- Record year-to-date participant engagements of 113,100, up
13% year-over-year
- Received highest CDC Full-Plus Recognition for delivering a
proven and effective alternative diabetes prevention
program
- Initiates cost-cutting program to improve efficiency and
margins, while positioning the Company for long-term
profitability
- Q3 2022 conference call scheduled for November 8, 2022 at 5 PM
ET
TORONTO, Nov. 8, 2022
/CNW/ - Newtopia Inc. ("Newtopia" or the
"Company") (TSXV: NEWU) (OTCQB: NEWUF), a tech-enabled whole
health platform creating sustainable habits that prevent, slow, and
reverse chronic disease, today announced its third quarter 2022
financial results for the three and nine months ended September 30, 2022. All amounts are expressed in
Canadian dollars, unless otherwise noted.
Third Quarter 2022 Financial Highlights (vs. Q3
2021):
- Revenue of $2.7 million, up 5%
sequentially, and down 9% from the prior-year-period
- Gross profit margin1 of 55% compared to 47%
sequentially and to 50% from the prior-year period
"Newtopia continued to make progress during the third quarter,"
said Jeff Ruby, Founder and CEO of
Newtopia. "Revenues of $2.7 million
improved 5% sequentially, while our gross profit margin expanded
500 basis points from the prior-year period. We continue to
demonstrate industry-leading participant retention and low churn
rates with 70% of our participants remaining engaged after 12
months and 58% remaining engaged after 24 months. During the
quarter, we were also honored to receive the highest CDC Full-Plus
recognition for our alternative diabetes prevention program. This
five-year recognition is further proof that our differentiated
approach to diabetes prevention and reversal, which combines
one-on-one coaching and behavior genetics amplified by technology
to create sustainable habit change and industry-leading engagement,
is not only meeting CDC standards but exceeding them."
Mr. Ruby continued, "In the third quarter, we moved closer to
the finish line in negotiations with a new set of health plans and
employers. While we expect our new engagement platform, when rolled
out across our entire client base, will enable us to fully
capitalize on these opportunities, we want to get a jump start on
bringing these efficiencies to our operations sooner. To
proactively drive toward profitability quicker and, in light of the
currently challenging macro-economic conditions, commencing in the
third quarter and throughout the fourth quarter, we are eliminating
costs that do not drive successful business development as well as
those that will not enhance our margins or operational
efficiencies. Once complete, we anticipate that these expense cuts
will result in $3 to $4 million in annualized cost savings. These
savings will help us bridge the gap to profitability. We also
expect that with a more efficient participant platform, not only
will we experience an improvement in our gross margin, but we will
also be able to maintain a leaner, yet highly productive operating
structure going forward."
_______________________________
|
1
|
Gross profit is defined
as revenue which is comprised of onboarding welcome revenue,
ongoing engagement fees and success fees, less cost of sales which
is comprised of Welcome Kit costs, compensation expense for
Inspirators and care specialists and genetic testing costs. Gross
margin percentage is calculated by dividing gross profit by total
revenue for the defined period. Gross profit is considered by
management to be an integral measure of financial performance and
represents the amount of revenues retained by the Company after
incurring direct costs. However, gross profit is not a recognized
measure of profitability under IFRS.
|
Third Quarter 2022 Financial Results
Revenue for the three months ended September 30, 2022 was $2.7 million, up 5% sequentially, but down 9%
from the third quarter of 2021. On a year-to-date basis, for the
nine-month period ending September 30, 2022, revenue totaled
$8.1 million, flat with the first
nine months of 2021. In the third quarter of 2021, revenue
benefited from an expanded marketing opportunity with an existing
Fortune 50 health services client.
Gross profit for the third quarter 2022 totaled $1.5 million, up 22% sequentially and up slightly
from the prior-year period. Gross profit is comprised of Newtopia's
revenue less direct expenses, which include the cost of Welcome
Kits to new participants as well as labour costs associated with
hiring and training of the Company's coaching team of Inspirators
(health coaches). As a percentage of revenue, gross profit totaled
55%, compared to 47% in the second quarter of 2022 and 50% in the
prior-year period.
