and cash equivalents of $87.0 million, positive working capital of $88.4 million and stockholders’ equity of $5.5 million.

We began selling Jeuveau ® in May 2019 and have a relatively limited history of generating revenues.

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We had net loss of $50.4 million and $61.7 million in the years ended December 31, 2024 and 2023, respectively.

We had a net loss from operations of $49.2 million and $65.3 million in the years ended December 31, 2023 and 2022, respectively.

We used net cash of $34.0 million and $84.9 million in operating activities for the twelve months ended December 31, 2023 and 2022, respectively.

We expect to continue to incur significant expenses for the foreseeable future as we increase marketing efforts for Jeuveau ® in the U.S., Europe, and Australia, pursue regulatory approvals in other jurisdictions and ready for commercial launch of the Evolysse™ Lift, Smooth, Sculpt and Eye dermal filler product line.

We had a loss from operations of $34.4 million and $49.2 million in the years ended December 31, 2024 and 2023, respectively.

We used net cash of $18.0 million and $34.0 million in operating activities for the years ended December 31, 2024 and 2023, respectively.

We expect to continue to incur significant expenses for the foreseeable future as we increase marketing efforts for Jeuveau ® in the U.S., Europe, and Australia, pursue regulatory approvals in other jurisdictions and ready for commercial launch of the Evolysse™ Form, Smooth, Sculpt and Eye hyaluronic acid gel product line.

Impact of Inflation

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While we do not believe that inflation has had a material impact on our business, revenues or operating results during the periods presented, a prolonged inflationary environment could impact consumer discretionary spending for aesthetic medical procedures, increase our cash required for operations and impact our liquidity position.

Follow-On Offering

In March 2024, we completed a follow-on offering and issued 3,554,000 shares of our common stock, at a price to the public of $14.07 per share.

We received net proceeds of $46.8 million from the offering, after deducting underwriting discounts and commissions and other offering expenses.

In addition, we granted the underwriters an option, exercisable for 30 days, to purchase up to 533,100 additional shares of common stock (the “option shares”) at the purchase price, which the underwriters exercised in April 2024 with respect to 318,100 of the allotted option shares.

The net proceeds to us from the sale of the option shares, after deducting the underwriters’ discounts and commissions, was $4.2 million.

“At-the-market” Offerings of Common Stock

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On May 9, 2023, we entered into a Third Amendment to the loan agreement, which provided for the advancement of the second tranche of $50.0 million in two installments:

(i) $25.0 million

advanced on May 31, 2023 and (ii) $25.0 million advanced on December 15, 2023, which amounts were advanced on such dates subject to the terms and conditions of the Pharmakon Term Loans.

(i) $25.0 million advanced on May 31, 2023 and (ii) $25.0 million advanced on December 15, 2023, which amounts were advanced on such dates subject to the terms and conditions of the Pharmakon Term Loans.

We are required to pay interest only under the loan agreement until March 2026, after which we make seven equal quarterly payments, each in an amount equal to 1/12th of the outstanding principal amount of the loan.

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Litigation Settlement

As described in “—Overview— Impact of Settlement Agreements ,” on February 18, 2021, upon entering into the Medytox/Allergan Settlement Agreements, we agreed to pay to Allergan and Medytox $35.0 million in multiple payments over two years, of which we paid the first payment of $15.0 million in the third quarter of 2021, the second payment of $15.0 million in the first quarter of 2022, and the final pay ment of $5.0 million in the first quarter of 2023.

On February 18, 2021, upon entering into the Medytox Settlement Agreements, we agreed to pay to Allergan and Medytox $35.0 million in multiple payments over two years, of which we paid the first payment of $15.0 million in the third quarter of 2021, the second payment of $15.0 million in the first quarter of 2022, and the final pay ment of $5.0 million in the first quarter of 2023.

We also issued 6,762,652 shares of common stock to Medytox.

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The royalty payments are made quarterly.

License and Supply Agreement

Daewoong Agreement

The Daewoong Agreement includes certain minimum annual purchases we are required to make in order to maintain the exclusivity of the license.

