Planned divestiture of Canadian cannabis
business to cut costs and realign focus on increasing value of
consumer products business
LAVAL,
QC, June 8, 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 the launch of a new Consumer
Packaged Goods (CPG) focused strategic plan to reduce costs,
improve the Company's path to profitability and enhance current
shareholder value.
This plan builds on the Company's initial strategic review that
took place in fall of 2021 and focuses on two primary actions: (1)
planned accelerated divestiture of the Canadian cannabis business
and (2) a realignment of focus and operational resources toward
increasing the value of Neptune's consumer products business, which
the Company believes is showing greater potential. These actions
are also intended to preserve resources towards meeting its funding
requirements in the near-term while driving long-term profitability
and growth.
Intended divestiture of cannabis
business and reduction of workforce
The intended divestiture of the cannabis business would include
the sale of the Mood Ring™ and PanHash™ brands, along with the
Company's Sherbrooke, Quebec
facility, in one or more transactions. The value of the facility
was recently appraised at $21 million
CAD by a third-party appraisal company. Neptune has retained Stifel
GMP to support the divestiture efforts, with a focus on maximizing
the value to Neptune shareholders.
In order to accelerate its cost savings, the Company will focus
on winding up its cannabis operations pending a transaction.
This planned action is intended to provide significant cost
savings and help maximize operational efficiencies, resulting in a
50% reduction in workforce, over 30% reduction of total payroll
costs and an estimated annual cost savings of $5.8 million CAD. In addition, the Company
expects to see additional cost savings from corresponding
reductions in corporate overhead costs and professional fees.
Finally, the exit of the Canadian cannabis business may impact
the amount and structure of financing the company is currently
seeking. It is expected to reduce the amount of financing the
Company seeks, given a lower anticipated expense structure, along
with anticipated cash inflows from the planned divestiture.
Additionally, the divestiture is expected to facilitate working
with a broader set of financing sources – including traditional
banks and financial institutions that have policies restricting
dealing with businesses exposed to regulated cannabis
operations.
"This is the final stage of our transition to a pure play,
purpose driven consumer packaged goods Company. This strategic
divestiture greatly simplifies our overall structure, enabling us
to hyper-focus on those areas of the business we believe are best
positioned for profitability and growth," said Michael Cammarata, President and CEO of Neptune.
"Of course, the most difficult part of the Company and Board making
this decision is the impact on our workforce. We are committed to
working with those employees to ensure they are supported
throughout this transition. I extend my deepest gratitude to each
and every person impacted by this decision and thank them for their
hard work and dedication to Neptune throughout their tenure."
"Today's decision, while difficult, is a step that is necessary
to best position Neptune for long term success," said Julie Phillips, Neptune's Chair of the Board.
"Together with management, the Board has worked carefully to
explore all possible avenues and we are confident that the decision
to exit the Canadian cannabis sector and realign focus on our
consumer goods brands is the best next move for both the Company
and its shareholders."
Renewed focus on high-potential
business segments
With the planned divestiture of its cannabis business, Neptune
is renewing its focus on the core brands – Sprout Organics and
Biodroga Solutions – that align closely with future consumer trends
and show a greater potential for future growth and
profitability.
Sprout Organics, the fast-growing organic baby and toddler food
brand, has made major distribution gains over the past year,
expanding into Walmart and Target. The recent launch of licensed,
co-branded product with CoComelon – the number one kids
entertainment show globally – has far surpassed initial sales goals
in Walmart stores. Neptune sees significant opportunity to continue
to improve Sprout's margins and accelerate its path to
profitability.
Biodroga Solutions, Neptune's B2B nutraceuticals business, has a
strong foundation and a robust pipeline for continued growth. The
Company's supply chain capabilities and product development
expertise can also be applied to future Neptune brand and product
innovations. Cedrick Billequey,
Biodroga's business leader, also oversees Forest Remedies, a vegan Omega supplement brand,
providing synergies between the B2B business and consumer
brands.
The success of these businesses and their anticipated growth
form the foundation for the future of Neptune as a CPG business
built to serve the next generation of consumers.
