- Quarterly Net Loss Reduced by
53% Compared to Prior Year
- YTD Net Loss Reduced by 82%
Compared to Prior Year
- Total YTD Revenues of $14.4
Million Lower by 2% Compared to Prior Year
Sonoma Pharmaceuticals, Inc. (Nasdaq: SNOA), a specialty
pharmaceutical company dedicated to identifying, developing and
commercializing unique, differentiated therapies to millions of
patients living with chronic skin conditions, today announced
financial results for the third quarter and nine months ended
December 31, 2019.
“We are pleased that our third fiscal quarter results show
continued progress towards our goal of building a sustainable
company that can deliver both growth and profitability. This
quarter is the closest we have come to break-even in the Company’s
history,” said Amy Trombly, CEO of Sonoma Pharmaceuticals. Ms.
Trombly continued, “We anticipate that 2020 will be a year of
focusing on business strategies and geographic markets that have
shown success and have future promise. We expect that our
revenues and earnings will fluctuate in the near-term as we divest
low or non-profitable business units and invest in strategies that
have shown positive results.”
Results for the Quarter Ended December
31, 2019
Total revenue of $4,678,000 for the third quarter ended December
31, 2019, decreased by $602,000, or 11%, from $5,280,000 for the
same period last year. Product revenues of $4,381,000 for the third
quarter ended December 31, 2019, were down by 13%, or $664,000,
when compared to $5,045,000 in the same period last year. This
decrease was primarily the result of decline in product revenue of
$918,000, or 31%, in the United States partly due to the launch of
Epicyn in the quarter ended December 31, 2018, and weakening
insurance reimbursements for our prescription products in the
current quarter. The decrease was partially offset by growth in
product revenue of $195,000, or 17%, in Europe and Rest of World
mostly as a result of increased sales, and an increase of product
revenue of $59,000, or 6%, in Latin America.
For the quarter ended December 31, 2019, Sonoma reported total
revenues of $4,678,000 and total cost of revenues of $2,520,000,
resulting in total gross profit of $2,158,000 or 46% of total
revenues, compared to a gross profit of $2,847,000 or 54% of total
revenues, for the same period in the prior year. Product revenues
were $4,381,000 and cost of product revenues were $2,394,000,
resulting in product gross profit of $1,987,000, or 45% of product
revenues, compared to product gross profit of $2,776,000, or 55% of
product revenues, for the same period in the prior year. The
decrease in gross profit as a percentage of product revenues was
primarily due to product mix and weakened insurance reimbursements
in the current period.
Total operating expenses during the third quarter of fiscal year
2020 were $3,140,000, down $2,057,000, or 40%, as compared to the
same period in the prior year. The decrease in total operating
expenses was primarily the result of certain cost savings measures
implemented during 2019, including a reduction in
headcount.
Net loss for the quarter ended December 31, 2019 of $1,084,000
decreased by $1,214,000, or 53%, when compared to net loss of
$2,298,000 for the quarter ended December 31, 2018. The decrease in
net loss is due to a decrease in operating expenses of $2,057,000,
or 40%, primarily due to certain cost saving measures implemented
during the latter part of fiscal year 2019. EBITDA loss for the
quarter ended December 31, 2019 of $802,000, was down $1,839,000,
or 56%, compared to an EBITDA loss of $1,037,000, for the same
period last year.
As of December 31, 2019, Sonoma had cash and
cash equivalents of $3,727,000.
Results for the Nine Months Ended December 31,
2019
Total revenues for the nine months ended December 31, 2019, of
$14,357,000 decreased by $231,000, or 2%, as compared to
$14,588,000 for the nine months ended December 31, 2018. Product
revenues for the nine months ended December 31, 2019 of $13,478,000
decreased by $297,000, or 2%, as compared to $13,775,000 for the
nine months ended December 31, 2018. This decrease in product
revenue was primarily the result of a decline of $621,000, or 8%,
in United States partly due to the launch of Epicyn in the prior
year, weakening insurance reimbursements for our prescription
products and a decrease in spending on sales and marketing efforts
in the current period. This decrease was partially offset by growth
in product revenue of $752,000, or 22% in Europe and Rest of World
mostly as a result of increased sales and an expansion of customer
base. Product revenues in Latin America for the nine months ended
December 31, 2019, of $2,577,000 decreased by $428,000, or 14%,
from $3,005,000 for the same period last year. The decrease was
primarily the result of a large initial order by our customer in
Brazil in the nine months ended December 31, 2018, offset by a
slight increase in Mexico revenue in the current period.
