NEXGEL, Inc. (“NEXGEL” or the “Company”) (NASDAQ: “NXGL”), a
leading provider of ultra-gentle, high-water-content hydrogel
products for healthcare and consumer applications, today announced
financial results for the second quarter ended June 30, 2023.
Adam Levy, NEXGEL’s Chief Executive Officer,
commented, “Record second quarter revenue of $1.17 million, an
increase of 108% year-over-year, exceeded our projections. Our
contract manufacturing line of business increased 174%
year-over-year, predominately due to the full quarter contribution
of our joint venture with C.G. Laboratories as well as increased
demand from our existing contract customers. New and existing
direct-to-consumer branded products also continued to sell through
well during the quarter, increasing 44% year-over-year.”
Mr. Levy continued, “During the second quarter,
we strategically invested in inventory and capital expenditure to
improve equipment and increase capacity in anticipation of demand
we expect during the second half of this year and beyond. Thus far
the branded products sequential growth trend we saw in the first
half of the year has continued into the current third quarter.
Taking into account the investments we made during the quarter, we
continue to have a sufficient runway of cash to operate and invest
in accelerating our growth going forward.”
2023 Operational Highlights
to Date
- Announced a new strategic
relationship with Enigma Health, a new joint venture company, for
retail distribution and marketing services in North America.
- Acquired a 50% interest in a newly
formed joint venture (“JV”), CG Converting and Packaging, LLC, with
C.G. Laboratories Inc. (“CG Labs”) for its converting and packaging
business.
- Executed a supply agreement with a
large new customer relating to a new consumer product.
- Launched advertising and marketing
initiative, which has increased branded product sales.
Second Quarter
2023 Financial
Highlights
For the second quarter of 2023, revenue totaled
$1.17 million, an increase of $606 thousand or 108%, as compared to
$561 thousand for the same period the year prior. The quarterly
increase in overall revenues was primarily due to sales growth in
contract manufacturing of 174% and branded products of 44%
year-over-year. Revenue for the quarter included a full quarter
contribution from the newly formed joint venture with C.G.
Laboratories.
Gross profit for the second quarter of 2023 was
$175 thousand, compared to a gross profit of $101 thousand for the
same prior year period. Gross profit margin for the second quarter
of 2023 was 15% as compared to 18% for the same period the year
prior. The increase in gross profit was mainly due to the higher
volume of contract manufacturing sales against fixed costs
partially offset by higher manufacturing labor costs and increased
manufacturing of promotional materials and customer product samples
to support new product line growth.
Total operating expenses, including R&D and
SG&A expenses, increased to $937 thousand for the three months
ended June 30, 2023, compared to $819 thousand for the prior year
period. The year-over-year increase was attributable to an increase
in compensation and benefits and professional fees. Advertising,
marketing, and Amazon fees also increased period-over-period to
support new product line growth.
Net loss for the quarter ended June 30, 2023,
improved to $687 thousand or $0.13 per basic and diluted share,
compared to net loss of $1 million or $0.19 per basic and diluted
share for the same period in 2022.
As of March 31, 2023, NEXGEL had approximately
$4.3 million of cash and cash equivalents and marketable
securities. During the quarter the Company invested in inventory
and capital expenditures for new equipment and increase in capacity
at its manufacturing facility in anticipation of increased demand
in contract manufacturing during the second half of 2023.
As of June 30, 2023, NEXGEL had 5,696,064 shares
of common stock outstanding.
NEXGEL Second
Quarter 2023 Financial Results Conference Call
Management will host a conference call and
webcast today at 4:30 p.m. Eastern Time to discuss its operational
and financial results for the second quarter 2023.
Date: August 14,
2023Time: 4:30 P.M. ETLive Call:
+1-877-300-8521 (U.S. Toll Free) or +1-412-317-6026
(International)Webcast:
https://viavid.webcasts.com/starthere.jsp?ei=1627569&tp_key=69c361dd6d
For interested individuals unable to join the
conference call, a replay will be available through August 28,
2023, at +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671
(International). Participants must use the following code to access
the replay of the call: 10181557. An archived version of the
webcast will also be available on NEXGEL’s Investor Relations
site: https://ir.nexgel.com/.
About NEXGEL, INC.
NEXGEL is a leading provider of ultra-gentle,
high-water-content hydrogels for healthcare and consumer
applications. Based in Langhorne, Pa., the Company has developed
and manufactured electron-beam, cross-linked hydrogels for over two
decades. NEXGEL has formulated more than 200 different combinations
to bring natural ingredients to gentle skin patches that can be
worn for long periods of time with little to no irritation.