Adjusted operating expenses2 for the three
months ended September 30, 2022
totaled $3.3 million, compared to
$2.4 million in the prior-year
period. On a non-adjusted basis, operating expenses increased
year-over-year, primarily because of higher costs incurred in the
third quarter of 2022 in connection with the launch of the
Company's new engagement platform.
For the third quarter, the Company had an adjusted operating
loss3 of $1.8 million,
compared with a loss of $1.0 million
in the prior-year period.
The Company ended the third quarter 2022 with approximately
$0.4 million in cash and continued
access to $3.5 million in equity
raised via a private placement at the end of April in addition to a
$7.5 million revolving credit
facility of which the Company has $2.6
million undrawn.
2022 Outlook
Given the year-to-date performance, the Company continues to
anticipate achieving full year revenue growth for 2022 over full
year 2021. With an expanded business development effort and the
geographic expansion with a current Fortune 50 client, revenue is
expected to benefit in the final quarter of the year. In the fourth
quarter, the Company will continue to work towards onboarding a new
set of health plan clients in addition to driving organic growth
with its current set of self-insured employer clients to position
Newtopia for further revenue improvements in 2023.
Conference Call
The Company will host a conference call today at 5:00 p.m. Eastern Time to discuss the third
quarter 2022 results in further detail. To access the conference
call, please dial (877) 300-8521 (U.S.) or (412) 317-6026
(International) 10 minutes prior to the start time and reference
Conference ID number 10172219. The call will also be available via
live webcast on the investor relations portion of the Company's
website located at investor.newtopia.com.
A replay of the conference call will be available through
Tuesday, November 22, 2022 which can
be accessed by dialing (844) 512-2921 (U.S.) or (412) 317-6671
(International) and entering the passcode 10172219. The
webcast will also be archived on the Company's website.
___________________________________
|
2 Adjusted
operating expenses consist of all cash-based technology, sales and
marketing and administrative expenses including employment expenses
for these functions excluding equity-settled share-based
compensation. Adjusted operating expense is not a measure of
financial performance under IFRS and should not be considered a
substitute for total operating expenses, which we believe to be the
most directly comparable IFRS measure.
|
3
Adjusted operating loss consists of gross profit less
adjusted operating income. Adjusted operating loss is not a measure
of financial performance under IFRS and should not be considered a
substitute for loss from operations which we believe to be the most
directly comparable IFRS measure.
|
About Newtopia
Newtopia is a personalized whole health platform helping people
create positive lifelong habits that prevent, slow, or reverse
chronic disease while reducing healthcare costs. The platform
leverages genetic, social and behavioral insights to create
individualized prevention programs with a focus on metabolic
disease, diabetes, mental health challenges, hypertension, weight
management and musculoskeletal disorders. With a person-centered
approach that combines virtual care, digital tools, connected
devices and actionable data science, Newtopia delivers sustainable
clinical and financial outcomes. Newtopia serves some of the
largest nationwide employers and health plans and is currently
listed in Canada on the Toronto
Stock Exchange (TSXV: NEWU) and is quoted in the US on the
OTCQB® Venture Market (OTCQB: NEWUF). To learn
more,
visit newtopia.com , LinkedIn or Twitter.
Forward Looking Statements
This news release contains forward-looking information and
forward-looking statements, within the meaning of applicable
Canadian securities legislation, and forward looking statements,
within the meaning of applicable United
States securities legislation (collectively,
"forward-looking statements"), which reflects management's
expectations regarding Newtopia's future growth, results from
operations (including, without limitation, future production and
capital expenditures), performance (both operational and financial)
and business prospects and opportunities. Wherever possible, words
such as "predicts", "projects", "targets", "plans", "expects",
"does not expect", "budget", "scheduled", "estimates", "forecasts",
"anticipate" or "does not anticipate", "believe", "intend" and
similar expressions or statements that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved, or the negative or grammatical variation thereof or
other variations thereof, or comparable terminology have been used
to identify forward-looking statements. All statements other than
statements of historical fact may be forward- looking information.
