Neptune Reports Fourth Quarter and Fiscal 2021 Results
LAVAL, QC– Neptune Wellness Solutions
Fourth Quarter and Full Year Financial Highlights
- Reported fourth quarter revenue of $6.8 million compared to $9.5 million in the comparable period in fiscal 2020 and was a 127% acceleration versus the third quarter 2021 reported revenue of $3.3 million. Reported fiscal year 2021 revenue of $46.8 million, which increased 58% versus the full fiscal year 2020 of $46.8 million.
- Reported fourth quarter gross profit loss of $24.8 million compared to a reported gross profit loss of $1.1 million in the comparable period in fiscal 2020 and reported fiscal year 2021 gross profit loss of $36.2 million compared to a gross profit loss of $1.8 million for the fiscal year 2020.
- Reported fourth quarter net loss of $60.3 million compared to a reported net loss of $39.2 million in the comparable period in fiscal 2020 and reported fiscal year 2021 net loss of $168.6 million compared to a net loss of $60.9 million for the fiscal year 2020.
- Adjusted EBITDA loss for the fourth quarter was $38.2 million compared to an Adjusted EBITDA loss of $5.8 million in the comparable period in fiscal 2020. Adjusted EBITDA loss for fiscal year 2021 was $52.7 million compared to an Adjusted EBITDA loss of $19.9 million for the fiscal year 2020.
“Fiscal 2021 was the most challenging year in Neptune’s history due to the global pandemic and our transformation into a diversified, health and wellness CPG company,” said Michael Cammarata, President and Chief Executive Officer of Neptune Wellness. “As indicated in our first quarter revenue range of $10 to $12 million, we are now positioned to accelerate top-line growth and leverage costs. Neptune will continue driving organic brand growth through increased distribution and innovation, complimented by strategic, accretive acquisitions, which should lead to improved margins, and ultimately outsized shareholder returns longer-term.”
Fourth Quarter Business Highlights
- Entered an agreement with Société québécoise du cannabis (“SQDC”), Quebec’s sole legal retailer for recreational cannabis, for the sale of recreational cannabis products, which will be sold under the PanHash brand.
- Received amended license by Health Canada to sell dried cannabis flower and pre-rolled cannabis in Canada.
- Developed and licensed CoQ10-enhanced and CBD-enhanced fish oil supplements using our MaxSimil technology and licensed to existing customers.
- Acquired majority stake in Sprout Food, an organic baby and toddler snack food company. Sprout is currently the #5 organic baby food brand in the U.S. and #3 on Amazon.
- Raised gross proceeds of US$55 million in an equity offering to a syndicate of institutional investors.
Subsequent Events and Business Updates
- Entered a supply agreement with Alberta Gaming, Liquor and Cannabis (“AGLC”), the wholesaler and sole online retailer for recreational cannabis in Alberta. Combined with other provincial supplier agreements, Neptune can now sell recreational cannabis products, under its Mood Ring and PanHash brands, to nearly 1,900 licensed retail locations across Alberta, British Columbia, Ontario, and Quebec.
- Launched High-CBD capsules and oil under the PanHash brand in Quebec.
- Launched three new Mood Ring SKU’s, including dried flower in the province of British Columbia. Mood Ring Florida Citrus Kush is Neptune’s first branded flower product.
- Began selling Sprout organic baby foods into substantially all Target stores in the U.S. and Walmart.com, significantly increasing the brand’s distribution.
- Announced a multi-year licensing agreement between Sprout and CoComelon. With more than 110 million YouTube subscribers, CoComelon is the #1 children’s entertainment and educational show in the world.
- Given the first quarter of fiscal 2022 has ended, management announced it expects revenue for the fiscal quarter ended June 30th to be within a range of $10 to $12 million. If achieved, this would represent a sequential growth rate of about 47% to 76% versus the fourth quarter reported revenue of $6.8 million.
Disclaimer – Safe Harbour Forward–Looking Statements
Forward-looking statements contained in this press release involve known and unknown risks, uncertainties and other factors that may cause actual results, performance and achievements of Neptune Wellness Solutions to be materially different from any future results, performance or achievements expressed or implied by the said forward-looking statements.
Neither NASDAQ nor the Toronto Stock Exchange accepts responsibility for the adequacy or accuracy of this release.
NEPTUNE WELLNESS SOLUTIONS INC.