For the nine months ended December 31, 2019, Sonoma reported
total revenues of $14,357,000 and total cost of revenues of
$7,538,000, resulting in total gross profit of 6,819,000 or 47% of
total revenues, compared to a gross profit of $7,005,000 or 48% of
total revenues, for the same period in the prior year.
Net loss for the nine months ended December 31, 2019 of
$1,572,000 decreased by $7,004,000, when compared to net loss of
$8,576,000 for the nine months ended December 31, 2018. The
decrease in net loss is due to a decrease in operating loss of
$4,640,000 as a result of a decrease in operating expenses of
$4,826,000 primarily due to certain cost savings measures
implemented during the latter part of fiscal year 2019.
Additionally, for the nine months ended December 31, 2019,
Sonoma reported income related to the sale of certain assets to
Petagon in the amount of $2,472,000. EBITDA loss for the nine
months ended December 31, 2019 of $3,165,000, was down $3,708,000,
or 54%, compared to an EBITDA loss of $6,873,000 for the same
period last year.
About Sonoma Pharmaceuticals, Inc.
Sonoma Pharmaceuticals is a specialty pharmaceutical company
dedicated to identifying, developing and commercializing unique,
differentiated therapies to millions of patients living with
chronic skin conditions. Sonoma offers early-intervention relief
with virtually no side-effects or contraindications. The company
believes its products, which are sold throughout the United States
and internationally, have improved patient outcomes for more than
six million patients by treating and reducing certain skin diseases
including acne, atopic dermatitis, scarring, infections, itch, pain
and harmful inflammatory responses. Sonoma’s vision is to be a
catalyst for improved care and increased access for all patients.
The company's headquarters are in Petaluma, California,
with manufacturing operations in the United States and Latin
America. European marketing and sales are headquartered in
Roermond, Netherlands. More information can be found at
www.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,” and “expand,” 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 regulatory clinical and
guideline developments may change, scientific data may not be
sufficient to meet regulatory standards or receipt of required
regulatory clearances or approvals, clinical results may not
be replicated in actual patient settings, protection offered
by the company’s patents and patent applications may be
challenged, invalidated or circumvented by its
competitors, the available market
for the company’s products will not be as large as
expected, the company’s products will not be able to penetrate
one or more targeted markets, revenues will not be sufficient
to meet the company’s cash needs, fund further development and
clinical studies, as well as uncertainties relative to 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 Epicyn™ are trademarks or registered
trademarks of Sonoma Pharmaceuticals, Inc.
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESCondensed Consolidated Balance
Sheets(In thousands, except share and per share
amounts) (Unaudited)
| |
|
December 31, |
|
|
March 31, |
|
| |
|
2019 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
3,727 |
|
|
$ |
3,689 |
|
|
Accounts receivable, net |
|
|
5,029 |
|
|
|
3,481 |
|
|
Inventories |
|
|
2,825 |
|
|
|
3,409 |
|
|
Prepaid expenses and other current assets |
|
|
2,048 |
|
|
|
1,694 |
|
|
Current portion of deferred consideration, net of discount |
|
|
229 |
|
|
|
223 |
|
|
Total current assets |
|
|
13,858 |
|
|
|
12,496 |
|
| Operating lease right-of-use
assets |
|
|
1,057 |
|
|
|
– |
|
| Property and equipment,
net |
|
|
483 |
|
|
|
727 |
|
| Deferred consideration, net of
discount, less current portion |
|
|
1,025 |
|
|
|
1,103 |
|
| Other assets |
|
|
73 |
|
|
|
122 |
|
|
Total assets |
|
$ |
16,496 |
|
|
$ |
14,448 |
|
