- Gross Profit Percentage for the Quarter ended December 31,
2021 Increased 1% versus Prior Year and 8% versus Prior
Quarter
- Net loss per Share of $(0.31) for the Third Quarter Compared
to a Net Loss per Share of $(0.32) for the Prior Year
- $8.5 Million of Cash and Strengthened Balance Sheet
Sonoma Pharmaceuticals, Inc. (Nasdaq: SNOA), a global healthcare
leader developing and producing stabilized hypochlorous acid (HOCl)
products for a wide range of applications, including wound care,
eye care, nasal care, oral care and dermatological conditions today
announced financial results for its third fiscal quarter and nine
months ended December 31, 2021.
“We continue to reshape Sonoma into a healthier company by
divesting unprofitable product lines while building strength in the
U.S. and international markets with profitable products,” said Amy
Trombly, CEO of Sonoma. “While our top line has decreased,
primarily as the result of our low-margin contract with Invekra
ending, our gross margins and bottom line have improved and our
balance sheet is stronger than it has been in years. We continue to
add new partners and expand our existing partner relationships with
the goal of building a strong, diverse business driving towards
profitability.”
Business Highlights for the Third Fiscal Quarter
Sonoma further expanded its existing partnerships and added new
partnerships:
- On November 4, 2021, Sonoma entered into an expanded
partnership with its long-term partner Dyamed Biotech Pte Ltd., for
Singapore, Malaysia, Indonesia and Thailand for the sale and
distribution of dermatology, eye, and oral products for multiple
indications using Sonoma’s patented Microcyn® Technology. Dyamed,
one of Sonoma’s first international partners, successfully
commercializes Dermacyn® Wound Care, Dermacyn® Scarless for Scar
Reduction, and Dermacyn® Ezyma Spray for itch relief associated
with atopic dermatitis. Dyamed expects to launch Ocucyn® Eye Care
and Oracyn® Oral Care in 2022.
- On January 18, 2022, Sonoma partnered with Anlicare
International to seek regulatory clearance to sell its oral and
dental products in China. Anlicare will bear the costs of the
regulatory process. The regulatory clearance is expected in
2024.
- On January 19, 2022, Sonoma granted Salus Medical a
non-exclusive right to sell Sonoma’s dermatology, wound, eye, oral
and dental care products in the United States.
Additionally, Sonoma added to its regulatory approvals around
the world. Sonoma’s New Zealand partner, Te Arai Biofarma, obtained
regulatory approval in Taiwan for Sonoma’s Electromicyn60 hospital
grade surface disinfectant and expects to launch sales in summer
2022.
Results for the Third Quarter Ended December 31, 2021
Revenue of $2,902,000 for the third quarter ended December 31,
2021, decreased by $2,034,000, or 41%, from $4,936,000 for the same
period last year. The year-over-year decrease was primarily the
result of decreases in revenue in United States of $1,045,000 from
the EMC transaction and a decrease in Latin America of $1,034,000,
offset by an increase in revenue in Europe and the Rest of World of
$45,000. The decrease in revenue in Latin America is the result of
the low margin contract with Invekra ending in October 2020. Since
then, Invekra has begun to produce their own product and Sonoma is
manufacturing backup orders at a reduced scale at full cost rather
than larger volumes at reduced prices. Although the end of this
contract has caused a reduction in Sonoma’s top line, the overall
impact has been neutral to its bottom line due to the low margins
required by the contract. Additionally, divesting sales in its
prescription dermatology business to EMC has resulted in reduced
revenue, but an improving bottom line. Sonoma now sells its
prescription products to EMC at a lower price than what it sold
them to patients for, however, EMC is responsible for sales and
distribution and Sonoma eliminated the costs of a direct sales
force and associated overhead costs. Prior to this transaction, the
U.S. prescription dermatology business had operated at a
significant loss and partnering with EMC has improved the overall
financial health of Sonoma while retaining lower, but now
profitable, revenues from the U.S. prescription dermatology
business.
For the quarter ended December 31, 2021, Sonoma reported
revenues of $2,902,000 and cost of revenues of $1,699,000,
resulting in gross profit of $1,203,000 or 41% of revenues,
compared to a gross profit of $1,995,000 or 40% of revenues, for
the same period in the prior year, and compared to a gross profit
of $1,241,000, or 33% of revenues, for the September quarter. For
the quarter ended December 31, 2021, gross margins increased by 1%
when compared to the same period last year and 8% when compared to
the previous quarter.
Total operating expenses during the third quarter of fiscal year
2022 were $2,161,000, up $28,000, or 1%, when compared to
$2,133,000 during the same period in the prior year.
Net loss from continuing operations for the quarter ended
December 31, 2021, was $944,000, compared to a net loss of $626,000
for the quarter ended December 31, 2020. EBITDAS loss for the
quarter ended December 31, 2021 of $852,000, was down $887,000,
compared to an EBITDAS income of $35,000 for the same period last
year.
Results for the Nine Months Ended December 31, 2021
Revenue of $10,330,000 for the nine months ended December 31,
2021, decreased by $6,142,000, or 37%, from $16,472,000 for the
same period last year. This decrease was primarily the result of
decreases in revenue in Latin America of $4,303,000 and in the
United States of $1,710,000. The decrease in revenue in Latin
America resulted from the contract with Invekra ending in October
2020. Although the end of this contract has caused a reduction in
the top line, the overall impact has been neutral to the bottom
line due to the low margins required by the contract. Since the
contract ended, Invekra has begun to produce their own product and
Sonoma is manufacturing backup orders at a reduced scale at full
cost.
For the nine months ended December 31, 2021, Sonoma reported
revenues of $10,330,000 and cost of revenues of $6,433,000,
resulting in gross profit of $3,897,000, or 38% of revenues,
compared to a gross profit of $6,753,000 or 41% or revenues for the
same period last year. For the nine month ended December 31, 2021,
gross margins decreased by 3% when compared to the same period last
year, partially as a result of the EMC transaction. While Sonoma
now sells prescription products to EMC at a reduced price instead
of selling directly to patients, it has brought its U.S.
prescription drug business to profitability and improved the
company’s overall health by eliminating the overhead costs of a
direct sales force and administration. The product mix sold during
any particular quarter will also influence gross margins.
Total operating expenses during the nine months ended December
31, 2021 of $6,724,000 decreased by $664,000, or 9%, compared to
$7,388,000 during the same period last year. The decrease in total
operating expenses was primarily related to a reduction in
headcount as a result of the EMC deal, partially offset by
increased insurance costs.
Net loss from continuing operations for the nine months ended
December 31, 2021, was $2,136,000, compared to a net loss of
$1,183,000 for the same period in prior year. EBITDAS loss for the
nine months ended December 31, 2021 of $2,507,000 was up
$2,355,000, compared to an EBITDAS loss of $152,000 for the same
period last year.
As of December 31, 2021, Sonoma had cash and cash equivalents of
$8.5 million compared to $4.2 million at March 31, 2021.
About Sonoma Pharmaceuticals, Inc.
Sonoma Pharmaceuticals is a global healthcare leader for
developing and producing stabilized hypochlorous acid (HOCl)
products for a wide range of applications, including wound care,
animal health care, eye care, nasal care, oral care, and
dermatological conditions. The company’s products reduce
infections, itch, pain, scarring and harmful inflammatory responses
in a safe and effective manner. In-vitro and clinical studies of
hypochlorous acid (HOCl) show it to have impressive antipruritic,
antimicrobial, antiviral and anti-inflammatory properties. Sonoma’s
stabilized HOCl immediately relieves itch and pain, kills pathogens
and breaks down biofilm, does not sting or irritate skin and
oxygenates the cells in the area treated assisting the body in its
natural healing process. The company’s products are sold either
directly or via partners in 54 countries worldwide and the company
actively seeks new distribution partners. The company’s principal
office is in Woodstock, Georgia, with manufacturing operations in
Latin America. European marketing and sales are headquartered in
Roermond, Netherlands. More information can be found at
www.sonomapharma.com. For partnership opportunities, please contact
busdev@sonomapharma.com.
Forward-Looking Statements
Except for historical information herein, matters set forth in
this press release are forward-looking within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, including statements about the commercial and
technology progress and future financial performance of Sonoma
Pharmaceuticals, Inc. and its subsidiaries (the “company”). These
forward-looking statements are identified by the use of words such
as “continue,” “reduce,” “develop” and “goal,” among others.
Forward-looking statements in this press release are subject to
certain risks and uncertainties inherent in the company’s business
that could cause actual results to vary, including such risks that
the company may never achieve profitability or continue as a going
concern, the company’s dependance on third-party distributors, the
company’s exposure to risks from its international operations, its
ability to obtain regulatory clearances, the market penetration of
its products, revenues will not be sufficient to meet the company’s
cash needs, fund further development, as well as uncertainties
relative to the COVID-19 pandemic and economic development, varying
product formulations and a multitude of diverse regulatory and
marketing requirements in different countries and municipalities,
and other risks detailed from time to time in the company’s filings
with the Securities and Exchange Commission. The company disclaims
any obligation to update these forward-looking statements, except
as required by law.
Sonoma Pharmaceuticals™ and Microcyn® are trademarks or
registered trademark of Sonoma Pharmaceuticals, Inc. All other
trademarks and service marks are the property of their respective
owners.
SONOMA PHARMACEUTICALS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In thousands, except share
amounts)
December 31, 2021
March 31, 2021
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
8,529
$
4,220
Accounts receivable, net
2,854
2,806
Inventories, net
2,879
2,530
Prepaid expenses and other current
assets
3,226
3,218
Current portion of deferred consideration,
net of discount
211
209
Total current assets
17,699
12,983
Property and equipment, net
299
360
Operating lease, right of use assets
623
769
Deferred consideration, net of discount,
less current portion
651
763
Other assets
75
112
Total assets
$
19,347
$
14,987
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
1,583
$
1,769
Accrued expenses and other current
liabilities
1,292
1,154
Deferred revenue
100
267
Deferred revenue Invekra
52
52
Current portion of debt – PPP
587
–
Current portion of long-term debt
-
596
Operating lease liabilities
261
240
Total current liabilities
3,875
4,078
Long-term deferred revenue Invekra
190
229
Long-term debt, less current portion –
PPP
–
1,310
Withholding tax payable
3,751
3,478
Operating lease liabilities, less current
portion
362
529
Total liabilities
$
8,178
$
9,624
Commitments and Contingencies
–
–
Stockholders’ Equity:
Convertible preferred stock, $0.0001 par
value; 714,286 shares authorized at December 31, 2021 and March 31,
2021, 0 shares issued and outstanding at December 31, 2021 and
March 31, 2021
–
–
Common stock, $0.0001 par value;
24,000,000 shares authorized December 31, 2021 and March 31, 2021,
3,099,341 and 2,092,909 shares issued and outstanding at December
31, 2021 and March 31, 2021, respectively
3
2
Additional paid-in capital
197,156
189,217
Accumulated deficit
(181,419
)
(179,277
)
Accumulated other comprehensive loss
(4,571
)
(4,579
)
Total stockholders’ equity
11,169
5,363
Total liabilities and stockholders’
equity
$
19,347
$
14,987
SONOMA PHARMACEUTICALS, INC.
AND SUBSIDIARIES
Condensed Consolidated
Statements of Comprehensive Income (Loss)
(In thousands, except per share
amounts)
(Unaudited)
Three Months Ended
December 31,
Nine Months Ended December
31,
2021
2020
2021
2020
Revenues
$
2,902
$
4,936
$
10,330
$
16,472
Cost of revenues
1,699
2,941
6,433
9,719
Gross profit
1,203
1,995
3,897
6,753
Operating expenses
Research and development
26
33
121
425
Selling, general and administrative
2,135
2,100
6,603
6,963
Total operating expenses
2,161
2,133
6,724
7,388
Loss from operations
(958
)
(138
)
(2,827
)
(635
)
Interest income (expense), net
3
(2
)
(1
)
2
Other income (expense), net
11
(490
)
542
(687
)
Gain on sale of assets
–
4
150
137
Loss from continuing operations
(944
)
(626
)
(2,136
)
(1,183
)
Income tax expense
–
–
(6
)
–
Income (loss) from discontinued operations
(Note 4)
–
(24
)
–
893
Net loss
$
(944
)
$
(650
)
$
(2,142
)
$
(290
)
Net income (loss) per share: basic
Continuing operations
$
(0.31
)
$
(0.31
)
$
(0.85
)
$
(0.60
)
Discontinued operations
–
(0.01
)
–
0.45
Total basic net income (loss) per
share
$
(0.31
)
$
(0.32
)
$
(0.85
)
$
(0.15
)
Net income (loss) per share: diluted
Continuing operations
$
(0.31
)
$
(0.31
)
$
(0.85
)
$
(0.60
)
Discontinued operations
–
(0.01
)
–
0.45
Total diluted net income (loss) per
share
$
(0.31
)
$
(0.32
)
$
(0.85
)
$
(0.15
)
Weighted-average number of shares used in
per common share calculations: basic
3,080
2,052
2,507
1,967
Weighted-average number of shares used in
per common share calculations: diluted
3,080
2,052
2,507
1,967
Other comprehensive income (loss)
Net loss
$
(944
)
$
(650
)
$
(2,142
)
$
(290
)
Foreign currency translation
adjustments
(65
)
1,020
8
1,375
Comprehensive income (loss)
$
(1,009
)
$
370
$
(2,134
)
$
1,085
SONOMA PHARMACEUTICALS, INC.
AND SUBSIDIARIES
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
(In thousands)
(Unaudited)
Three Months Ended
December 31,
Nine Months Ended
December 31,
2021
2020
2021
2020
(1) Loss from operations minus non-cash
expenses EBITDAS loss:
GAAP loss from continuing operations as
reported
$
(958
)
$
(138
)
$
(2,827
)
$
(635
)
Non-cash adjustments:
Stock-based compensation
55
93
169
295
Depreciation and amortization
51
80
151
188
Non-GAAP income (loss) from operations
minus non-cash expenses EBITDAS income (loss)
$
(852
)
$
35
$
(2,507
)
$
(152
)
(2) Net loss minus non-cash
expenses:
GAAP net loss as reported
$
(944
)
$
(650
)
$
(2,142
)
$
(290
)
Non-cash adjustments:
Stock-based compensation
55
93
169
295
Depreciation and amortization
51
80
151
188
Non-GAAP net income (loss) minus non-cash
expenses
$
(838
)
$
(477
)
$
(1,822
)
$
193
(3) Operating expenses minus non-cash
expenses
GAAP operating expenses as reported
$
2,161
$
2,133
$
6,724
$
7.388
Non-cash adjustments:
Stock-based compensation
(55
)
(93
)
(169
)
(295
)
Depreciation and amortization
(51
)
(80
)
(151
)
(188
)
Non-GAAP operating expenses minus non-cash
expenses
$
2,055
$
1,960
$
6,404
$
6,905
(1)
Income (loss) from continuing operations minus non-cash expenses
(EBITDAS) is a non-GAAP financial measure. The company defines
operating income (loss) minus non-cash expenses as GAAP reported
operating income (loss) minus operating depreciation and
amortization, and operating stock-based compensation. The company
uses this measure for the purpose of modifying the operating loss
to reflect direct cash related transactions during the measurement
period. EBITDAS is not meant to be viewed as a substitution of net
income or cash flow from operations, both of which are GAAP
measures.
(2)
Net income (loss) minus non-cash expenses is a non-GAAP
financial measure. The company defines net income (loss) minus
non-cash expenses as GAAP reported net income (loss) minus
depreciation and amortization, stock-based compensation, and
non-cash foreign exchange transaction losses. The company uses this
measure for the purpose of modifying the net loss to reflect only
those expenses to reflect direct cash transactions during the
measurement period. Net income (loss) minus non-cash expenses is
not meant to be viewed as a substitution of net income or cash flow
from operations, both of which are GAAP measures.
(3)
Operating expenses minus non-cash expenses is a non-GAAP
financial measure. The company defines operating expenses minus
non-cash expenses as GAAP reported operating expenses minus
operating depreciation and amortization, and operating stock-based
compensation. The company uses this measure for the purpose of
identifying total operating expenses involving cash transactions
during the measurement period. Operating expenses minus non-cash
expenses is not meant to be viewed as a substitution of net income
or cash flow from operations, both of which are GAAP measures.
SONOMA PHARMACEUTICALS, INC.
AND SUBSIDIARIES
PRODUCT RELATED REVENUE
SCHEDULES
(In thousands)
(Unaudited)
The following table presents the company’s
disaggregated product revenues by geographic region:
Three Months Ended
December 31,
(In thousands)
2021
2020
$ Change
% Change
United States
$
933
$
1,978
$
(1,045
)
(53
%)
Latin America
273
1,307
(1,034
)
(79
%)
Europe and Rest of the World
1,696
1,651
45
3
%
Total
$
2,902
$
4,936
$
(2,034
)
(41
%)
Nine Months Ended
December 31,
(In thousands)
2021
2020
$ Change
% Change
United States
$
3,872
$
5,582
$
(1,710
)
(31
%)
Latin America
1,356
5,659
(4,303
)
(76
%)
Europe and Rest of the World
5,102
5,231
(129
)
(3
%)
Total
$
10,330
$
16,472
$
(6,142
)
(37
%)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220211005532/en/
Media and Investor Contact: Sonoma Pharmaceuticals,
Inc. ir@sonomapharma.com
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