Forward-Looking Statement
This press release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) (which Sections were
adopted as part of the Private Securities Litigation Reform Act of
1995). Statements preceded by, followed by or that otherwise
include the words “believe,” “anticipate,” “estimate,” “expect,”
“intend,” “plan,” “project,” “prospects,” “outlook,” and similar
words or expressions, or future or conditional verbs, such as
“will,” “should,” “would,” “may,” and “could,” are generally
forward-looking in nature and not historical facts. These
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the Company's
actual results, performance, or achievements to be materially
different from any anticipated results, performance, or
achievements for many reasons. The Company disclaims any intention
to, and undertakes no obligation to, revise any forward-looking
statements, whether as a result of new information, a future event,
or otherwise. For additional risks and uncertainties that could
impact the Company's forward-looking statements, please see the
Company's Annual Report on Form 10-K for the year ended December
31, 2022, including but not limited to the discussion under “Risk
Factors” therein, which the Company filed with the SEC and which
may be viewed at http://www.sec.gov/.
Investor
Contacts:Valter
Pinto, Managing DirectorKCSA Strategic
Communications212.896.1254valter@kcsa.com
Media
Contacts:Kelly
KnobeckDirector of Consumer Productsinfo@nexgel.com
NEXGEL, INCCONDENSED
CONSOLIDATED BALANCE SHEETS AS OF JUNE
30, 2023 AND DECEMBER 31,
2022 (Unaudited)(in thousands, except
share and per share data)
|
|
June 30,2023 |
|
|
December 31,2022 |
|
ASSETS: |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
3,691 |
|
|
$ |
1,101 |
|
Marketable securities |
|
|
612 |
|
|
|
5,508 |
|
Accounts receivable, net |
|
|
950 |
|
|
|
222 |
|
Inventory |
|
|
1,079 |
|
|
|
502 |
|
Prepaid expenses and other current assets |
|
|
366 |
|
|
|
172 |
|
Total current assets |
|
|
6,698 |
|
|
|
7,505 |
|
Goodwill |
|
|
311 |
|
|
|
311 |
|
Intangibles, net |
|
|
13 |
|
|
|
20 |
|
Property and equipment, net |
|
|
1,413 |
|
|
|
721 |
|
Operating lease - right of use asset |
|
|
1,967 |
|
|
|
1,737 |
|
Other assets |
|
|
95 |
|
|
|
63 |
|
Total assets |
|
$ |
10,497 |
|
|
$ |
10,357 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,058 |
|
|
$ |
265 |
|
Accrued expenses and other current liabilities |
|
|
202 |
|
|
|
130 |
|
Current portion of note payable |
|
|
15 |
|
|
|
15 |
|
Warrant liability |
|
|
165 |
|
|
|
242 |
|
Operating lease liability, current portion |
|
|
232 |
|
|
|
207 |
|
Total current liabilities |
|
|
1,672 |
|
|
|
859 |
|
Operating lease liability, net of current portion |
|
|
1,819 |
|
|
|
1,593 |
|
Notes payable, net of current portion |
|
|
265 |
|
|
|
268 |
|
Total liabilities |
|
|
3,756 |
|
|
|
2,720 |
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies
(Note 15) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY |
|
|
|
|
|
|
|
|
Preferred stock, par value
$0.001 per share, 5,000,000 shares authorized, no shares issued and
outstanding |
|
|
— |
|
|
|
— |
|
Common stock, par value $0.001
per share, 25,000,000 shares authorized; 5,696,064 and 5,577,916
shares issued and outstanding as of June 30, 2023 and December 31,
2022, respectively |
|
|
6 |
|
|
|
6 |
|
Additional paid-in
capital |
|
|
19,242 |
|
|
|
19,189 |
|
Accumulated deficit |
|
|
(13,067 |
) |
|
|
(11,558 |
) |
Total NexGel stockholders’
equity |
|
|
6,181 |
|
|
|
7,637 |
|
Non-controlling interest in
joint venture |
|
|
560 |
|
|
|
— |
|
Total stockholders’
equity |
|
|
6,741 |
|
|
|
7,637 |
|
Total liabilities and
stockholders’ equity |
|
$ |
10,497 |
|
|
$ |
10,357 |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE
30, 2023 AND 2022
(Unaudited)(in thousands, except share and per
share data)
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenues, net |
|
$ |
1,167 |
|
|
$ |
561 |
|
|
$ |
1,786 |
|
|
$ |
956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
992 |
|
|
|
460 |
|
|
|
1,669 |
|
|
|
884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
175 |
|
|
|
101 |
|
|
|
117 |
|
|
|
72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
55 |
|
|
|
111 |
|
|
|
84 |
|
|
|
135 |
|
Selling, general and
administrative |
|
|
882 |
|
|
|
708 |
|
|
|
1,679 |
|
|
|
1,467 |
|
Total operating expenses |
|
|
937 |
|
|
|
819 |
|
|
|
1,763 |
|
|
|
1,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(762 |
) |
|
|
(718 |
) |
|
|
(1,646 |
) |
|
|
(1,530 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(9 |
) |
|
|
(348 |
) |
|
|
(10 |
) |
|
|
(1,092 |
) |
Interest income |
|
|
2 |
|
|
|
- |
|
|
|
2 |
|
|
|
- |
|
Loss on debt
extinguishment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(150 |
) |
Other income |
|
|
- |
|
|
|
2 |
|
|
|
4 |
|
|
|
2 |
|
Gain on investments |
|
|
116 |
|
|
|
- |
|
|
|
124 |
|
|
|
- |
|
Changes in fair value of
warrant liability |
|
|
11 |
|
|
|
29 |
|
|
|
77 |
|
|
|
(101 |
) |
Total other income (expense),
net |
|
|
120 |
|
|
|
(317 |
) |
|
|
197 |
|
|
|
(1,341 |
) |
Loss before income taxes |
|
|
(642 |
) |
|
|
(1,035 |
) |
|
|
(1,449 |
) |
|
|
(2,871 |
) |
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net loss |
|
$ |
(642 |
) |
|
$ |
(1,035 |
) |
|
|
(1,449 |
) |
|
|
(2,871 |
) |
Less: Income attributable to
non-controlling interest in joint venture |
|
|
53 |
|
|
|
- |
|
|
|
60 |
|
|
|
- |
|
Net loss attributable to
NexGel stockholders |
|
|
(695 |
) |
|
|
(1,035 |
) |
|
|
(1,509 |
) |
|
|
(2,871 |
) |
Net loss per common share -
basic |
|
$ |
(0.12 |
) |
|
$ |
(0.19 |
) |
|
|
(0.27 |
) |
|
|
(0.52 |
) |
Net loss per common share -
diluted |
|
$ |
(0.12 |
) |
|
$ |
(0.19 |
) |
|
|
(0.27 |
) |
|
|
(0.52 |
) |
Weighted average shares used
in computing net loss per common share - basic |
|
|
5,662,338 |
|
|
|
5,572,234 |
|
|
|
5,624,275 |
|
|
|
5,572,234 |
|
Weighted average shares used
in computing net loss per common share – diluted |
|
|
5,662,338 |
|
|
|
5,572,234 |
|
|
|
5,624,275 |
|
|
|
5,572,234 |
|
NEXGEL, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX
MONTHS ENDED JUNE 30, 2023 AND
2022 (Unaudited)(in thousands)
|
|
Six Months Ended June 30, |
|
|
|
2023 |
|
|
2022 |
|
Operating
Activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(1,509 |
) |
|
$ |
(2,871 |
) |
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Income attributable to non-controlling interest in joint
venture |
|
|
60 |
|
|
|
- |
|
Depreciation and amortization |
|
|
68 |
|
|
|
57 |
|
Changes in ROU asset and operating lease liability |
|
|
21 |
|
|
|
19 |
|
Share-based compensation and restricted stock vesting |
|
|
53 |
|
|
|
134 |
|
Gain on investment in marketable securities |
|
|
124 |
|
|
|
- |
|
Changes in fair value of warrant liability and warrant
modification |
|
|
(77 |
) |
|
|
101 |
|
Amortization of deferred financing costs |
|
|
- |
|
|
|
1,086 |
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
150 |
|
|
|
|
|
|
|
|
|
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(728 |
) |
|
|
(91 |
) |
Inventory |
|
|
(577 |
) |
|
|
(90 |
) |
Prepaid expenses and other assets |
|
|
(226 |
) |
|
|
(286 |
) |
Accounts payable |
|
|
793 |
|
|
|
268 |
|
Accrued expenses and other current liabilities |
|
|
72 |
|
|
|
28 |
|
Net Cash
Used in Operating Activities |
|
|
(1,926 |
) |
|
|
(1,495 |
) |
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
|
Proceeds from sales of marketable securities |
|
|
4,772 |
|
|
|
- |
|
Investment in marketable securities |
|
|
- |
|
|
|
(5,371 |
) |
Capital expenditures |
|
|
(253 |
) |
|
|
(31 |
) |
Net Cash
Provided by Investing Activities |
|
|
4,519 |
|
|
|
(5,402 |
) |
|
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
|
Principle payments of notes payable |
|
|
(3 |
) |
|
|
(2,033 |
) |
Net Cash
Used in Financing Activities |
|
|
(3 |
) |
|
|
(2,033 |
) |
Net
Decrease in Cash |
|
|
2,590 |
|
|
|
(8,930 |
) |
Cash – Beginning
of period |
|
|
1,101 |
|
|
|
13,350 |
|
Cash – End of period |
|
$ |
3,691 |
|
|
$ |
4,420 |
|
Supplemental Disclosure of Cash Flows
Information |
|
|
|
|
|
|
|
|
Cash paid during
the year for: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
- |
|
|
$ |
- |
|
Taxes |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Supplemental
Non-cash Investing and Financing activities |
|
|
|
|
|
|
|
|
Property and equipment contributed as capital investment to JV |
|
$ |
500 |
|
|
$ |
- |
|
ROU asset and operating lease liabilities recognized upon
consolidation of JV |
|
$ |
334 |
|
|
$ |
- |
|
NexGel (NASDAQ:NXGLW)
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NexGel (NASDAQ:NXGLW)
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