Sonoma Pharmaceuticals Reports Third Quarter 2023 Financial Results
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, 2022
BOULDER, CO / ACCESSWIRE / February 14, 2023 / 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, 2022.
"Our revenues remain strong despite overall economic trends such as inflation, and reduced consumer spending. These trends affected our U.S. business resulting in a decline in the sales of our consumer products. However, our international sales increased in the nine months ended December 31, 2022 compared to the same period in the prior year, with the largest increases in Europe and Latin America. We continue to grow our distributor network, recently adding partners in the U.S. and in Asia, and expanding our product offerings in many regions. We expect our ongoing efforts to add distributors and introduce new products to result in meaningful impacts to future results," said Amy Trombly, CEO of Sonoma. She continued, "Our sharply reduced cash burn for the quarter, combined with $2.5 milllion raised since quarter end, places Sonoma in a solid position as we head toward the end of our fiscal year."
Business Highlights
Sonoma continued to expand its business by launching new products and building new partnerships while growing existing distributor relationships and seeking additional regulatory approvals:
Results for the Quarter Ended December 31, 2022
Revenues for the quarter ended December 31, 2022 of $2.9 million increased slightly compared to the same period last year. European sales increased by 51%, reflecting an increase in demand for our wound care products as well as the introduction of several new products in Europe. Latin America revenue also increased compared to the same period last year. Decreased revenues in the United States were primarily the result of a decline in sales of our consumer-focused animal health care products as well as an overall retail market slowdown. The decrease in Rest of World revenue was due to decreased disinfectant sales in the Middle East that was partially offset by increased sales in India. The decrease in Asia revenue for the three months ended December 31, 2022 was due to timing of sales with Asian customers receiving higher values of sales earlier in the year compared to the third quarter. Sonoma's revenues tend to be choppy when viewed on a quarterly basis due to international customers placing larger but less frequent orders to benefit from quantity discounts and reduced shipping costs.
For the quarter ended December 31, 2022, Sonoma reported revenues of $2.9 million and cost of revenues of $2.1 million, resulting in gross profit of $0.8 million, or 28% of revenue, compared to a gross profit of $1.2 million, or 41% of revenue, for the same period last year. Gross margins decreased by 13% for the quarter ended December 31, 2022 when compared to the same period last year as a result of overall product mix, lower manufacturing levels and higher costs of materials and transportation.
Total operating expenses during the third quarter of fiscal year 2023 were $2.7 million, up $0.5 million, or 23%, when compared to $2.2 million during the same period in the prior year, as a result of closing down our Woodstock, GA facility and moving finance and operations staff to our Boulder, CO headquarters, as well as $350,000 of additional expenses for settling a long term contract, each of which management expects to be a one-time event. We continue to tightly manage expenses across all of our operations.
Net loss before income tax for the quarter was $1.9 million, compared to a net loss of $0.9 million for the same period last year. EBITDAS loss for the quarter ended December 31, 2022 of $1.6 million was higher by $0.7 million, compared to an EBITDAS loss of $0.9 million for the same period last year.
Results for the Nine Months Ended December 31, 2022
Revenues of $10.3 million for the nine months ended December 31, 2022 were essentially flat compared to the same period last year. Revenues increased in Europe, Asia, and Latin America. Decreased sales in the United States were due to the conversion of our prescription dermatology business to a distribution model and a decline in sales of our consumer-focused animal health care products as well as an overall retail market slowdown. The decrease in Rest of World revenue was due to decreased disinfectant sales in the Middle East that was partially offset by increased sales in India.
For the nine months ended December 31, 2022, Sonoma reported revenues of $10.3 million and cost of revenues of $6.6 million, resulting in gross profit of $3.6 million, or 35% of revenues, compared to a gross profit of $3.9 million or 38% or revenues in the same period last year. The decrease in gross profit margin for the nine months ended December 31, 2022 was primarily due to product mix and higher costs of materials and transportation.
Total operating expenses during the nine months ended December 31, 2022 of $7.0 million increased by $0.3 million, or 4%, compared to $6.7 million during the same period last year due to $350,000 of additional expenses for settling a long term contract and some increased expenses related to closing the Woodstock, GA office, each of which management expects to be a one-time event.
Net loss before taxes for the nine months ended December 31, 2022 was $3.7 million, compared to a net loss before taxes of $2.1 million for the same period in prior year. EBITDAS loss for the nine months ended December 31, 2022 of $2.8 million was higher by $0.3 million, compared to an EBITDAS loss of $2.5 million for the same period last year.
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 55 countries worldwide and the company actively seeks new distribution partners. The company's principal office is in Boulder, Colorado, with manufacturing operations in Guadalajara, Mexico. European marketing and sales are headquartered in Roermond, Netherlands. More information can be found at www.sonomapharma.com . For partnership opportunities, please contact
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 "expect," "continue," "believe" 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, as well as uncertainties relative to the Covid 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™, Microcyn ® , Regenacyn ® , Reliefacyn ® , Rejuvacyn ® , Celacyn ® , Levicyn ® and Acuicyn ® are trademarks or registered trademarks of Sonoma Pharmaceuticals, Inc. All other trademarks and service marks are the property of their respective owners.