Such statements reflect Newtopia's current views and intentions
with respect to future events, based on information available to
Newtopia, and are subject to certain risks, uncertainties, and
assumptions. Material factors or assumptions were applied in
providing forward-looking information. While forward-looking
statements are based on data, assumptions and analyses that
Newtopia believes are reasonable under the circumstances, whether
actual results, performance or developments will meet Newtopia's
expectations and predictions depends on a number of risks and
uncertainties that could cause the actual results, performance and
financial condition of Newtopia to differ materially from its
expectations. Forward-looking statements are not a guarantee and
are based on a number of estimates and assumptions management
believes to be relevant and reasonable, whether actual results,
performance or developments will meet Newtopia's expectations and
predictions depends on a number of risks and uncertainties that
could cause the actual results, performance and financial condition
of Newtopia to differ materially from its expectations. Certain of
the "risk factors" that could cause actual results to differ
materially from Newtopia's forward-looking statements in this press
release include, without limitation: the termination of contracts
by clients, risks related to COVID-19 including various
recommendations, orders and measures of governmental authorities to
try to limit the pandemic, including travel restrictions,
border closures, non-essential business closures, quarantines,
self-isolations, shelters- in-place and social distancing,
disruptions to markets, economic activity, financing, supply chains
and sales channels, and a deterioration of general economic
conditions including a possible national or global recession; and
other general economic, market and business conditions and factors,
including the risk factors discussed or referred to in Newtopia's
disclosure documents, filed with the securities regulatory
authorities in certain provinces of Canada and available at www.sedar.com
including Newtopia's final long form prospectus dated March 30, 2020.
Should any factor affect Newtopia's in an unexpected manner,
or should assumptions underlying the forward-looking information
prove incorrect, the actual results or events may differ materially
from the results or events predicted. Any such forward-looking
information is expressly qualified in its entirety by this
cautionary statement. Moreover, Newtopia does not assume
responsibility for the accuracy or completeness of such
forward-looking information. The forward-looking information
included in this press release is made as of the date of this press
release, and Newtopia undertakes no obligation to publicly update
or revise any forward-looking information, other than as required
by applicable law.
Non-GAAP Financial Measures
The Company's financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS").
Management uses certain non-GAAP measures, which are defined in the
appropriate sections of this press release, to better assess the
Company's underlying performance. These measures are reviewed
regularly by management and the Company's Board of Directors in
assessing the Company's performance and in making decisions about
ongoing operations. In addition, we use certain non-GAAP measures
to determine the components of management compensation. We believe
that these measures are also used by investors as an indicator of
the Company's operating performance. Readers are cautioned that
these terms are not recognized GAAP measures and do not have a
standardized GAAP meaning under IFRS and should not be construed as
alternatives to IFRS terms, such as net income.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Newtopia Inc.