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Our corporate headquarters in Newport Beach, California is under a non-cancelable operating lease, which expires on January 31, 2030 with an option to extend the term for an additional 60 months.

Lease payments increase based on an annual rent escalation clause that occurs on each February 1 anniversary.

Lease payments increase based on an annual rent

escalation clause that occurs on each February 1 anniversary.

On October 16, 2024, the Company entered into the Second Amendment to the Lease Agreement (the “Second Lease Amendment”) to lease additional office space for its corporate headquarters and the lease is expected to commence on or around the second half of 2025.

Current and Future Capital Requirements

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Our cash requirements depend on numerous factors, including but not limited to, the impact of any potential disruptions to our supply chain, inflation or other economic conditions, uncertainty regarding the stability of certain financial institutions, and other long-term commitments and contingencies.

Because of the numerous risks and uncertainties associated with research, development and commercialization of our products, we are unable to estimate the exact amount of our operating capital requirements.

In such case, we may be required to raise additional capital to fund future operations through the incurrence of debt, the entry into licensing or collaboration agreements with partners, sale of equity securities, grants or other sources of financing.

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Our future funding requirements will depend on many factors, including, but not limited to:

• the rate of revenue growth for Jeuveau ® in the United States and success of planned international launches;

• the timing of regulatory approval for the Evolysse™ dermal filler product line in the United States and Europe by Symatese and our ability to successfully commercialize these products;

• the rate of revenue growth for Jeuveau ® and Evolysse™ in the markets in which they are launched;

• the timing of regulatory approval for the additional Evolysse™ products in the United States and Europe by Symatese and our ability to successfully commercialize these products;

• development costs and milestone payments related to the Evolysse™ products;

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• the cost of manufacturing our product or any future product candidates and any products we successfully commercialize, including costs associated with our supply chain;

• the timing and amounts of the royalty and other payments payable in connection with the Medytox Settlement Agreement;

• the timing and amounts of the royalty and other payments payable in connection with the Medytox Settlement Agreements;

• the amounts of the royalty payable to the Evolus Founders;

• the cost of commercialization activities for Jeuveau ® , the Evolysse™ dermal filler product line or any future product candidates that are approved or cleared for sale, including marketing, sales and distribution costs;

• the cost of commercialization activities for Jeuveau ® , the Evolysse™ hyaluronic acid gel product line or any future product candidates that are approved or cleared for sale, including marketing, sales and distribution costs;

• the cost of maintaining a sales force, the productivity of that sales force, the market acceptance of our products and the actions and product introductions of our competitors;

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Year Ended December 31,

2024 2023 2022

(in millions)

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Investing activities

(4.8) (1.6) (2.9)

Financing activities

Effect of exchange rates on cash (0.1) (0.3)

47.4 44.6 (4.1)

Effect of exchange rates on cash and cash equivalents (0.5) (0.1) (0.3)

Change in cash and cash equivalents

24.1 8.9 (92.3)

Cash and cash equivalents, beginning of period

62.8 53.9 146.3

Cash and cash equivalents, end of period

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For the year ended December 31, 2024, operating activities used $18.0 million of cash, which primarily resulted from our net loss of $50.4 million.

Net operating assets and liabilities changed by $5.9 million, primarily driven by improved collections from customers, payments to vendors, the timing of inventory purchases from our supplier, and the final cash litigation settlement payment of $5.0 million to Medytox and Allergan.

Operating activities also includes adjustments for certain non-cash charges including $16.5 million of stock-based compensation expense, $1.4 million of provision of allowance for doubtful accounts, $1.1 million of amortization of debt discount and issuance costs, $5.1 million of depreciation and amortization, $4.3 million in revaluation of our contingent royalty obligation and $4.4 million of in-process research and development expense.

Net operating assets and liabilities changed by $6.6 million, primarily driven by timing of collections from customers, payments to vendors, and the timing of inventory purchases from our supplier.

Operating activities also includes adjustments for certain non-cash charges including $22.3 million of stock-based compensation expense, $2.4 million of provision of allowance for doubtful accounts, $1.1 million of amortization of debt discount and issuance costs, $5.3 million of depreciation and amortization, and $7.2 million in revaluation of our contingent royalty obligation.