| |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
| Current liabilities: |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
2,159 |
|
|
$ |
1,255 |
|
|
Accrued expenses and other current liabilities |
|
|
1,423 |
|
|
|
1,501 |
|
|
Deferred revenue |
|
|
228 |
|
|
|
47 |
|
|
Deferred revenue Invekra |
|
|
57 |
|
|
|
55 |
|
|
Operating lease liabilities |
|
|
291 |
|
|
|
– |
|
|
Current portion of long-term debt |
|
|
– |
|
|
|
322 |
|
|
Current portion of capital leases |
|
|
– |
|
|
|
141 |
|
|
Common Stock liability |
|
|
– |
|
|
|
270 |
|
|
Total current liabilities |
|
|
4,158 |
|
|
|
3,591 |
|
| Operating lease liabilities
non-current |
|
|
807 |
|
|
|
– |
|
| Long-term deferred revenue
Invekra |
|
|
322 |
|
|
|
356 |
|
| Long-term debt, less current
portion |
|
|
– |
|
|
|
12 |
|
|
Total liabilities |
|
|
5,287 |
|
|
|
3,959 |
|
|
|
|
|
|
|
|
|
|
|
| Commitments and
Contingencies |
|
|
– |
|
|
|
– |
|
| Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
Convertible preferred stock, $0.0001 par value; 714,286 shares
authorized at December 31, 2019 and March 31, 2019 respectively;
1.55 shares issued and outstanding at December 31, 2019 and March
31, 2019 respectively |
|
|
– |
|
|
|
– |
|
|
Common stock, $0.0001 par value; 24,000,000 shares authorized at
December 31, 2019 and March 31, 2019, respectively, 1,777,483 and
1,316,335 shares issued and outstanding at December 31, 2019 and
March 31, 2019, respectively |
|
|
2 |
|
|
|
2 |
|
|
Additional paid-in capital |
|
|
186,257 |
|
|
|
184,074 |
|
|
Accumulated deficit |
|
|
(170,869 |
) |
|
|
(169,238 |
) |
|
Accumulated other comprehensive loss |
|
|
(4,181 |
) |
|
|
(4,349 |
) |
|
Total stockholders’ equity |
|
|
11,209 |
|
|
|
10,489 |
|
|
Total liabilities and stockholders’ equity |
|
$ |
16,496 |
|
|
$ |
14,448 |
|
| |
|
|
|
|
|
|
|
|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Comprehensive Loss(In thousands, except per share
amounts)(Unaudited)
| |
|
Three Months EndedDecember
31, |
|
|
Nine Months EndedDecember
31, |
|
| |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
4,381 |
|
|
$ |
5,045 |
|
|
$ |
13,478 |
|
|
$ |
13,775 |
|
|
Service |
|
|
297 |
|
|
|
235 |
|
|
|
879 |
|
|
|
813 |
|
|
Total revenues |
|
|
4,678 |
|
|
|
5,280 |
|
|
|
14,357 |
|
|
|
14,588 |
|
| Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
2,394 |
|
|
|
2,269 |
|
|
|
7,147 |
|
|
|
7,006 |
|
|
Service |
|
|
126 |
|
|
|
164 |
|
|
|
391 |
|
|
|
577 |
|
|
Total cost of revenues |
|
|
2,520 |
|
|
|
2,433 |
|
|
|
7,538 |
|
|
|
7,583 |
|
| Gross profit |
|
|
2,158 |
|
|
|
2,847 |
|
|
|
6,819 |
|
|
|
7,005 |
|
| Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
248 |
|
|
|
451 |
|
|
|
856 |
|
|
|
1,191 |
|
|
Selling, general and administrative |
|
|
2,892 |
|
|
|
4,746 |
|
|
|
9,877 |
|
|
|
14,368 |
|
|
Total operating expenses |
|
|
3,140 |
|
|
|
5,197 |
|
|
|
10,733 |
|
|
|
15,559 |
|
| Loss from operations |
|
|
(982 |
) |
|
|
(2,350 |
) |
|
|
(3,914 |
) |
|
|
(8,554 |
) |
| Interest expense |
|
|
(1 |
) |
|
|
(7 |
) |
|
|
(13 |
) |
|
|
(26 |
) |
| Interest income |
|
|
33 |
|
|
|
37 |
|
|
|
117 |
|
|
|
139 |
|
| Other (expense) income |
|
|
(134 |
) |
|
|
22 |
|
|
|
(234 |
) |
|
|
(135 |
) |
| Gain on sale of assets |
|
|
– |
|
|
|
– |
|
|
|
2,472 |
|
|
|
– |
|
| Net loss |
|
$ |
(1,084 |
) |
|
$ |
(2,298 |
) |
|
$ |
(1,572 |
) |
|
$ |
(8,576 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss per share: basic and
diluted |
|
$ |
(0.72 |
) |
|
$ |
(2.37 |
) |
|
$ |
(1.14 |
) |
|
$ |
(10.79 |
) |
| Weighted-average number of
shares used in per common share calculations: basic and
diluted |
|
|
1,500 |
|
|
|
971 |
|
|
|
1,378 |
|
|
|
795 |
|
| Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(1,084 |
) |
|
$ |
(2,298 |
) |
|
$ |
(1,572 |
) |
|
$ |
(8,576 |
) |
| Foreign currency translation
adjustments |
|
|
264 |
|
|
|
(291 |
) |
|
|
168 |
|
|
|
(443 |
) |
| Comprehensive loss |
|