Key Financial Measures and Schedule of Non-GAAP
Reconciliations
Gross Profit Information [1]
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Revenue
|
|
2,653,411
|
|
2,904,863
|
|
8,052,111
|
|
8,053,055
|
Cost of
sales
|
|
(1,201,016)
|
|
(1,460,870)
|
|
(4,060,793)
|
|
(4,219,501)
|
Gross profit
|
|
1,452,395
|
|
1,443,993
|
|
3,991,318
|
|
3,833,554
|
Gross
margin
|
|
55 %
|
|
50 %
|
|
50 %
|
|
48 %
|
Reconciliation of Total Expenses to Adjusted Operating
Expenses [2]
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Total
expenses
|
|
3,703,525
|
|
2,564,597
|
|
10,101,882
|
|
9,687,931
|
Add
(Subtract)
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
(140,314)
|
|
(45,122)
|
|
(404,112)
|
|
(932,065)
|
Depreciation of
property and equipment
|
|
(11,891)
|
|
(16,163)
|
|
(39,674)
|
|
(50,938)
|
Depreciation of
right-of-use asset
|
|
(46,192)
|
|
(46,192)
|
|
(138,579)
|
|
(138,579)
|
Interest and accretion
expense
|
|
-
|
|
-
|
|
-
|
|
-
|
Interest on lease
obligations
|
|
(17,485)
|
|
(27,875)
|
|
(60,747)
|
|
(88,189)
|
Interest and accretion
expense
|
|
(79,163)
|
|
(15,652)
|
|
(276,884)
|
|
(15,652)
|
Finance
charges
|
|
(70,269)
|
|
(23,802)
|
|
(147,816)
|
|
(44,750)
|
Amortization of
deferred finance charges
|
|
(68,140)
|
|
(27,890)
|
|
(191,910)
|
|
(112,926)
|
Foreign exchange loss
(gain)
|
|
5,534
|
|
34,524
|
|
28,998
|
|
(32,414)
|
Change in value of
derivative liability
|
|
-
|
|
-
|
|
-
|
|
47,508
|
Capitalized borrowing
costs
|
|
-
|
|
-
|
|
67,000
|
|
-
|
Adjusted operating
expenses
|
|
3,275,605
|
|
2,396,425
|
|
8,938,158
|
|
8,319,926
|
Adjusted Operating Loss
[3]
|
|
Three Months
Ended
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
|
$
|
|
$
|
|
$
|
|
$
|
Gross profit
|
|
1,452,395
|
|
1,443,993
|
|
3,991,318
|
|
3,833,554
|
Adjusted operating
expenses
|
|
(3,275,605)
|
|
(2,396,425)
|
|
(8,938,158)
|
|
(8,319,926)
|
|
|
(1,823,210)
|
|
(952,432)
|
|
(4,946,840)
|
|
(4,486,372)
|
NEWTOPIA INC. Condensed Interim
Statements of Financial Position (Unaudited)
As at September 30, 2022 and December 31, 2021
(Expressed in Canadian Dollars)
|
|
|
|
September 30,
2022
|
December 31,
2021
|
|
|
|
$
|
$
|
Assets
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash
|
|
|
388,492
|
811,584
|
Trade and other
receivables
|
|
|
1,613,182
|
1,381,977
|
Prepaid expenses and
deposits
|
|
|
275,112
|
330,992
|
Inventories
|
|
|
391,852
|
131,000
|
Deferred
costs
|
|
|
52,793
|
162,872
|
|
|
|
2,721,431
|
2,818,425
|
|
|
|
|
|
Property and
equipment
|
|
|
30,302
|
66,147
|
Right‑of‑use
asset
|
|
|
230,959
|
369,538
|
Intangible
asset
|
|
|
3,304,201
|
2,251,852
|
|
|
|
6,286,893
|
5,505,962
|
Liabilities
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Trade and other
payables
|
|
|
2,863,166
|
1,965,420
|
Credit
facility
|
|
|
4,880,760
|
2,331,314
|
Lease
obligations
|
|
|
349,449
|
300,555
|
Deferred
revenue
|
|
|
49,301
|
59,549
|
Contract