Consolidated Statements of Financial Position
As at March 31, 2021 and 2020
| March 31, | March 31, | |||
| 2021 | 2020 | |||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 75,167,100 | $ | 16,577,076 |
| Short-term investment | 24,050 | 36,000 | ||
| Trade and other receivables | 10,887,748 | 10,793,571 | ||
| Prepaid expenses | 4,631,422 | 2,296,003 | ||
| Inventories | 21,754,147 | 9,092,538 | ||
| 112,464,467 | 38,795,188 | |||
| Property, plant and equipment | 46,913,688 | 60,028,574 | ||
| Right-of-use assets | 3,541,147 | 1,386,254 | ||
| Intangible assets | 32,606,969 | 25,518,287 | ||
| Goodwill | 31,974,526 | 42,333,174 | ||
| Tax credits recoverable | — | 184,470 | ||
| Other assets | 7,243,774 | 530,000 | ||
| Total assets | $ | 234,744,571 | $ | 168,775,947 |
| Liabilities and Equity | ||||
| Current liabilities: | ||||
| Trade and other payables | $ | 24,975,764 | $ | 12,451,669 |
| Lease liabilities | 288,947 | 450,125 | ||
| Loans and borrowings | — | 3,180,927 | ||
| Deferred revenues | 2,499,376 | 17,601 | ||
| Provisions | 2,820,995 | 1,115,703 | ||
| 30,585,082 | 17,216,025 | |||
| Lease liabilities | 3,626,574 | 1,141,314 | ||
| Long-term payables | — | 555,440 | ||
| Deferred tax liabilities | — | 5,015,106 | ||
| Liability related to warrants | 9,879,980 | — | ||
| Loans and borrowings | 14,211,339 | — | ||
| Other liability | 2,258,449 | 1,217,769 | ||
| Total liabilities | 60,561,424 | 25,145,654 | ||
| Equity: | ||||
| Share capital | 379,643,670 | 213,876,454 | ||
| Warrants | 23,947,111 | 18,597,776 | ||
| Contributed surplus | 71,991,328 | 69,173,313 | ||
| Accumulated other comprehensive income | 1,202,409 | 5,517,376 | ||
| Deficit | (330,681,375) | (163,534,626) | ||
| Total equity attributable to equity holders of the Corporation | 146,103,143 | 143,630,293 | ||
| Non-controlling interest | 28,080,004 | — | ||
| Total equity attributable to non-controlling interest | 28,080,004 | — | ||
| Total equity | 174,183,147 | 143,630,293 | ||
| Commitments and contingencies | ||||
| Total liabilities and equity | $ | 234,744,571 | $ | 168,775,947 |
NEPTUNE WELLNESS SOLUTIONS INC.
Consolidated Statements of Loss and Comprehensive Loss
For the years ended March 31, 2021 and 2020
| March 31, 2021 | March 31, 2020 | |||
| Revenue from sales and services | $ | 45,304,176 | $ | 27,722,571 |
| Royalty revenues | 1,467,327 | 1,630,717 | ||
| Other revenues | 38,339 | 224,516 | ||
| Total revenues | 46,809,842 | 29,577,804 | ||
| Cost of sales | (83,005,929) | (31,416,251) | ||
| Gross profit | (36,196,087) | (1,838,447) | ||
| Research and development expenses, net of tax credits and grants of $16,227 (2020 – $73,930) | (2,155,332) | (2,870,497) | ||
| Selling, general and administrative expenses | (88,196,284) | (64,664,389) | ||
| Impairment loss related to property, plant and equipment | (14,211,673) | — | ||
| Impairment loss related to right-of-use assets | (142,345) | — | ||
| Impairment loss related to goodwill | (35,567,246) | (85,548,266) | ||
| Loss from operating activities | (176,468,967) | (154,921,599) | ||
| Finance income | 1,091,882 | 151,219 | ||
| Finance costs | (2,471,281) | (583,707) | ||
| Foreign exchange gain (loss) | (5,344,763) | 1,883,999 | ||
| Revaluation of derivatives | 10,000,929 | — | ||
| Change in fair value of contingent consideration | — | 97,208,166 | ||
| 3,276,767 | 98,659,677 | |||
| Loss before income taxes | (173,192,200) | (56,261,922) | ||
| Income tax recovery (expense) | 4,598,577 | (4,601,340) | ||
| Net loss | (168,593,623) | (60,863,262) | ||
| Other comprehensive income | ||||
| Unrealized gains on investments | 192,279 | 1,320,431 | ||
| Net change in unrealized foreign currency losses on translation of net investments in foreign operations | (4,805,991) | 3,438,879 | ||
| Total other comprehensive income (loss) | (4,613,712) | 4,759,310 | ||
| Total comprehensive loss | $ | (173,207,335) | $ | (56,103,952) |
| Net loss attributable to: | ||||
| Equity holders of the Corporation | $ | (167,146,749) | $ | (60,863,262) |
| Non-controlling interest | (1,446,874) | — | ||
| Net loss | $ | (168,593,623) | $ | (60,863,262) |
| Total comprehensive loss attributable to: | ||||
| Equity holders of the Corporation | $ | (171,461,716) | $ | (56,103,952) |
| Non-controlling interest | (1,745,619) | — | ||
| Total comprehensive loss | $ | (173,207,335) | $ | (56,103,952) |
| Basic and diluted loss per share attributable to the equity holders of the Corporation | $ | (1.38) | $ | (0.68) |
| Basic and diluted weighted average number of common shares | 121,277,033 | 89,972,395 | ||
ADJUSTED EBITDA
Although the concept of Adjusted EBITDA is not a financial or accounting measure defined under IFRS and it may not be comparable to other issuers, it is widely used by companies. Neptune obtains its Adjusted EBITDA measurement by adding to net loss, net finance costs and depreciation and amortization, and by subtracting income tax recovery. Other items such as stock-based compensation, non-employee compensation related to warrants, litigation provisions, acquisition costs, signing bonuses, severances and related costs, impairment losses, write-downs, revaluations, and changes in fair values of the Corporation are also added back as they may vary significantly from one period to another. Adjusting for these items does not imply they are non-recurring.
Adjusted EBITDA1 reconciliation, in thousands of dollars
| Three-month periods ended | Twelve-month periods ended | |||||||
| March 31, | March 31, | March 31, | March 31, | |||||
| 2021 | 2020 | 2021 | 2020 | |||||
| Net income (loss) for the period | $ | (60,328) | $ | (39,239) | $ | (168,594) | $ | (60,863) |
| Add (deduct): | ||||||||
| Depreciation and amortization | 3,360 | 2,612 | 11,725 | 8,384 | ||||
| Acceleration of amortization of long-lived non-financial assets | — | — | 13,953 | — | ||||
| Revaluation of derivatives | (4,635) | — | (10,001) | — | ||||
| Net finance costs | (11,752) | (1,545) | 6,724 | (1,452) | ||||
| Stock-based compensation | 3,340 | 3,356 | 13,069 | 16,595 | ||||
| Non-employee compensation related to warrants | 238 | 17,544 | 5,349 | 18,598 | ||||
| Provisions | 1,145 | 62 | 1,705 | 293 | ||||
| Acquisition costs | 396 | — | 396 | 2,211 | ||||
| Signing bonuses, severances and related costs | — | — | 601 | 1,263 | ||||
| Cybersecurity incident | — | — | 1,983 | — | ||||
| Write-down of inventories and deposits | 17,683 | 2,082 | 25,074 | 2,082 | ||||
| Impairment loss on long-lived assets | 12,213 | 41,452 | 49,921 | 85,548 | ||||
| Change in fair value of contingent consideration | — | (36,782) | — | (97,208) | ||||
| Income tax expense (recovery) | 91 | 4,675 | (4,599) | 4,601 | ||||
| Adjusted EBITDA1 | $ | (38,249) | $ | (5,783) | $ | (52,694) | $ | (19,948) |
Please note that non-employee compensation related to warrants and signing bonuses are new additions to the Company’s calculation methodology since the quarter ended September 30, 2020. Signing bonuses did not occur previously, so no restatement of the previous periods was needed, but there were non-employee compensation expenses related to warrants in previous quarters; consequently, the amounts for the years ended March 31, 2021 and 2020 reflect the sum of those expenses for all quarters of respective fiscal years. Please also note that the change in fair value of the contingent consideration and the write-down of inventories and deposits were also added to the calculation of the adjusted EBITDA for the comparative periods.
| ____________________ |
| 1.The Adjusted EBITDA is not a standard measure endorsed by IFRS requirements. |
(This information is primarily sourced from Neptune. Highly Capitalized has neither approved nor disapproved the contents of this news release. Read our Disclaimer here).
About the Author: HCN News Team
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