Sonoma Pharmaceuticals, Inc. (Nasdaq: SNOA), a specialty
pharmaceutical company dedicated to identifying, developing and
commercializing unique, differentiated therapies to millions of
patients living with chronic skin conditions, today announced
financial results for the first quarter ended June 30, 2019.
“We are pleased with the strong growth for the first quarter
ended June 30, 2019. We have significantly slowed our cash burn and
continue to build a sustainable business,” said Bubba Sandford, CEO
of Sonoma Pharmaceuticals. “Our performance in dermatology has
improved substantially, resulting in gross margins of 50% of total
revenues compared to 40% a year ago, and our efforts to grow
revenues while containing expenses resulted in one of our strongest
quarters to date. While our quarterly results were impacted by
one-time sale of our animal rights in Asia, revenue growth in our
core U.S. dermatology business year-over-year out-paced our total
revenue growth.”
Results for the Quarter Ended June 30, 2019
Total revenue of $4.7 million for the first quarter ended June
30, 2019, increased by $342,000, or 8%, from $4.4 million for the
same period last year. Product revenues of $4.4 million for the
first quarter ended June 30, 2019, were up by 7%, or $290,000, when
compared to $4.1 million in the same period last year. This
increase was primarily the result of growth in product revenue of
$516,000, or 26%, in the United States, and growth of product
revenue of $199,000, or 19%, in Europe and Rest of World offset by
a decrease of $425,000, or 39% in Latin America primarily due to
timing of orders from our customer in Mexico.
Product revenues in the United States for the quarter ended June
30, 2019 of $2,487,000 increased by $516,000, or 26%, as compared
to $1,971,000 for the quarter ended June 30, 2018. This increase
was primarily the result of an increase of $551,000, or 46%, in
sales of dermatology products, and an increase of $74,000, or 19%,
in sales of acute care products offset by a decrease of $125,000 in
sales of animal health care products.
During the quarter ended June 30, 2019, Sonoma reported total
revenues of $4.7 million and cost of revenues of $2.3 million
resulting in total gross profit of $2.4 million, or 50% of total
revenue, compared to a gross profit of $1.7 million, or 40% of
total revenue in the same period last year. The improved gross
margins are primarily the result of an increase in dermatology
revenues combined with cost savings in the U.S.
Total operating expenses during the first quarter of fiscal year
2020 were $4.1 million, down $1.2 million, or 23%, as compared to
the same period in the prior year. This decrease in operating
expenses was primarily due to lower employee costs resulting from a
reduction in headcount combined with cost-cutting across all
divisions.
Net income for the first quarter of fiscal 2020
was $715,000, up $4.2 million, or 121%, compared net loss of $3.5
million for the same period last year. The increase in net income
is primarily due to a decrease in operating loss of $1,820,000 due
to an increase in sales and a decrease in operating expenses of
$1.2 million. Additionally, for the quarter ended June 30, 2019,
Sonoma reported income related to the sale of certain assets to
Petagon in the amount of $2,472,000.
As of June 30, 2019, Sonoma had cash and cash
equivalents of $4.3 million compared to $3.7 million at March 31,
2019. The operating loss minus non-cash expenses (EBITDA) was $1.4
million for the quarter ended June 30, 2019, compared to $3.1
million for the quarter ended June 30, 2018.
About Sonoma Pharmaceuticals, Inc.
Sonoma Pharmaceuticals is a specialty pharmaceutical company
dedicated to identifying, developing and commercializing unique,
differentiated therapies to millions of patients living with
chronic skin conditions. Sonoma offers early-intervention relief
with virtually no side-effects or contraindications. The company
believes its products, which are sold throughout the United States
and internationally, have improved patient outcomes for more than
six million patients by treating and reducing certain skin diseases
including acne, atopic dermatitis, scarring, infections, itch, pain
and harmful inflammatory responses. Sonoma’s vision is to be a
catalyst for improved care and increased access for all patients.
The company's headquarters are in Petaluma, California,
with manufacturing operations in the United States and Latin
America. European marketing and sales are headquartered in
Roermond, Netherlands. More information can be found at
www.sonomapharma.com.
