Neptune Wellness Solutions Inc., a diversified and fully integrated health and wellness company focused on plant-based, sustainable and purpose-driven lifestyle brands, today announced its financial and operating results for the three-month period ended on December 31, 2021.
Fiscal Third Quarter 2022 Financial Highlights (all amounts in CAD unless otherwise noted):
- Revenue totaled $18.4 million, which included a release of $1.1 million of previously reserved sales attributable to the prior quarter. This represents an increase of 17% sequentially, and the fourth consecutive quarter of revenue growth. Revenue in the year-ago quarter totaled $3.3 million.
- Gross profit totaled $2.0 million as compared to a loss of $10.0 million, an improvement of $12.0 million from the year-ago period.
- Gross margin of 11.1% compares to (300.8%) in the year-ago period.
- Net loss of $20.9 million compares to $74.9 million in the year-ago period.
- Adjusted EBITDA loss improved $2.7 million, or 22%, to a loss of $9.8 million compared to a loss of $12.5 million in the year-ago period.
Michael Cammarata, President and Chief Executive Officer of Neptune Wellness, said, “Over the past 12 months we have worked hard to transform Neptune into a high-growth branded CPG company. This quarter, we achieved several notable milestones. We delivered our fourth consecutive quarter of sequential revenue growth and reached positive gross margins, driven by acceleration of our Cannabis sales and supply chain improvements for Sprout Foods. We also took measures to improve our overall operating efficiencies and reduce corporate overhead, as outlined in our Strategic Review. As we look ahead, we will continue to focus on controlling our costs while executing on our high-growth opportunities within our Food & Beverage, Cannabis, and Personal Care & Beauty brands. I could not be more excited about the opportunities in front of us.”
Fiscal Third Quarter 2022 Business Highlights
- Implemented cost-cutting initiatives across Neptune and improved Sprout Foods’ supply chain efficiencies.
- Launched Mood Ring pre-roll products in Ontario and Alberta, marking Neptune’s entrance into all major cannabis product categories.
- Launched high-quality and sustainable Mood Ring vapes in Canada.
- Granted U.S. Patent for cannabis extraction process, unlocking future licensing opportunities.
Subsequent Events and Business Updates
- Announced today, Julie Phillips has been appointed as Chair of Neptune’s Board of Directors.
- Continued to decrease corporate overhead byexpanding in-house legal capabilities.
|
Consolidated Balance Sheets (Amounts in Canadian dollars) |
December 31, |
March 31, |
||
|
Assets |
||||
|
Current assets: |
||||
|
Cash and cash equivalents |
$ 16,628,529 |
$ 75,167,100 |
||
|
Short-term investment |
24,078 |
24,050 |
||
|
Trade and other receivables |
11,575,036 |
10,887,748 |
||
|
Prepaid expenses |
6,717,289 |
4,631,422 |
||
|
Inventories |
22,365,421 |
21,754,147 |
||
|
57,310,353 |
112,464,467 |
|||
|
Property, plant and equipment |
42,694,704 |
46,913,688 |
||
|
Right-of-use assets |
2,805,208 |
3,541,147 |
||
|
Intangible assets |
30,374,370 |
32,606,969 |
||
|
Goodwill |
32,112,223 |
31,974,526 |
||
|
Asset related to warrants |
655,088 |
— |
||
|
Other financial assets |
6,935,606 |
7,243,774 |
||
|
Total assets |
$ 172,887,552 |
$ 234,744,571 |
||
|
Liabilities and Equity |
||||
|
Current liabilities: |
||||
|
Trade and other payables |
$ 30,690,536 |
$ 24,975,764 |
||
|
Lease liabilities |
464,852 |
288,947 |
||
|
Deferred revenues |
212,060 |
2,499,376 |
||
|
Provisions |
1,434,489 |
2,820,995 |
||
|
32,801,937 |
30,585,082 |
|||
|
Lease liabilities |
3,017,158 |
3,626,574 |
||
|
Liability related to warrants |
— |
9,879,980 |
||
|
Loans and borrowings |
14,425,126 |
14,211,339 |
||
|
Other liability |
626,795 |
2,258,449 |
||
|
Total liabilities |
50,871,016 |
60,561,424 |
||
|
Equity: |
||||
|
Share capital |
387,940,705 |
379,643,670 |
||
|
Warrants |
23,918,210 |
23,947,111 |
||
|
Contributed surplus |
70,250,746 |
71,991,328 |
||
|
Accumulated other comprehensive income |
945,553 |
1,202,409 |
||
|
Deficit |
(383,272,779) |
(330,681,375) |
||
|
Total equity attributable to equity holders of the Corporation |
99,782,435 |
146,103,143 |
||
|
Non-controlling interest |
22,234,101 |
28,080,004 |
||
|
Total equity attributable to non-controlling interest |
22,234,101 |
28,080,004 |
||
|
Total equity |
122,016,536 |
174,183,147 |
||
|
Total liabilities and equity |
$ 172,887,552 |
$ 234,744,571 |
|
Three-month periods ended |
|||||||
|
Consolidated Statements of Income (Amounts in Canadian dollars) |
December 31, |
December 31, |
|||||
|
(Restated) |
|||||||
|
Revenue from sales and services |
$ |
18,072,543 |
$ |
2,768,636 |
|||
|
Royalty revenues |
347,923 |
523,096 |
|||||
|
Other revenues |
25,410 |
28,579 |
|||||
|
Total revenues |
18,445,876 |
3,320,311 |
|||||
|
Cost of sales other than loss on inventories, net of subsidies |
(16,397,778) |
(5,915,536) |
|||||
|
Impairment loss on inventories |
— |
(7,390,940) |
|||||
|
Total Cost of Sales
|
(16,397,778) |
(13,306,476) |
|||||
|
Gross profit |
2,048,098 |
(9,986,165) |
|||||
|
Research and development expenses, net of tax credits and grants |
(312,131) |
(436,307) |
|||||
|
Selling, general and administrative expenses, net of subsidies |
(22,869,010) |
(31,580,722) |
|||||
|
Impairment loss related to property, plant and equipment |
— |
(1,998,497) |
|||||
|
Impairment loss related to right-of-use assets |
— |
(142,345) |
|||||
|
Impairment loss related to goodwill |
— |
(35,567,246) |
|||||
|
Net gain on sale of assets |
8,109 |
— |
|||||
|
Loss from operating activities |
(21,124,934) |
(79,711,282) |
|||||
|
Finance income |
3,733 |
18,255 |
|||||
|
Finance costs |
(1,454,577) |
(821,180) |
|||||
|
Foreign exchange gain (loss) |
(750,186) |
(1,558,231) |
|||||
|
Revaluation of derivatives – gain |
2,384,726 |
5,366,395 |
|||||
|
183,696 |
3,005,239 |
||||||
|
Loss before income taxes |
(20,941,238) |
(76,706,043) |
|||||
|
Income tax recovery (expense) |
— |
1,828,930 |
|||||
|
Net loss |
(20,941,238) |
(74,877,113) |
|||||
|
Other comprehensive income |
|||||||
|
Unrealized gains (losses) on investments |
(22,515) |
247,974 |
|||||
|
Net change in unrealized foreign currency gains and losses |
(59,961) |
(1,773,253) |
|||||
|
Total other comprehensive income (loss) |
(82,476) |
(1,525,279) |
|||||
|
Total comprehensive loss |
$ |
(21,023,714) |
$ |
(76,402,392) |
|||
|
Net loss attributable to: |
|||||||
|
Equity holders of the Corporation |
$ |
(18,658,181) |
$ |
(74,877,113) |
|||
|
Non-controlling interest |
(2,283,057) |
— |
|||||
|
Net loss |
$ |
(20,941,238) |
$ |
(74,877,113) |
|||
|
Total comprehensive loss attributable to: |
|||||||
|
Equity holders of the Corporation |
$ |
(18,656,949) |
$ |
(76,402,392) |
|||
|
Non-controlling interest |
(2,366,765) |
— |
|||||
|
Total comprehensive loss |
$ |
(21,023,714) |
$ |
(76,402,392) |
|||
|
Basic and diluted loss per share attributable to: |
|||||||
|
Equity holders of the Corporation |
$ |
(0.11) |
$ |
(0.59) |
|||
|
Non-controlling interest |
$ |
(0.01) |
$ |
— |
|||
|
Basic and diluted weighted average number of common shares |
167,341,647 |
126,348,943 |
|||||
|
Three-month periods ended |
|||
|
December 31, 2021 |
December 31, 2020 |
||
|
Adjusted EBITDA Reconciliation(Amounts in Canadian dollars) |
(Restated) |
||
|
Net loss |
(20,941,238) |
(74,877,113) |
|
|
Add (deduct): |
|||
|
Depreciation and amortization |
1,924,107 |
2,814,816 |
|
|
Acceleration of amortization long-lived non-financial assets |
– |
13,953,319 |
|
|
Revaluation of derivatives |
(1,388,593) |
(5,366,395) |
|
|
Net finance costs |
1,204,897 |
2,361,156 |
|
|
Stock-based compensation |
1,214,290 |
3,576,872 |
|
|
Non-employees compensation related to warrants |
(34,673) |
1,694,981 |
|
|
Provisions |
172,346 |
79,955 |
|
|
System migration, conversion, implementation |
410,323 |
– |
|
|
CEO D&O insurance |
6,556,757 |
– |
|
|
Signing bonuses, severances and related costs |
1,066,561 |
– |
|
|
Write-down of inventories and deposits |
– |
7,390,940 |
|
|
Impairment loss on long-term assets |
– |
37,708,088 |
|
|
Change in fair value of contingent consideration |
– |
– |
|
|
Income tax expense (recovery) |
– |
(1,828,930) |
|
|
Adjusted EBITDA loss |
(9,815,223) |
(12,492,311) |
|
About Neptune Wellness Solutions Inc.
Headquartered in Laval, Quebec, Neptune is a diversified health and wellness 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/.