$ |
(820 |
) |
|
$ |
(2,589 |
) |
|
$ |
(1,404 |
) |
|
$ |
(9,019 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESRECONCILIATION OF GAAP MEASURES TO
NON-GAAP MEASURES(In
thousands) (Unaudited)
| |
|
Three Months EndedDecember
31, |
|
|
Nine Months EndedDecember
31, |
|
| |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
(1) Loss from operations minus non-cash expenses EBITDA
loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP loss from operations as
reported |
|
$ |
(982 |
) |
|
$ |
(2,350 |
) |
|
$ |
(3,914 |
) |
|
$ |
(8,554 |
) |
| Non-cash adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based compensation |
|
|
112 |
|
|
|
402 |
|
|
|
537 |
|
|
|
1,334 |
|
| Depreciation and
amortization |
|
|
68 |
|
|
|
109 |
|
|
|
212 |
|
|
|
347 |
|
| Non-GAAP loss from operations
minus non-cash expenses EBITDA loss |
|
$ |
(802 |
) |
|
$ |
(1,839 |
) |
|
$ |
(3,165 |
) |
|
$ |
(6,873 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (2) Net loss minus
non-cash expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP net (loss) income as
reported |
|
$ |
(1,084 |
) |
|
$ |
(2,298 |
) |
|
$ |
(1,572 |
) |
|
$ |
(8,576 |
) |
| Non-cash adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based compensation |
|
|
112 |
|
|
|
402 |
|
|
|
537 |
|
|
|
1,334 |
|
| Depreciation and
amortization |
|
|
68 |
|
|
|
109 |
|
|
|
212 |
|
|
|
347 |
|
| Non-GAAP net (loss) income
minus non-cash expenses |
|
$ |
(904 |
) |
|
$ |
(1,787 |
) |
|
$ |
(823 |
) |
|
$ |
(6,895 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3) Operating expenses
minus non-cash expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| GAAP operating expenses as
reported |
|
$ |
3,140 |
|
|
$ |
5,197 |
|
|
$ |
10,733 |
|
|
$ |
15,559 |
|
| Non-cash adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock-based compensation |
|
|
(95 |
) |
|
|
(378 |
) |
|
|
(486 |
) |
|
|
(1,245 |
) |
| Depreciation and
amortization |
|
|
(10 |
) |
|
|
(57 |
) |
|
|
(43 |
) |
|
|
(169 |
) |
| Non-GAAP operating expenses
minus non-cash expenses |
|
$ |
3,035 |
|
|
$ |
4,762 |
|
|
$ |
10,204 |
|
|
$ |
14,145 |
|
| (1) |
Loss from operations minus non-cash expenses (EBITDAS) is a
non-GAAP financial measure. The Company defines operating loss
minus non-cash expenses as GAAP reported operating 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. |
| |
|
| (2) |
Net loss minus non-cash expenses is a non-GAAP financial measure.
The Company defines net loss minus non-cash expenses as GAAP
reported net 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. |
| |
|
| (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. |
| |
|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESPRODUCT RELATED REVENUE
SCHEDULES(In thousands) (Unaudited)
The following table presents the Company’s
disaggregated product revenues by geographic region:
| |
|
Three Months Ended December 31, |
|
|
|
|
|
|
| |
|
2019 |
|
|
2018 |
|
|
$ Change |
|
|
% Change |
|
United States |
|
$ |
2,059,000 |
|
|
$ |
2,977,000 |
|
|
$ |
(918,000 |
) |
|
|
(31 |
%) |
| Latin America |
|
|
988,000 |
|
|
|
929,000 |
|
|
|
59,000 |
|
|
|
6 |
% |
| Europe and Rest of the
World |
|
|
1,334,000 |
|
|
|
1,139,000 |
|
|
|
195,000 |
|
|
|
17 |
% |
| Total |
|
$ |
4,381,000 |
|
|
$ |
5,045,000 |
|
|
$ |
(664,000 |
) |
|
|
(13 |
%) |
| |
|
Nine Months Ended December 31, |
|
|
|
|
|
|
| |
|
2019 |
|
|
2018 |
|
|
$ Change |
|
|
% Change |
|
United States |
|
$ |
6,753,000 |
|
|
$ |
7,374,000 |
|
|
$ |
(621,000 |
) |
|
|
(8 |
%) |
| Latin America |
|
|
2,577,000 |
|
|
|
3,005,000 |
|
|
|
(428,000 |
) |
|
|
(14 |
%) |
| Europe and Rest of the
World |
|
|
4,148,000 |
|
|
|
3,396,000 |
|
|
|
752,000 |
|
|
|
22 |
% |
| Total |
|
$ |
13,478,000 |
|
|
$ |
13,775,000 |
|
|
$ |
(297,000 |
) |
|
|
(2 |
%) |
Media and Investor Contact:
Sonoma Pharmaceuticals, Inc.
ir@sonomapharmaceuticals.com
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