Biote Corp. Form 8-K Summary
Business context and reporting period
Biote Corp. filed a Form 8-K dated March 24, 2023 under Item 4.02 regarding non-reliance on previously issued financial statements. The affected filings cover the three and six months ended June 30, 2022, and the three and nine months ended September 30, 2022.
Financial impact and restatement
- Biote’s Audit Committee concluded that the affected unaudited interim condensed consolidated financial statements should no longer be relied upon and must be restated.
- Management identified an error in the calculation of the earnout valuation, which overstated the earnout liability and the gain or loss from changes in the fair value of that liability.
- The company also determined that changes in the fair value of warrant and earnout liabilities should be attributed to BioTE Holdings, LLC, its operating subsidiary, rather than entirely to Biote Corp., consistent with the economics of its Up-C structure and ASC 810.
- The restatements are expected to reduce the company’s basic and diluted income or loss per common share because a pro rata portion of the relevant fair-value changes will be allocated to Holdings’ noncontrolling interests.
- The filing states that the restatements will affect certain balance-sheet items and non-cash expenses only.
- Revenue, income or loss from operations, adjusted EBITDA, liquidity, cash, and cash flows from operating, investing, and financing activities will not be affected.
- The filing provides no revised dollar amounts for the earnout liability, fair-value adjustments, or earnings per share.
Material changes versus prior filings
The previously reported interim financial statements for the affected periods are no longer reliable. Biote intends to file amended Forms 10-Q, Amendment No. 1, for the quarters ended June 30, 2022, and September 30, 2022. The company’s reported revenue, operating results, adjusted EBITDA, liquidity, cash, and cash flows are not expected to change.
Management commentary, risks, and contingencies
- Management and the Audit Committee discussed the matter with Deloitte & Touche LLP, the company’s independent registered public accounting firm.
- Management stated that it did not believe the issue resulted from a previously unidentified material weakness in internal control over financial reporting or disclosure controls and procedures, while continuing its assessment.
- The timing of the amended filings and the final quantified restatement impacts are not provided in the filing.
- Key cited risks include market acceptance of Biote’s dietary supplements and method, reliance on third parties for manufacturing bio-identical hormones, regulatory oversight and changes in law, competition, limited operating history, intellectual-property protection, geographic and economic conditions, and the ability to expand profitably.
Important facts for investors to verify
- Confirm the filing and completion of the amended Forms 10-Q for June 30 and September 30, 2022.
- Review the quantified reductions to the earnout liability and fair-value gain or loss.
- Assess the revised allocation of warrant and earnout fair-value changes between Biote Corp. and Holdings’ noncontrolling interests.
- Verify the revised basic and diluted earnings-per-share figures.
- Confirm that revenue, adjusted EBITDA, liquidity, cash, and cash-flow amounts remain unchanged after restatement.
- Review any subsequent disclosure regarding internal controls or additional accounting adjustments.