- YTD net sales $40.5
million, up 8.6% from prior year
- Q3 net sales $12.2 million,
down $2.5 million from last year,
$3.5 million of decrease
attributable to sale of cannabis business
- In Q3 Sprout outperformed Organic Shelf Stable Baby Food
category, had highest sales velocity in Toddler Meals
segment1and increased NA distribution to approx. 29,350
doors with Loblaws launch
- Diluted Earnings Per Share attributable to equity holders
of the company – $0.06
Company will host a conference call at
5:00 p.m. (Eastern Time) Thursday
March 30, 2023, to discuss these results
LAVAL,
QC, March 30, 2023 /PRNewswire/ - Neptune
Wellness Solutions Inc. ("Neptune" or the "Company") (NASDAQ:
NEPT), a consumer-packaged goods company focused on plant-based,
sustainable and purpose-driven lifestyle brands, today announces
financial and operating results for the three-month period ending
December 31, 2022.
Raymond P. Silcock, Chief
Financial Officer of Neptune commented, "This is the start of our
transition to a pure play consumer-packaged-goods company. On
November 9, 2022 we completed the
sale of our cannabis business, which resulted in a reduction of
$3.5 million in cannabis sales in the
third quarter. Partially as a result of this sale, and also due to
other cost cutting measures, we are starting to see the positive
earnings impact of reduced SG&A costs anticipated in last
year's strategic business review. SG&A for Q3 was down
$9.7 million as compared to the same
period last year."
Sprout, our organic baby and toddler food brand, ramped up
innovation this year and outperformed its category with the two
fastest growing organic toddler meal items nationally, and the
highest sales velocity in the Toddler Meals segment.1
Sprout also continued its North American expansion during Q3 by
launching into Loblaws, the largest grocer in Canada, reaching a total of approximately
28,000 doors in the United States
and 1,350 in Canada.
Biodroga, our nutraceutical co-manufacturing business, had
year-to-date net sales of $11.8
million, up 6%, as compared to same period last year. This
was driven by increased sales of MaxSimil and MaxSimil based
products, which are now the most popular of Biodroga's product
lines.
Third Quarter 2023 Financial
Highlights:
- Consolidated net sales for Q3 totaled $12.2 million, down $2.5
million from prior year Lost cannabis sales versus prior
year amounted to $3.5 million.
- Gross profit in Q3 was $1.9
million, a gross margin of 15.4% of net sales, up from 11.3%
for the same period last year.
- SG&A expenses for the quarter totaled $8.7 million compared to $18.4 million for the same period last year, a
reduction of 52%, primarily driven by reduced headcount in both the
cannabis and Sprout businesses.
- Net loss of $497 thousand dollars
for third quarter compares to a net loss of $16.8 million in the prior year, an improvement
of $16.3 million primarily due to the
reduced SG&A ($9.7 million) as
well as from the gain on the revaluation of the derivatives net of
the one day loss on issuance ($7.4
million).
- Adjusted EBITDA loss for the quarter totaled $5.1 million compared to a $14.2 million loss for the same quarter last
year.
Third Quarter Events and Recent Business Highlights:
- Completed the divestiture on November 9,
2022 of the cannabis assets, including the Sherbrooke plant and the Mood Ring and PanHash
brands.
- Announced an accounts receivable factoring facility of up to
$5 million for its Sprout Organics
baby food brand.
- Sprout now has the two fastest growing organic meal items
nationally, and the highest sales velocity in the Toddler Meals
segment.1
- Sprout achieved strong fill rate of 85% for the third fiscal
quarter.
- Biodroga continues to report strong growth year-over-year,
driven by MaxSimil.
|
------------------------------------------
|
|
1) Sales
velocity: Sales dollars per total point of distribution; Nielsen
AOD; Total US xAOC Latest 13 W/E 12-31-22
|
Conference Call Details:
The Company will host a conference call at 5:00 p.m. (Eastern Time) on Thursday March 30,
2023 to discuss these results. The conference call will be webcast
live and can be accessed by registering on the Events and
Presentations portion of Neptune's Investor Relations website at
www.investors.neptunewellness.com. The webcast will be archived for
approximately 90 days.