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 “continue,” “build,” 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 and clinical studies, as well as uncertainties relative
to 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™ is a trademark or registered trademark
of Sonoma Pharmaceuticals, Inc. All other trademarks and service
marks are the property of their respective owners.
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIES Condensed Consolidated Balance
Sheets(In thousands, except share amounts)
|
June 30, |
|
|
March 31, |
|
|
2019 |
|
|
2019 |
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
4,284 |
|
|
$ |
3,689 |
|
Accounts receivable, net |
|
4,315 |
|
|
|
3,481 |
|
Inventories |
|
3,368 |
|
|
|
3,409 |
|
Prepaid expenses and other current assets |
|
1,641 |
|
|
|
1,694 |
|
Current portion of deferred consideration, net of discount |
|
226 |
|
|
|
223 |
|
Total current assets |
|
13,834 |
|
|
|
12,496 |
|
Operating lease right-of-use assets |
|
1,316 |
|
|
|
– |
|
Property and equipment, net |
|
564 |
|
|
|
727 |
|
Deferred consideration, net of discount, less current portion |
|
1,081 |
|
|
|
1,103 |
|
Other assets |
|
123 |
|
|
|
122 |
|
Total assets |
$ |
16,918 |
|
|
$ |
14,448 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
1,518 |
|
|
$ |
1,255 |
|
Accrued expenses and other current liabilities |
|
1,414 |
|
|
|
1,501 |
|
Deferred revenue |
|
228 |
|
|
|
47 |
|
Deferred revenue Invekra |
|
56 |
|
|
|
55 |
|
Operating lease liabilities |
|
438 |
|
|
|
– |
|
Current portion of long-term debt |
|
211 |
|
|
|
322 |
|
Current portion of capital leases |
|
– |
|
|
|
141 |
|
Common stock liability |
|
270 |
|
|
|
270 |
|
Total current liabilities |
|
4,135 |
|
|
|
3,591 |
|
Operating lease
liabilities-non-current |
|
933 |
|
|
|
– |
|
Long-term deferred revenue
Invekra |
|
346 |
|
|
|
356 |
|
Long-term debt, less current
portion |
|
– |
|
|
|
12 |
|
Total liabilities |
|
5,414 |
|
|
|
3,959 |
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
|
Convertible preferred stock, $0.0001 par value; 714,286 shares
authorized at June 30, 2019 and March 31, 2019, respectively, 1.55
shares issued and outstanding at June 30, 2019 and March 31,
2019 |
|
– |
|
|
|
– |
|
Common stock, $0.0001 par value; 24,000,000 shares authorized at
June 30, 2019 and March 31, 2019, 1,317,170 and 1,316,335 shares
issued and outstanding at June 30, 2019 and March 31, 2019,
respectively |
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
184,366 |
|
|
|
184,074 |
|
Accumulated deficit |
|
(168,582 |
) |
|
|
(169,238 |
) |
Accumulated other comprehensive loss |
|
(4,282 |
) |
|
|
(4,349 |
) |
Total stockholders’ equity |
|
11,504 |
|
|
|
10,489 |
|
Total liabilities and stockholders’ equity |
$ |
16,918 |
|
|
$ |
14,448 |
|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Comprehensive Income (Loss)(In thousands, except per share
amounts)(Unaudited)
|
Three Months EndedJune 30, |
|
|
2019 |
|
|
2018 |
|
Revenues |
|
|
|
|
|
Product |
$ |
4,385 |
|
|
$ |
4,095 |
|
Service |
|
326 |
|
|
|
274 |
|
Total revenues |
|
4,711 |
|
|
|
4,369 |
|
Cost of revenues |
|
|
|
|
|
|
|
Product |
|
2,202 |
|
|
|
2,424 |
|
Service |
|
142 |
|
|
|
214 |
|
Total cost of revenues |
|
2,344 |
|
|
|
2,638 |
|
Gross profit |
|
2,367 |
|
|
|
1,731 |
|
Operating expenses |
|
|
|
|
|
|
|
Research and development |
|
338 |
|
|
|
350 |
|
Selling, general and administrative |
|
3,759 |
|
|
|
4,933 |
|
Total operating expenses |
|
4,097 |
|
|
|
5,283 |
|
Loss from operations |
|
(1,730 |
) |
|
|
(3,552 |
) |
Interest expense |