For the year ended December 31, 2023, operating activities used $34.0 million of cash, which primarily resulted from our net loss of $61.7 million.

Net operating assets and liabilities changed by $5.9 million, primarily driven by timing of receipts from customers and payments to vendors and the second cash litigation settlement payment of $5.0 million to Medytox and Allergan.

Operating activities also includes adjustments for certain non-cash charges including $16.5 million of stock-based compensation expense, $4.3 million in revaluation of our contingent royalty obligation, $1.4 million of provision of allowance for doubtful accounts, $1.1 million of amortization of debt discount and issuance costs and $5.1 million of depreciation and amortization and $4.4 million of in-process research and development expense.

For the year ended December 31, 2022, operating activities used $84.9 million of cash, which primarily resulted from our net loss of $74.4 million.

Net operating assets and liabilities changed by $34.3 million, primarily driven by timing of receipts from customers and payments to vendors and second cash litigation settlement payment of $15.0 million to Medytox and Allergan.

Operating activities also includes adjustments for certain non-cash charges including $10.8 million of stock-based compensation expense, $5.8 million in revaluation of our contingent royalty obligation, $1.6 million of provision of allowance for doubtful accounts, $1.1 million of amortization of debt discount and issuance costs and $3.7 million of depreciation and amortization.

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Cash used in investing activities was $4.8 million for the year ended December 31, 2024, compared to $1.6 million for the year ended December 31, 2023.

For the year ended December 31, 2024, cash used in investing activities driven by the purchase of property, plant, and equipment and additions to capitalized software.

Cash used in investing activities was $1.6 million for the year ended December 31, 2023, compared to $2.9 million for the year ended December 31, 2022.

For the year ended December 31, 2023, cash used in investing activities driven by the purchase of property, plant, and equipment and additions to capitalized software.

Financing Activities

Cash provided by financing activities was $47.4 million for the year ended December 31, 2024, compared to $44.6 million of cash provided by financing activities for the year ended December 31, 2023.

For the year ended December 31, 2024, cash provided by financing activities primarily resulted from $51.2 million net proceeds from the follow-up equity offering, net of discounts.

Cash provided by financing activities was $44.6 million for the year ended December 31, 2023, compared to $4.1 million of cash used in financing activities for the year ended December 31, 2022.

For the year ended December 31, 2023, cash provided by financing activities resulted from $50.0 million net proceeds from drawing on the second tranche of the Pharmakon Term Loans as described above.

See “ —Liquidity and Capital Resources ” for a description of our Pharmakon Term Loans.

For the year ended December 31, 2023, cash provided by financing activities primarily resulted from $50.0 million net proceeds from drawing on the second tranche of the Pharmakon Term Loans as described above.

See “ —Liquidity and Capital Resources—The Pharmakon Term Loans ” for a description of our Pharmakon Term Loans.

Material Cash Requirements

Our material cash requirements from known contractual and other obligations, including commitments for capital expenditures, primarily consist of (i) principal and interest payments related to our Pharmakon Term Loans (future interest payments on our outstanding Pharmakon Term Loans total approximately $40.6 million, with $16.8 million due within twelve months), (ii) quarterly royalty payments to the Evolus Founders of a low single digit percentage of net sales of Jeuveau ® (these obligations terminate in the quarter after the 10-year anniversary of the first commercial sale of Jeuveau ® in the United States), (iii) quarterly royalty payments to Medytox of a low-double digit royalty on net sales of Jeuveau ® sold in the United States and other Evolus territories (during the period from September 17, 2022 to September 16, 2032), (iv) minimum purchase obligations under the Daewoong Agreement, (v) €12.1 milestone payments under the Symatese U.S.