- ADJUSTED EBITDA
Although the concept of Adjusted EBITDA is not a financial
or accounting measure defined under US GAAP and it may not be
comparable to other issuers, it is widely used by companies.
Neptune obtains its Adjusted EBITDA measurement by excluding from
its net loss the following items: net finance costs (income),
depreciation and amortization, and income tax expense (recovery).
Other items such as equity classified stock-based compensation,
non-employee compensation related to warrants, impairment losses on
non-financial assets, revaluations of derivatives, costs related to
conversion from IFRS to US GAAP and other changes in fair values
are also added back to Neptune's net loss. The exclusion of net
finance costs (income) eliminates the impact on earnings derived
from non-operational activities. The exclusion of depreciation and
amortization, stock-based compensation, non-employee compensation
related to warrants, impairment losses, revaluations of derivatives
and other changes in fair values eliminates the non-cash impact of
such items, and the exclusion of costs related to conversion from
IFRS to US GAAP, together with the other exclusions discussed
above, present the results of the on-going business. From time to
time, the Company may exclude additional items if it believes doing
so would result in a more effective analysis of underlying
operating performance. Adjusting for these items does not imply
they are non-recurring. In Q4 2022, the Company added the costs
related to the conversion from IFRS to US GAAP as an adjustment to
the definition of Adjusted EBITDA. Adjusting for these items does
not imply they are non-recurring.
About Neptune Wellness Solutions
Inc.
Headquartered in Laval, Quebec,
Neptune is a consumer-packaged goods company with a mission to
redefine health and wellness. Neptune is focused on building a
portfolio of high quality, affordable consumer products in response
to long-term secular trends and market demand for natural,
plant-based, sustainable and purpose-driven lifestyle brands. The
Company utilizes a highly flexible, cost-efficient manufacturing
and supply chain infrastructure that can be scaled to quickly adapt
to consumer demand and bring new products to market through its
mass retail partners and e-commerce channels. For additional
information, please visit: https://neptunewellness.com/.
Disclaimer – Safe Harbor Forward–Looking Statements
This news release contains "forward-looking information" and
"forward-looking statements" (collectively, "forward-looking
statements") within the meaning of applicable securities laws. All
statements, other than statements of historical fact, are
forward-looking statements and are based on expectations,
estimates, and projections as at the date of this news release. Any
statement that involves discussions with respect to predictions,
expectations, beliefs, plans, projections, objectives, assumptions,
future events or performance (often but not always using phrases
such as "expects", or "does not expect", "is expected",
"anticipates" or "does not anticipate", "plans", "budget",
"scheduled", "forecasts", "estimates", "believes" or "intends" or
variations of such words and phrases or stating that certain
actions, events or results "may" or "could", "would", "might" or
"will" be taken to occur or be achieved) are not statements of
historical fact and may be forward-looking statements. In this news
release, forward-looking statements include, among other things,
statements with respect to the Company's strategic review, expected
cost savings, projected growth of Sprout and Biodroga, the success
of the Company's action plan, future increased revenues,
expectations regarding expenses, cash needs, cash flow, liquidity
and sources of funding, future expansion plans, initiatives
and strategies of the Company, and the Company's performance,
growth initiatives, profitability, future product launches and
plans and gain in market share.
These forward-looking statements are based on assumptions and
estimates of management of the Company at the time such statements
were made. Actual future results may differ materially as
forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual
results, performance, or achievements of the Company to materially
differ from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Such
factors, among other things, include: the ability of the Company to
successfully implement its strategic initiatives; implications of
the COVID-19 pandemic on the Company's operations; fluctuations in
general macroeconomic conditions; fluctuations in securities
markets; changing consumer habits; the ability of the Company to
successfully achieve its business objectives and cost cutting
plans; plans for expansion; political and social uncertainties;
inability to obtain adequate insurance to cover risks and hazards;
the ability of the Company to obtain financing on acceptable terms,
the adequacy of our capital resources and liquidity, including but
not limited to, availability of sufficient cash flow to execute our
business plan (either within the expected timeframe or at all); the
ability of the Company to obtain financing on acceptable terms,
expectations regarding the resolution of litigation and other legal
and regulatory proceedings, reviews and investigations; employee
relations; and the presence of laws and regulations that may impose
restrictions in the markets where the Company operates. Although
the forward-looking statements contained in this news release are
based upon what management of the Company believes, or believed at
the time, to be reasonable assumptions, the Company cannot assure
shareholders that actual results will be consistent with such
forward-looking statements, as there may be other factors that
cause results not to be as anticipated, estimated or intended.
Readers should not place undue reliance on the forward-looking
statements and information contained in this news release. The
Company assumes no obligation to update the forward-looking
statements of beliefs, opinions, projections, or other factors,
should they change, except as required by law.
Additional information regarding these and other risks and
uncertainties relating to the Company's business are contained
under the heading "Risk Factors" in the Company's Annual Report on
Form 10-K dated July 7, 2022, for the
year ended March 31, 2022.
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated
Interim Balance Sheets
(Unaudited) (in U.S. dollars)
|
|
As at
|
|
As at
|
|
|
December 31,
2022
|
|
March 31,
2022
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$3,404,023
|
|
$8,726,341
|
|
Short-term
investment
|
|
17,540
|
|
19,255
|
|
Trade and other
receivables
|
|
4,919,568
|
|
7,599,584
|
|
Prepaid
expenses
|
|
2,937,662
|
|
3,983,427
|
|
Inventories
|
|
16,942,808
|
|
17,059,406
|
|
Total current
assets
|
|
28,221,601
|
|
37,388,013
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
1,862,667
|
|
21,448,123
|
|
Operating lease
right-of-use assets
|
|
2,144,362
|
|
2,295,263
|
|
Intangible
assets
|
|
17,343,178
|
|
21,655,035
|
|
Goodwill
|
|
14,396,380
|
|
22,168,288
|
|
Total assets
|
|
$63,968,188
|
|
$104,954,722
|
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Trade and other
payables
|
|
$21,984,254
|
|
$22,700,849
|
|
Current portion of
operating lease liabilities
|
|
489,849
|
|
641,698
|
|
Deferred
revenues
|
|
—
|
|
285,004
|
|
Provisions
|
|
5,936,933
|
|
1,118,613
|
|
Liability related to
warrants
|
|
1,444,058
|
|
5,570,530
|
|
Total current
liabilities
|
|
29,855,094
|
|
30,316,694
|
|
|
|
|
|
|
Operating lease
liabilities
|
|
2,229,583
|
|
2,063,421
|
|
Loans and
borrowings
|
|
15,936,658
|
|
11,648,320
|
|
Other
liability
|
|
23,000
|
|
88,688
|
|
Total
liabilities
|
|
48,044,335
|
|
44,117,123
|
|
|
|
|
|
|
Shareholders'
Equity:
|
|
|
|
|
|
Share capital -
without par value (11,778,392 shares issued and outstanding
as of
December 31, 2022; 5,560,829 shares
issued and outstanding as of March 31, 2022)
|
|
321,791,727
|
|
317,051,125
|
|
Warrants
|
|
6,117,600
|
|
6,079,890
|
|
Additional paid-in
capital
|
|
57,303,078
|
|
55,980,367
|
|
Accumulated other
comprehensive loss
|
|
(14,539,294)
|
|
(7,814,163)
|
|
Deficit
|
|
(357,075,395)
|
|
(323,181,697)
|
|
Total equity
attributable to equity holders of the Company
|
|
13,597,716
|
|
48,115,522
|
|
|
|
|
|
|
Non-controlling
interest
|
|
2,326,137
|
|
12,722,077
|
|
Total shareholders'
equity
|
|
15,923,853
|
|
60,837,599
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
Subsequent
events
|
|
|
|
|
|
Total liabilities and
shareholders' equity
|
|
$63,968,188
|
|
$104,954,722
|
|
See accompanying notes
to the condensed consolidated interim financial
statements.
|
|
|
On behalf of the
Board:
|
|
|
|
|
|
|
/s/ Julie Philips
|
|
/s/ Michael Cammarata
|
|
Julie
Philips
|
|
Michael
Cammarata
|
|
Chair of the
Board
|
|
President and
CEO
|
|
|
|
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated
Interim Statements of Loss and Comprehensive Loss
(Unaudited) (in U.S. dollars)
For the three and nine-month periods ended December 31, 2022 and 2021
|
|
|
|
|
|
|
|
Three-month periods
ended
|
|
|
|
|
December 31,
2022
|
|
December 31,
2021
|
|
|
|
|
|
|
|
|
|
Revenue from sales net
of excise taxes
of nil and $643,476 (2021 -
$746,870 and $1,127,569 )
|
|
$11,945,092
|
|
$14,371,095
|
|
|
Royalty
revenues
|
|
263,816
|
|
276,670
|
|
|
Other
revenues
|
|
—
|
|
20,164
|
|
|
Total
revenues
|
|
12,208,908
|
|
14,667,929
|
|
|
|
|
|
|
|
|
|
Cost of sales other
than impairment loss on inventories,
net of subsidies of nil and nil (2021 -
($3,952) and $927,753 )
|
|
(10,328,349)
|
|
(13,026,604)
|
|
|
Impairment gain (loss)
on inventories
|
|
—
|
|
12,765
|
|
|
Total Cost of
sales
|
|
(10,328,349)
|
|
(13,013,839)
|
|
|
Gross profit
(loss)
|
|
1,880,559
|
|
1,654,090
|
|
|
|
|
|
|
|
|
|
Research and
development expenses
|
|
(28,836)
|
|
(301,645)
|
|
|
Selling, general and
administrative expenses, net of subsidies
of nil and nil (2021 - ($427)and $100,178
)
|
|
(8,727,323)
|
|
(18,429,528)
|
|
|
Impairment loss related
to intangible assets
|
|
—
|
|
—
|
|
|
Impairment loss related
to property, plant and equipment
|
|
—
|
|
—
|
|
|
Impairment loss on
assets held for sale
|
|
—
|
|
—
|
|
|
Impairment loss on
right of use assets
|
|
(271,057)
|
|
—
|
|
|
Impairment loss related
to goodwill
|
|
—
|
|
—
|
|
|
Net gain on sale of
property, plant and equipment
|
|
84,998
|
|
6,490
|
|
|
Loss from operating
activities
|
|
(7,061,659)
|
|
(17,070,593)
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
—
|
|
2,956
|
|
|
Finance
costs
|
|
(1,362,776)
|
|
(363,466)
|
|
|
Loss on issuance of
derivatives
|
|
(1,029,614)
|
|
—
|
|
|
Foreign exchange gain
(loss)
|
|
524,571
|
|
(601,347)
|
|
|
Change in revaluation
of marketable securities
|
|
—
|
|
(17,640)
|
|
|
Gain on revaluation of
derivatives
|
|
8,367,871
|
|
1,245,134
|
|
|
Gain on settlement of
liability
|
|
66,169
|
|
—
|
|
|
|
|
6,566,221
|
|
265,637
|
|
|
Loss before income
taxes
|
|
(495,438)
|
|
(16,804,956)
|
|
|
|
|
|
|
|
|
|
Income tax (recovery)
expense
|
|
(2,013)
|
|
50
|
|
|
Net loss
|
|
(497,451)
|
|
(16,804,906)
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss
|
|
|
|
|
|
|
Net change in
unrealized foreign currency gains (losses)
on translation of net investments in
foreign operations
(tax effect of nil for all
periods)
|
|
(231,490)
|
|
332,074
|
|
|
Total other
comprehensive loss
|
|
(231,490)
|
|
332,074
|
|
|
|
|
|
|
|
|
|
Total comprehensive
loss
|
|
$(728,941)
|
|