liability
|
|
|
9,000
|
144,034
|
Debentures
|
|
|
2,360,854
|
‑
|
|
|
|
10,512,530
|
4,800,872
|
Non‑current lease
obligations
|
|
|
96,941
|
367,001
|
Debentures
|
|
|
‑
|
2,182,403
|
|
|
|
10,609,471
|
7,350,276
|
Equity/Deficit
|
|
|
|
|
Common
shares
|
|
|
47,718,385
|
45,177,120
|
Contributed
surplus
|
|
|
12,743,235
|
11,652,200
|
Deficit
|
|
|
(64,784,198)
|
(58,673,634)
|
|
|
|
(4,322,578)
|
(1,844,314)
|
|
|
|
6,286,893
|
5,505,962
|
NEWTOPIA INC. Condensed Interim
Statements of Loss and Comprehensive Loss (Unaudited)
Three and Nine Months Ended September 30, 2022 and 2021
(Expressed in Canadian Dollars)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
|
2022
|
2021
|
|
2022
|
2021
|
|
|
|
$
|
$
|
|
$
|
$
|
Revenue
|
|
|
2,653,411
|
2,904,863
|
|
8,052,111
|
8,053,055
|
Cost of
revenue
|
|
|
1,201,016
|
1,460,870
|
|
4,060,793
|
4,219,501
|
Gross profit
|
|
|
1,452,395
|
1,443,993
|
|
3,991,318
|
3,833,554
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Technology and
development
|
|
|
1,259,596
|
715,966
|
|
2,909,996
|
2,428,187
|
Sales and
marketing
|
|
|
645,452
|
644,184
|
|
2,158,597
|
2,543,717
|
General and
administrative
|
|
|
1,370,557
|
1,036,275
|
|
3,869,565
|
3,348,022
|
Share‑based
compensation
|
|
|
140,314
|
45,122
|
|
404,112
|
932,065
|
|
|
|
3,415,919
|
2,441,547
|
|
9,342,270
|
9,251,991
|
|
|
|
|
|
|
|
|
Other expenses
(income)
|
|
|
|
|
|
|
|
Depreciation of
property and equipment
|
|
|
11,891
|
16,163
|
|
39,674
|
50,938
|
Depreciation of
right‑of‑use asset
|
|
|
46,192
|
46,192
|
|
138,579
|
138,579
|
Interest and accretion
expense
|
|
|
79,163
|
15,652
|
|
276,884
|
15,652
|
Interest on lease
obligations
|
|
|
17,485
|
27,875
|
|
60,747
|
88,189
|
Finance
charges
|
|
|
70,269
|
23,802
|
|
147,816
|
44,750
|
Amortization of
deferred finance charges
|
|
|
68,140
|
27,890
|
|
191,910
|
112,926
|
Foreign exchange
(gain)/loss
|
|
|
(5,534)
|
(34,524)
|
|
(28,998)
|
32,414
|
Capitalized borrowing
costs
|
|
|
‑
|
‑
|
|
(67,000)
|
‑
|
Change in value of
derivative liability
|
|
|
‑
|
‑
|
|
‑
|
(47,508)
|
|
|
|
287,606
|
123,050
|
|
759,612
|
435,940
|
Net loss and
comprehensive loss
|
|
|
(2,251,130)
|
(1,120,604)
|
|
(6,110,564)
|
(5,854,377)
|
NEWTOPIA INC. Condensed Interim
Statements of Changes in Equity (Deficit) (Unaudited)
Nine Months Ended September 30, 2022 and 2021
(Expressed in Canadian Dollars)
|
|
|
Common
Shares
|
Shares
To
Be
Issued
|
Contributed
Surplus
|
Deficit
|
Total
|
|
|
$
|
$
|
$
|
$
|
$
|
Balance, December
31, 2021
|
|
45,177,120
|
‑
|
11,652,200
|
(58,673,634)
|
(1,844,314)
|
Net loss and
comprehensive loss
|
|
‑
|
‑
|
‑
|
(6,110,564)
|
(6,110,564)
|
Share‑based
compensation
|
|
‑
|
‑
|
404,112
|
‑
|
404,112
|
Private Placement
Offering of Units, net of issuance costs
|
|
2,624,495
|
|
511,839
|
|
3,136,334
|
Compensation options
issued to brokers
|
|
(83,230)
|
‑
|
83,230
|
‑
|
‑
|
Adjustment of issuance
costs on Debentures
