Neptune Reports Fiscal First Quarter 2023 Financial Results

Published: Aug. 15, 2022 at 3:15 PM CDT

Fiscal Q1 2023 revenue totaled $16.3 million, an increase of 61% year-over-year

Sprout recorded $8.2 million in revenue, its largest net sales quarter on record

Personal Care and Beauty recorded $5.1 million in revenue, the highest in over two years  

Company will host a conference call at 5:00 p.m. (Eastern Time) Monday, August 15, 2022, to discuss these results

LAVAL, QC, Aug. 15, 2022 /PRNewswire/ - Neptune Wellness Solutions Inc. ("Neptune" or the "Company") (NASDAQ: NEPT) (TSX: NEPT), 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 ending June 30, 2022.

Neptune Wellness Solutions Inc. (CNW Group/Neptune Wellness Solutions Inc.)
Neptune Wellness Solutions Inc. (CNW Group/Neptune Wellness Solutions Inc.)(PRNewswire)

Statement from Neptune Management and Board of Directors:

"The results Neptune achieved in the first quarter of fiscal 2023 reflect the impacts of strategic decisions we have made over the past year to become a leading consumer packaged goods company. We reported revenue of $16.3 million, an increase of 61% year-over-year, led by Sprout, which had its largest net sales quarter yet, and our personal care and beauty products, which generated the largest quarter of revenue in two years."

"We are also continually striving to reduce expenses. Since our strategic review in late 2021, and including our most recent payroll reductions at cannabis and corporate, we have now reduced expenditures by approximately $18 million. This figure includes $7.6 million of reduced payroll expense across corporate and business units, with total headcount decreasing from 170 to 56, a 67% reduction. While it has been a year of tough strategic decisions, we are laser-focused on a path to growth and profitability and believe we are well-positioned to create value going forward."

First Quarter 2023 Financial Highlights:

  • Fiscal first quarter 2023 revenue totaled $16.3 million, as compared to $10.1 million or an increase of 61% for the same period in fiscal 2022.
  • Reported fiscal first quarter 2023 gross profit loss of $2.9 million compared to a gross profit loss of $2.3 million for the fiscal first quarter 2022.
  • Adjusted EBITDA (non-GAAP)1 loss for fiscal first quarter 2023 was $9.8 million compared to an Adjusted EBITDA (non-GAAP)1 loss of $12.9 million for fiscal first quarter 2022.
  • Reported first quarter net loss of $6.5 million compared to a reported net loss of $18.9 million in the prior comparable period in fiscal 2022.

First Quarter Business Highlights:

Subsequent Events and Business Updates:

Conference Call Details: 
The Company will host a conference call at 5:00 p.m. (Eastern Time) on Monday, August 15, 2022, 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.

____________________________

1 This is a non-GAAP measure. For further information on non-GAAP measures, please refer to the "Non-GAAP Measures" section of this news release. Please also refer to the tables in this news release for a reconciliation of this Non-GAAP measure to the most directly comparable GAAP measure. 

NEPTUNE WELLNESS SOLUTIONS INC. 
Condensed Consolidated Interim Balance Sheets 
(Unaudited) (in U.S. dollars)




As at


As at




June 30,
2022


March 31,
2022

Assets












Current assets:






Cash and cash equivalents



$6,231,968


$8,726,341

Short-term investment



18,715


19,255

Trade and other receivables



6,182,876


7,599,584

Prepaid expenses



2,865,974


3,983,427

Inventories



14,056,514


17,059,406

Assets held for sale



21,834,039


Total current assets



51,190,086


37,388,013







Property, plant and equipment



1,412,323


21,448,123

Operating lease right-of-use assets



2,046,835


2,295,263

Intangible assets



21,013,953


21,655,035

Goodwill



22,093,222


22,168,288

Total assets



$97,756,419


$104,954,722







Liabilities and Equity












Current liabilities:






Trade and other payables



$21,296,277


$22,700,849

Current portion of operating lease liabilities



626,928


641,698

Deferred revenues



351,551


285,004

Provisions



1,229,462


1,118,613

Liability related to warrants



3,167,947


5,570,530

Liabilities directly associated with assets held for sale



3,537,176


Total current liabilities



30,209,341


30,316,694







Operating lease liabilities



1,873,919


2,063,421

Loans and borrowings



11,881,589


11,648,320

Other liability



12,931


88,688

Total liabilities



43,977,780


44,117,123







Shareholders' Equity:






Share capital - without par value  (7,614,434  shares issued and outstanding as of
     June 30, 2022; 5,560,829  shares issued and outstanding as of March 31, 2022)



318,921,917


317,051,125

Warrants



6,079,890


6,079,890

Additional paid-in capital



56,346,589


55,980,367

Accumulated other comprehensive loss



(10,605,642)


(7,814,163)

Deficit



(327,466,047)


(323,181,697)

Total equity attributable to equity holders of the Corporation



43,276,707


48,115,522







Non-controlling interest



10,501,932


12,722,077

Total shareholders' equity



53,778,639


60,837,599







Commitments and contingencies






Subsequent events






Total liabilities and shareholders' equity



$97,756,419


$104,954,722

NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss 
(Unaudited) (in U.S. dollars) 
For the three-month periods ended June 30, 2022 and 2021










June 30,
2022


June 30,
2021








Revenue from sales, net of excise taxes



$15,968,098


$9,821,640

Royalty revenues



284,189


236,067

Other revenues



19,941


20,802

Total revenues



16,272,228


10,078,509








Cost of sales other than loss on inventories, net of subsidies



(16,086,578)


(12,401,043)

Impairment loss on inventories



(3,079,997)


Total Cost of sales



(19,166,575)


(12,401,043)

Gross profit (loss)



(2,894,347)


(2,322,534)








Research and development expenses



(214,687)


(259,666)

Selling, general and administrative expenses, net of subsidies



(10,553,734)


(16,014,634)

Impairment loss related to property, plant and equipment



(815,661)


(529,732)

Net gain on sale of assets



85,002


Loss from operating activities



(14,393,427)


(19,126,566)








Finance income



1,424


7,339

Finance costs



(916,522)


(358,116)

Loss on issuance of derivatives



(2,126,955)


Foreign exchange gains (losses)



1,407,285


(1,287,387)

Change in revaluation of marketable securities




(12,212)

Gain on revaluation of derivatives



9,523,700


1,933,330





7,888,932


282,954

Loss before income taxes



(6,504,495)


(18,843,612)








Income tax expense




(12,098)

Net loss



(6,504,495)


(18,855,710)








Other comprehensive (loss) income






Net change in unrealized foreign currency (losses) gains on translation of
     net investments in foreign operations



(2,791,479)


1,976,562

Total other comprehensive (loss) income



(2,791,479)


1,976,562








Total comprehensive loss



$(9,295,974)


$(16,879,148)








Net loss attributable to:






Equity holders of the Corporation



$(4,284,350)


$(16,907,628)

Non-controlling interest



(2,220,145)


(1,948,082)

Net loss



$(6,504,495)


$(18,855,710)








Total comprehensive loss attributable to:






Equity holders of the Corporation



$(7,075,829)


$(14,931,066)

Non-controlling interest



(2,220,145)


(1,948,082)

Total comprehensive loss



$(9,295,974)


$(16,879,148)








Basic and diluted loss per share attributable to:






Equity holders of the Corporation



$(0.72)


$(3.56)

Non-controlling interest



$(0.37)


$(0.41)

Total loss per share



$(1.09)


$(3.97)








Basic and diluted weighted average number of common shares



5,958,266


4,744,685

Adjusted EBITDA1 reconciliation, in millions of dollars



Three-month periods ended



June 30,
2022


June 30,
2021






Net loss for the period


$(6.504)


$(18.856)

Add (deduct):





Depreciation and amortization


1.039


1.344

Revaluation of derivatives


(9.524)


(1.933)

Net finance costs


1.635


1.638

Equity classified stock-based compensation


2.706


3.080

Non-employee compensation related to warrants



0.093

Litigation provisions


(0.263)


0.116

Business acquisition and integration costs



1.048

CEO D&O insurance


(3.154)


Signing bonuses, severances and related costs


0.390


Write-down of inventories and deposits


3.080


Impairment loss on long-lived assets


0.816


0.530

Change in revaluation of marketable securities



0.012

Income tax expense (recovery)



0.012

Adjusted EBITDA1


$(9.779)


$(12.916)

1 The Adjusted EBITDA is not a standard measure endorsed by US GAAP requirements.

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 adding to net loss, net finance costs (income) and depreciation and amortization, and income tax expense (recovery). Other items such as equity classified stock-based compensation, non-employee compensation related to warrants, litigation provisions, business acquisition and integration costs, signing bonuses, severances and related costs, impairment losses on non-financial assets, write-downs of non-financial assets, revaluations of derivatives, system migration, conversion and implementation, CEO directors and officers insurance, costs related to conversion from IFRS to US GAAP and other changes in fair values are also added back. 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, litigation provisions, impairment losses, write-downs revaluations of derivatives and other changes in fair values eliminates the non-cash impact, and the exclusion of acquisition costs, integration costs, signing bonuses, severance and related costs, costs related to cybersecurity and costs related to conversion from IFRS to US GAAP 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. 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. For purposes of this analysis, the Net finance costs (income) caption in the reconciliation below includes the impact of the revaluation of foreign exchange rates.

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/.

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, including the divestiture of the Company's cannabis business, 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, as well as the timing for the filing of the Restated Filings.

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.

Neither NASDAQ nor the Toronto Stock Exchange accepts responsibility for the adequacy or accuracy of this release.

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