Sarah
Tynan promoted to CEO of Sprout Organics
As part of the Company's renewed focus on its CPG brands and
Sprout Organics in particular, Neptune is delighted to announce
that Sarah Tynan, current Sprout
Chief Customer Officer, is promoted to CEO of Sprout, effective
immediately. Ms. Tynan has been instrumental in garnering big
distribution gains for Sprout, including Walmart and Target, and
leading the highly successful CoComelon partnership. She brings
deep sales experience and business acumen, including previous roles
at Newell Brands and Unilever, and will continue to drive the
Sprout business forward.
"Our goal with this strategic plan is to strengthen our cash
position and enhance financial flexibility, centering focus on our
higher potential CPG businesses," said Cammarata. "With
Sarah Tynan as the new CEO of Sprout
and Cedrick Billequey leading
Biodroga Solutions and the personal care & beauty segments of
our business, I'm confident we have not only the right plan, but
the right team in place to take Neptune into its next stage of
growth and profitability."
Neptune Wellness will provide further detail on the execution of
this new plan over the coming months.
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
Statements in this news release that are not statements of
historical or current fact constitute "forward-looking statements"
within the meaning of applicable securities laws. Such
forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause the actual results,
performance and achievements of Neptune to be materially different
from historical results or from any future results, performance and
achievements expressed or implied by such forward-looking
statements. In addition to statements which explicitly describe
such risks and uncertainties, readers are urged to consider
statements labeled with the terms "believes", "belief", "cost
savings", "estimates", "expects", "intends", "projects",
"anticipates", "will", "should" or "plans" to be uncertain and
forward-looking. Forward-looking statements relate to future events
or future performance and reflect management's expectations or
beliefs regarding future events including, but not limited to,
statements with respect to the review of strategic and financial
alternatives, the anticipated cost savings and operational
efficiencies related to the Company's divestiture of its Canadian
cannabis business, management's assessment of the potential for
growth and profitability of its Sprout Organics and
Biodroga Solutions brands, restructuring initiatives and
anticipated costs, the expected objectives and financial targets
underlying Neptune's CPG-Focused Strategic Plan as well as the
anticipated benefits of such transactions and their expected impact
on the Company's outlook, operations, opportunities, financial
condition, business plan and overall strategy.
Forward-looking statements are presented for the purpose of
assisting investors and others in understanding certain key
elements of the Company's current objectives, strategic priorities,
expectations and plans, and in obtaining a better understanding of
the Company's business and anticipated operating environment.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
news release. The forward-looking statements contained in this news
release are expressly qualified in their entirety by this
cautionary statement and the "Cautionary Note Regarding
Forward-Looking Information" and "Risk Factors" sections contained
in Neptune's latest Annual Information Form, which also forms part
of Neptune's latest annual report on Form 40-F, and which is
available on SEDAR at www.sedar.com, on EDGAR at
www.sec.gov/edgar.shtml. With respect to the pursuit of an
accelerated divestiture of the Canadian cannabis business and a
realignment of focus and operational resources toward increasing
the value of the Company's consumer products business discussed
herein specifically, certain factors that could cause actual
results to differ materially from those anticipated in the forward
looking statements include, but are not limited to: the failure to
satisfy the conditions to the completion of these transactions or
delay in completing, and uncertainty regarding the length of time
required to complete, such transactions, and all or part of the
intended benefits therefrom not being realized and the anticipated
proceeds therefrom not being available to the Company within the
anticipated timeframe, or at all; and alternate sources of funding
that would be used to replace the anticipated proceeds from such
transactions may not be available when needed, or on desirable
terms.
Neptune does not undertake to update any such forward-looking
statements whether as a result of new information, future events or
otherwise, except as required by law.
Neither NASDAQ nor the Toronto Stock Exchange accepts
responsibility for the adequacy or accuracy of this
release.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/neptune-wellness-launches-new-cpg-focused-strategic-plan-to-improve-path-to-profitability-301563584.html
SOURCE Neptune Wellness Solutions Inc.