Media and Investor Contact:
Sonoma Pharmaceuticals, Inc. ir@sonomapharma.com
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
December 31,
2022
March 31,
2022
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents$2,634$7,396
Accounts receivable, net2,2972,407
Inventories, net2,8492,663
Prepaid expenses and other current assets3,2303,746
Current portion of deferred consideration, net of discount222218
Total current assets11,23216,430
Property and equipment, net314320
Operating lease, right of use assets471559
Deferred tax asset1,089829
Deferred consideration, net of discount, less current portion514630
Other assets30877
Total assets$13,928$18,845
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$1,302$1,641
Accrued expenses and other current liabilities2,2011,843
Deferred revenue1001,223
Deferred revenue Invekra5554
Current portion of debt-PPP-120
Short-term debt-688
Operating lease liabilities276250
Total current liabilities3,9345,819
Long-term deferred revenue Invekra128182
Long-term debt15-
Withholding tax payable4,0973,838
Operating lease liabilities, less current portion195309
Total liabilities8,36910,148
Commitments and Contingencies (Note 5)
Stockholders' Equity:
Convertible preferred stock, $0.0001 par value; 714,286 shares authorized at December 31, 2022 and March 31, 2022, respectively, no shares issued and outstanding at December 31, 2022 and March 31, 2022, respectively--
Common stock, $0.0001 par value; 24,000,000 shares authorized at December 31, 2022 and March 31, 2022, respectively, 3,109,652 and 3,100,937 shares issued and outstanding at December 31, 2022 and March 31, 2022, respectively (Note 7)22
Additional paid-in capital197,939197,370
Accumulated deficit(188,206)(184,363)
Accumulated other comprehensive loss(4,176)(4,312)
Total stockholders' equity5,5598,697
Total liabilities and stockholders' equity$13,928$18,845
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 31,2022202120222021
Revenues$2,944$2,902$10,258$10,330
Cost of revenues2,1131,6996,6456,433
Gross profit8311,2033,6133,897
Operating expenses
Research and development-266121
Selling, general and administrative2,6652,1357,0306,603
Total operating expenses2,6652,1617,0366,724
Loss from operations(1,834)(958)(3,423)(2,827)
Interest income (expense), net134(1)
Other income (expense), net(73)11(327)542
Gain on sale of assets1-1150
Loss before income taxes(1,905)(944)(3,745)(2,136)
Income tax benefit (expense)(34)-(98)(6)
Net loss$(1,939)$(944)$(3,843)$(2,142)
Net loss per share: basic$(0.62)$(0.31)$(1.24)$(0.85)
Net loss per share: diluted$(0.62)$(0.31)$(1.24)$(0.85)
Weighted-average number of shares: basic3,1073,0803,1042,507
Weighted-average number of shares: diluted3,1073,0803,1042,507
Other comprehensive loss
Net loss$(1,939)$(944)$(3,843)$(2,142)
Foreign currency translation adjustments235(65)1368
Comprehensive loss$(1,704)$(1,009)$(3,707)$(2,134)
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(In thousands)
(Unaudited)
Three Months Ended
December 31,
Nine Months Ended
December 31,2022202120222021
(1) Loss from operations minus non-cash expenses EBITDAS loss:
GAAP operating loss as reported$(1,834)$(958)$(3,423)$(2,827)
Non-cash adjustments:
Stock-based compensation24255569169
Depreciation and amortization315191151
Non-GAAP income (loss) from operations minus non-cash expenses EBITDAS income (loss)$(1,561)$(852)$(2,763)$(2,507)
(2) Net loss minus non-cash and one-time expenses:
GAAP net income (loss) as reported$(1,939)$(944)$(3,843)$(2,142)
Non-cash adjustments:
Stock-based compensation24255569169
Non-cash foreign exchange transaction losses73-327
Income taxes34-98-
Depreciation and amortization315191151
Non-GAAP net income (loss) minus non-cash expenses$(1,559)$(838)$(2,758)$(1,822)
(3) Operating expenses minus non-cash expenses
GAAP operating expenses as reported$2,665$2,161$7,030$6,724
Non-cash adjustments:
Stock-based compensation(242)(55)(569)(169)
Depreciation and amortization(31)(51)(91)(151)
Non-GAAP operating expenses minus non-cash expenses$2,392$2,055$6,370$6,404
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
PRODUCT RELATED REVENUE SCHEDULES
(In thousands)
(Unaudited)
The following table presents the company's disaggregated product revenues by geographic region:
Three Months Ended
December 31,
(In thousands)20222021$ Change% Change
United States$761$933$(172)(18%)
Europe1,10473137351%
Asia514664(150)(23%)
Latin America38427311141%
Rest of the World181301(120)(40%)
Total$2,944$2,902$421%
Nine Months Ended
December 31,
(In thousands)20222021$ Change% Change
United States$2,603$3,872$(1,269)(33%)
Europe3,1172,41969829%
Asia1,9521,8101428%
Latin America1,8271,35647135%
Rest of the World759873(114)(13%)
Total$10,258$10,330$(72)(1%)
SOURCE: Sonoma Pharmaceuticals, Inc. View source version on accesswire.com: https://www.accesswire.com/739369/Sonoma-Pharmaceuticals-Reports-Third-Quarter-2023-Financial-Results