Agreement consisting of €1.6 million in June 2025, €4.1 million in June 2026, €3.2 million in June 2027, and €3.2 million in June 2028, in each case subject to three of the dermal filler products gaining approval prior to that date, (vi) €3.1 million of milestone payments under the Symatese Europe Agreement consisting of :

€1.2 million on the second anniversary of certain regulatory approvals and €1.9 million on the earlier of the third anniversary of certain regulatory approvals or following a year in which we achieves €25 million in revenue in Europe for the dermal filler products, and (vii) obligations under operating leases related to our office space which are described in more detail in Item 8.

Consolidated Financial Statements and Supplementary Data - Note 7.

Operating Leases.

Agreement consisting of €1.6 million in June 2025, €4.1 million in June 2026, €3.2 million in June 2027, and €3.2 million in June 2028, in each case subject to three of the hyaluronic acid gel products gaining approval prior to that date, (vi) €3.1 million of milestone payments under the Symatese Europe Agreement consisting of:

€1.2 million on the second anniversary of certain regulatory approvals and €1.9 million on the earlier of the third anniversary of certain regulatory approvals or following a year in which we achieves €25 million in revenue in Europe for the hyaluronic acid gel products, and (vii) obligations under operating leases related to our office space which are described in more detail in Note 8.

Operating Leases in the Notes to Consolidated Financial Statements in Part II, Item 8.

of this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

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The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the consolidated financial statements as well as the expenses incurred during the reporting period.

Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances.

Generally, we base our estimates on historical

experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances.

Actual results may differ materially from these estimates under different assumptions or conditions and such differences could be material to the financial position and results of operations.

On an ongoing basis, we evaluate our estimates and assumptions in light of changes in circumstances, facts and experience.

While our significant accounting policies are more fully described in the notes to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to be most critical for fully understanding and evaluating our financial condition and results of operations, as these policies relate to the more significant areas involving management’s judgments and estimates.

While our significant accounting policies are more fully described in the Notes to Consolidated Financial Statements in Part II, Item 8 of this Annual Report on Form 10-K, we believe the following accounting policies to be most critical for fully understanding and evaluating our financial condition and results of operations, as these policies relate to the more significant areas involving management’s judgments and estimates.

Revenue Recognition

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A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account for revenue recognition.

We generate product revenue from the sale of Jeuveau ® in the United States and Europe and service revenue from the sale of Jeuveau ® through a distribution partner in Canada.

We generate product revenue from the sale of Jeuveau ® in the United States, Europe, and Australia and service revenue from the sale of Jeuveau ® through a distribution partner in Canada.

For product revenue, we recognize revenue when control of Jeuveau ® is transferred to a customer upon receipt.

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The loyalty program represents a customer option that provides a material right and, accordingly, is a performance obligation.

Jeuveau ® product is sold to customers, the invoice price is allocated between the product sold and the estimated material right reward, or Reward, that the customer might redeem in the future.

At the time Jeuveau ® product is sold to customers, the invoice price is allocated between the product sold and the estimated material right reward, or Reward, that the customer might redeem in the future.

The standalone selling price of the Reward is measured based on estimated average selling price of Jeuveau ® at the time of redemption and the expected redemption rate by customers based on historical sales data.

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Contingent Royalty Obligation to the Evolus Founders

We determine the fair value of the contingent royalty obligation payable to the Evolus Founders under the Amended Purchase Agreement based on significant unobservable inputs using a discounted cash flows method.

We determine the fair value of the contingent royalty obligation payable to the Evolus Founders based on significant unobservable inputs using a discounted cash flows method.

Changes in the fair value of this contingent royalty obligation are determined each period end and recorded in operating expenses in the consolidated statements of operations and comprehensive loss and in the current and non-current liabilities in the consolidated balance sheets.

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Recently Issued and Adopted Accounting Pronouncements

We describe the recently issued accounting pronouncements that apply to us in Item 8.

Consolidated Financial Statements and Supplementary Data - Note 2.

Basis of Presentation and Summary of Significant Accounting Policies-Recent Accounting Pronouncements.

We describe the recently issued accounting pronouncements that apply to us in Note 2.

Basis of Presentation and Summary of Significant Accounting Policies—Recent Accounting Pronouncements in Part II, Item 8 of this Annual Report on Form 10-K .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis