Hello, and welcome to 22nd Century's fourth quarter and full year 2025 results conference call. The earnings release and 10-K are available in the investors section of our website at xxiicentury.com. During today's call, we may also discuss non-GAAP financial measures, including Adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, and amortization as adjusted for certain non-cash or non-operating expenses. For more details on these measures, please refer to our earnings release issued earlier today.
2025 was truly our transition year from restructuring to fully focus on growth. As a result, we have set our company up to begin an exciting growth path for 2026 and beyond. This strategy prioritizes revenue and market share to the detriment of the health of the consumer and the overall cost of healthcare related to illnesses derived from smoking and nicotine. Even with the compressed timeline and the small data set, we are seeing month-over-month growth within the stores.
Fourth quarter and full year 2025 reflect continued progress in strengthening our balance sheet and improving our operating model as we transition the business into higher margin proprietary branded products. During the year, we exited several unprofitable high volume revenue streams and focused our resources on building the foundation for growth in our reduced nicotine VLN cigarette portfolio and partner VLN brands. states and continue working to increase store count and availability of our product. Let me now walk through some of the specific numbers from our financial results for the fourth quarter and full year 2025.
| Metric | Period | Current guidance |
|---|---|---|
| Net revenue | Q1 2026 | Remain consistent with Q4, then grow sequentially thereafter mirroring added points of distribution |
| Store count | End of 2026 | Estimate increasing current store count by more than double; target of more than 5,000 locations |
| Restocking shipments | Later in Q2 2026 | Anticipate VLN/partner VLN restocking shipments to commence |
| Commercial momentum | Back half of 2026 | Majority of distribution and store additions in second half; stronger commercial momentum expected |
| Metric | YoY | Note |
|---|---|---|
| Q4 net revenue | — | Declined to approximately $3.6 million from $4 million in Q3 2025 on strategic shift away from lower-margin contract manufacturing |
| Full-year net revenue | Down from $24.4 million in 2024 to $17.6 million in 2025 | Strategic repositioning of the business away from unprofitable high-volume revenue streams |
| Q4 gross loss | — | Improved to approximately $0.8 million from $1.1 million in Q3 2025 on cost reduction and manufacturing restructuring |
| Q4 operating loss | — | $2.8 million versus $3.2 million in Q3 2025 |
| Full-year net loss from continuing operations | Improved from $15.5 million in 2024 to $13.1 million in 2025 | Reduced operating expenses and restructuring of the business |
| Cartons shipped (Q4) | — | Approximately 248,000 versus 517,000 in Q3 on shift to higher-margin branded products |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Strategic positioning | Restructuring and cleanup of legacy CMO business | 2025 as transition year complete; 2026 framed as the new beginning fully focused on growth | — |
| Regulatory | FDA published low-nicotine proposed rule in January 2025 with comment period through September 2025 | FDA in internal review; company filed MRTP renewal application in December 2025 and plans to expand PMTA/MRTP filings including a 100 mm VLN version | — |
| Margin profile | Exiting unprofitable high-volume revenue streams | Branded VLN products typically generate 20%-30% gross margin after marketing/promotional costs at optimal labor and overhead | — |
| Partner VLN strategy | Two newest VLN partner brand products launched | Welcoming other brands to license VLN brand or include low-nicotine tobacco to widen market presence | — |