$(16,472,832)
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to:
|
|
|
|
|
|
|
Equity holders of the
Company
|
|
$1,288,110
|
|
$(15,009,015)
|
|
|
Non-controlling
interest
|
|
(1,785,561)
|
|
(1,795,891)
|
|
|
Net loss
|
|
$(497,451)
|
|
$(16,804,906)
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income (loss) attributable to:
|
|
|
|
|
|
|
Equity holders of the
Company
|
|
$1,056,620
|
|
$(14,676,941)
|
|
|
Non-controlling
interest
|
|
(1,785,561)
|
|
(1,795,891)
|
|
|
Total comprehensive
loss
|
|
$(728,941)
|
|
$(16,472,832)
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per
share attributable to:
|
|
|
|
|
|
|
Common Shareholders of
the Company
|
|
$0.06
|
|
$(3.14)
|
|
|
|
|
|
|
|
|
|
Diluted income (loss)
per share attributable to:
|
|
|
|
|
|
|
Common Shareholders of
the Company
|
|
$0.06
|
|
$(3.14)
|
|
|
|
|
|
|
|
|
|
Basic weighted average
number of common shares
|
|
11,030,838
|
|
4,781,190
|
|
|
Diluted weighted
average number of common shares
|
|
11,094,967
|
|
4,781,190
|
|
|
The Company has removed
certain captions compared to prior
|
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated
Interim Statements of Cash Flows
(Unaudited) (in U.S. dollars)
For the three and nine-month periods ended December 31, 2022 and 2021
|
|
|
|
|
Nine-month periods
ended
|
|
|
December 31,
2022
|
|
December 31,
2021
|
|
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net loss for the
period
|
|
$(44,289,638)
|
|
$(47,762,688)
|
|
Adjustments:
|
|
|
|
|
|
Depreciation of
property, plant and equipment
|
|
652,196
|
|
2,135,961
|
|
Non-cash lease
expense
|
|
385,800
|
|
563,428
|
|
Amortization of
intangible assets
|
|
1,352,787
|
|
2,436,219
|
|
Impairment loss on
goodwill
|
|
7,570,471
|
|
—
|
|
Share-based
payment
|
|
2,832,438
|
|
6,251,713
|
|
Impairment loss on
inventories
|
|
3,079,997
|
|
2,996,333
|
|
Expected credit
losses
|
|
496,846
|
|
1,978,705
|
|
Non-employee
compensation related to warrants
|
|
—
|
|
178,917
|
|
Loss on issuance of
derivatives
|
|
3,156,569
|
|
—
|
|
Net finance
expense
|
|
2,656,865
|
|
1,170,069
|
|
Unrealized foreign
exchange (gain) loss
|
|
(6,545,401)
|
|
10,568
|
|
Change in revaluation
of marketable securities
|
|
—
|
|
107,564
|
|
Interest
received
|
|
1,440
|
|
7,796
|
|
Interest
paid
|
|
(215,019)
|
|
(961,463)
|
|
Gain on settlement of
liability
|
|
(66,169)
|
|
—
|
|
Revaluation of
derivatives
|
|
(16,083,681)
|
|
(8,706,973)
|
|
Impairment loss on
property, plant and equipment
|
|
—
|
|
2,404,459
|
|
Impairment loss on
assets held for sale
|
|
15,346,119
|
|
—
|
|
Impairment loss on
right-of-use assets
|
|
271,057
|
|
—
|
|
Impairment loss on
intangibles
|
|
2,593,529
|
|
—
|
|
Payment of lease
liabilities
|
|
(253,795)
|
|
(236,802)
|
|
Income tax
expense
|
|
14,543
|
|
11,894
|
|
Net gains from sale of