|
|
‑
|
‑
|
4,733
|
‑
|
4,733
|
Settlement of related
party payable
|
|
‑
|
‑
|
87,121
|
‑
|
87,121
|
Balance, September
30, 2022
|
|
47,718,385
|
‑
|
12,743,235
|
(64,784,198)
|
(4,322,578)
|
Balance, December
31, 2020
|
|
44,648,952
|
528,168
|
10,046,621
|
(51,023,880)
|
4,199,861
|
Net loss and
comprehensive loss
|
|
‑
|
‑
|
‑
|
(5,854,377)
|
(5,854,377)
|
Share‑based
compensation
|
|
‑
|
‑
|
932,065
|
‑
|
932,065
|
Warrants issued on
issuance of Debentures
|
|
‑
|
‑
|
216,588
|
‑
|
216,588
|
Issuance of
shares
|
|
528,168
|
(528,168)
|
‑
|
‑
|
‑
|
Settlement of related
party payable
|
|
‑
|
‑
|
265,589
|
‑
|
265,589
|
Balance, September
30, 2021
|
|
45,177,120
|
‑
|
11,460,863
|
(56,878,257)
|
(240,274)
|
|
|
|
|
|
|
|
|
|
|
|
|
NEWTOPIA INC. Condensed Interim
Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, 2022 and 2021
(Expressed in Canadian Dollars)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2022
|
2021
|
|
|
|
$
|
$
|
Cash flows used in
operating activities:
|
|
|
|
|
Net loss and
comprehensive loss
|
|
|
(6,110,564)
|
(5,854,377)
|
Items not involving
cash:
|
|
|
|
|
Depreciation of
property and equipment
|
|
|
39,674
|
50,938
|
Depreciation of
right‑of‑use asset
|
|
|
138,579
|
138,579
|
Amortization of
deferred finance charges
|
|
|
191,910
|
112,926
|
Capitalized borrowing
costs
|
|
|
(67,000)
|
‑
|
Share‑based
compensation
|
|
|
404,112
|
932,065
|
Accretion
expense
|
|
|
124,184
|
15,652
|
Interest on lease
obligations
|
|
|
60,747
|
88,189
|
Change in value of
derivative
liability
|
|
|
‑
|
(47,508)
|
|
|
|
(5,218,358)
|
(4,563,536)
|
Net change in non‑cash
working capital
|
|
|
|
|
Trade and other
receivables
|
|
|
(231,205)
|
(725,713)
|
Inventories
|
|
|
(260,852)
|
123,103
|
Prepaid expenses and
deposits
|
|
|
55,880
|
116,152
|
Trade and other
payables
|
|
|
1,043,867
|
(713,275)
|
Deferred
revenue
|
|
|
(10,248)
|
66,682
|
Contract
asset/liability
|
|
|
(135,034)
|
452,000
|
|
|
|
(4,755,950)
|
(5,244,587)
|
Cash flows used in
investing activities
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(3,829)
|
(3,025)
|
Intangible asset
development costs
|
|
|
(985,349)
|
(1,657,348)
|
|
|
|
(989,178)
|
(1,660,373)
|
Cash flows from
(used in) financing activities:
|
|
|
|
|
Credit facility
withdrawals
|
|
|
8,028,277
|
3,829,254
|
Credit facility
repayments
|
|
|
(5,478,831)
|
(3,162,454)
|
Credit facility
financing
costs
|
|
|
(81,831)
|
(65,040)
|
Repayment of lease
obligations
|
|
|
(281,913)
|
(239,452)
|
Proceeds from private
placement issuance of Units, net of issuance costs
|
|
|
3,136,334
|
-
|
Proceeds from issuance
of Debenture Units, net of issuance costs
|
|
|
-
|
2,336,901
|
|
|
|
5,322,036
|
2,699,209
|
Decrease in
cash
|
|
|
(423,092)
|
(4,205,751)
|
Cash, beginning of
period
|
|
|
811,584
|
4,673,683
|
Cash, end of
period
|
|
|
388,492
|
467,932
|
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SOURCE Newtopia Inc.