|
(10 |
) |
|
|
(12 |
) |
Interest income |
|
42 |
|
|
|
55 |
|
Other (expense) income,
net |
|
(59 |
) |
|
|
51 |
|
Gain on sale of assets |
|
2,472 |
|
|
|
– |
|
Net income (loss) |
|
715 |
|
|
|
(3,458 |
) |
Net income (loss) per share:
basic |
$ |
0.54 |
|
|
$ |
(4.99 |
) |
Net income (loss) per share:
diluted |
$ |
0.54 |
|
|
$ |
(4.99 |
) |
Weighted-average number of
shares used in per common share calculations: basic |
|
1,316 |
|
|
|
693 |
|
Weighted-average number of
shares used in per common share calculations: diluted |
|
1,336 |
|
|
|
693 |
|
Other comprehensive income
(loss) |
|
|
|
|
|
|
|
Net income (loss) |
$ |
715 |
|
|
$ |
(3,458 |
) |
Foreign currency translation
adjustments |
|
67 |
|
|
|
(502 |
) |
Comprehensive income (loss) |
$ |
782 |
|
|
$ |
(3,960 |
) |
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESReconciliation of GAAP Measures To
Non-GAAP Measures(In thousands)(Unaudited)
|
|
Three Months EndedJune 30, |
|
|
|
2019 |
|
|
2018 |
|
(1) Loss from
operations minus non-cash expenses (EBITDA): |
|
|
|
|
|
|
|
|
GAAP loss from operations as
reported |
|
$ |
(1,730 |
) |
|
$ |
(3,552 |
) |
Non-cash adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
292 |
|
|
|
347 |
|
Depreciation and
amortization |
|
|
76 |
|
|
|
121 |
|
Non-GAAP loss from operations
minus non-cash expenses (EBITDA) |
|
$ |
(1,362 |
) |
|
$ |
(3,084 |
) |
|
|
|
|
|
|
|
|
|
(2) Net income (loss)
minus non-cash expenses: |
|
|
|
|
|
|
|
|
GAAP net loss as reported |
|
$ |
715 |
|
|
$ |
(3,458 |
) |
Non-cash adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
292 |
|
|
|
347 |
|
Depreciation and
amortization |
|
|
76 |
|
|
|
121 |
|
Non-GAAP net income (loss)
minus non-cash expenses |
|
$ |
1,083 |
|
|
$ |
(2,990 |
) |
|
|
|
|
|
|
|
|
|
(3) Operating expenses
minus non-cash expenses |
|
|
|
|
|
|
|
|
GAAP operating expenses as
reported |
|
$ |
4,097 |
|
|
$ |
5,283 |
|
Non-cash adjustments: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(275 |
) |
|
|
(312 |
) |
Depreciation and
amortization |
|
|
(22 |
) |
|
|
(56 |
) |
Non-GAAP operating expenses
minus non-cash expenses |
|
$ |
3,800 |
|
|
$ |
4,915 |
|
(1) |
Loss from operations minus non-cash expenses (EBITDA) is a non-GAAP
financial measure. The Company defines operating loss minus
non-cash expenses as GAAP reported operating loss minus operating
depreciation and amortization, and operating stock-based
compensation. The Company uses this measure for the purpose of
modifying the operating loss to reflect direct cash related
transactions during the measurement period. |
|
|
(2) |
Net loss minus non-cash expenses is a non-GAAP financial measure.
The Company defines net loss minus non-cash expenses as GAAP
reported net loss minus depreciation and amortization, stock-based
compensation, and non-cash foreign exchange transaction losses. The
Company uses this measure for the purpose of modifying the net loss
to reflect only those expenses to reflect direct cash transactions
during the measurement period. |
|
|
(3) |
Operating expenses minus non-cash expenses is a non-GAAP financial
measure. The Company defines operating expenses minus non-cash
expenses as GAAP reported operating expenses minus operating
depreciation and amortization, and operating stock-based
compensation. The Company uses this measure for the purpose of
identifying total operating expenses involving cash transactions
during the measurement period. |
Media and Investor Contact:
Sonoma Pharmaceuticals, Inc.
ir@sonomapharmaceuticals.com
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