property, plant and equipment
|
|
(170,000)
|
|
—
|
|
Changes in operating
assets and liabilities
|
|
6,543,514
|
|
(6,394,409)
|
|
Income taxes
paid
|
|
(360)
|
|
(11,894)
|
|
Net cash used in
operating activities
|
|
(20,669,892)
|
|
(43,820,603)
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Proceeds on sale of
assets
|
|
170,000
|
|
—
|
|
Proceeds from the sale
of Cannabis assets
|
|
3,121,778
|
|
—
|
|
Acquisition of
property, plant and equipment
|
|
(601,743)
|
|
(1,034,982)
|
|
Acquisition of
intangible assets
|
|
—
|
|
(434,168)
|
|
Sales of Acasti
shares
|
|
—
|
|
44,509
|
|
Net cash provided by
(used in) investing activities:
|
|
2,690,035
|
|
(1,424,641)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Increase in loans and
borrowings, net of financing fees
|
|
3,800,000
|
|
—
|
|
Withholding taxes paid
pursuant to the settlement of non-treasury RSUs
|
|
(574,153)
|
|
(978,699)
|
|
Gross proceeds from
the issuance of shares and warrants through a Direct
Offering
|
|
5,000,002
|
|
—
|
|
Proceeds from the
issuance of shares and warrants through a Registered Direct
Offering
Priced At-The-Market and Concurrent
Private Placement
|
|
6,000,002
|
|
—
|
|
Warrants issuance
costs
|
|
(1,330,211)
|
|
—
|
|
Proceeds from exercise
of options and pre-funded warrants
|
|
65
|
|
—
|
|
Net cash provided by
(used in) financing activities:
|
|
12,895,705
|
|
(978,699)
|
|
Foreign exchange loss
on cash and cash equivalents
|
|
(238,166)
|
|
(454,341)
|
|
Net decrease in cash
and cash equivalents
|
|
(5,322,318)
|
|
(46,678,284)
|
|
Cash and cash
equivalents, beginning of period
|
|
8,726,341
|
|
59,836,889
|
|
Cash and cash
equivalents as at December 31, 2022 and 2021
|
|
$3,404,023
|
|
$13,158,605
|
|
|
|
|
|
|
Cash and cash equivalents is comprised
of:
|
|
|
|
|
|
Cash
|
|
$3,404,023
|
|
$13,158,605
|
|
See accompanying notes
to the condensed consolidated interim financial
statements.
|
|
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated
Interim Statements of Cash Flows (continued)
(Unaudited) (in U.S. dollars)
For the three and nine-month periods ended December 31, 2022 and 2021
Additional cash flow disclosure:
Changes in operating assets and liabilities:
|
|
Nine-month periods
ended
|
|
|
December 31,
2022
|
|
December 31,
2021
|
|
|
|
|
|
|
Trade and other
receivables
|
|
$2,489,793
|
|
$(2,541,426)
|
|
Prepaid
expenses
|
|
798,493
|
|
(2,162,076)
|
|
Inventories
|
|
(2,544,635)
|
|
(2,720,569)
|
|
Trade and other
payables
|
|
1,599,623
|
|
2,684,869
|
|
Deferred
revenues
|
|
(285,006)
|
|
(303,765)
|
|
Provisions
|
|
4,550,934
|
|
(1,112,762)
|
|
Other
liabilities
|
|
(65,688)
|
|
(238,680)
|
|
Changes in operating
assets and liabilities
|
|
$6,543,514
|
|
$(6,394,409)
|
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SOURCE Neptune Wellness Solutions Inc.
