Revenue Totaled $18.4 Million, Marking Fourth Consecutive Quarter
of Sequential Growth
Gross Margins Hit Inflection Point, Turning
Positive for the First Time Since Transition to Diversified CPG
Company
LAVAL, QC, Feb. 10, 2022 /CNW/ - 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 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,
2021
|
|
March 31,
2021
|
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,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
(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
on translation of net investments in foreign
operations
|
|
|
(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)
|
Conference Call Details
Neptune will host a conference
call with management today at 10:00 AM
EST. The call will be webcast and can be accessed at
www.investors.neptunewellness.com. To listen to the live call,
please go to the website at least 15 minutes early to register,
download and install any necessary audio software. The webcast will
be archived for approximately 90 days.
The unaudited condensed consolidated interim financial
statements of Neptune Wellness Solutions Inc., which were prepared
in accordance with IAS 34, Interim Financial Reporting of
International Financial Reporting Standards ("IFRS"), on a basis
consistent with those accounting policies followed by the
Corporation in the most recent audited consolidated annual
financial statements, and the management discussion and analysis
report for the three-month period ended on December 31, 2021 have been filed on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml, and may
also be found on our investor relations website at
www.investors.neptunewellness.com. All amounts are in Canadian
dollars except if specified otherwise.
Non-IFRS Measures
This news release contains a non-IFRS measure, specifically
Adjusted EBITDA. We use Adjusted EBITDA to provide investors with a
supplemental measure of our operating performance and thus
highlight trends in our core business that may not otherwise be
apparent when relying solely on IFRS financial measures. We
believe that securities analysts, investors and other interested
parties frequently use non-IFRS measures in the evaluation of
issuers. Management also uses this non-IFRS measure in order to
facilitate operating performance comparisons from period to period,
prepare annual operating budgets and assess our ability to meet our
capital expenditure and working capital requirements. Adjusted
EBITDA is not recognized, defined or standardized measures under
IFRS. Our definition of Adjusted EBITDA will likely differ from
that used by other companies (including our peers) and therefore
comparability may be limited. Non-IFRS measures should not be
considered a substitute for or in isolation from measures prepared
in accordance with IFRS. Investors are encouraged to review our
financial statements and disclosures in their entirety and are
cautioned not to put undue reliance on non-IFRS measures and view
them in conjunction with the most comparable IFRS financial
measures. For more information on our Adjusted EBITDA, please refer
to our Management Discussion and Analysis for the quarter.
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
Forward-looking statements contained in this press release
involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance and achievements of
Neptune Wellness 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, expected
profitable growth, 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 initiative; implications of
the COVID-19 pandemic on the Company's operations; fluctuations in
general macroeconomic conditions; fluctuations in securities
markets; expectations regarding the size of the cannabis markets
where the Company operates; 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
Information Form, and under the heading "Risk Disclosure" in the
Company's Management's Discussion and Analysis dated July 15, 2021, for the year ended March 31, 2021, and the Company's quarterly
Management's Discussion and Analysis, filed under the Company's
profile on SEDAR at www.sedar.com.
Neither NASDAQ nor the Toronto Stock Exchange accepts
responsibility for the adequacy or accuracy of this
release.
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SOURCE Neptune Wellness Solutions Inc.