• Total Revenue of $4.9 Million, up
13% over June 2018
Quarter• Total Revenue up
14% over September 2017 Quarter
Sonoma Pharmaceuticals, Inc. (Nasdaq: SNOA), today announced
financial results for the second quarter FY 2019 ending September
30, 2018. Total revenue of $4.9 million for the quarter
ending September 30, 2018, was up 14% when compared to $4.3 million
for the same period last year. Product revenues of $4.6 million for
the second quarter ending September 30, 2018, was up 12%, or
$491,000, when compared to the same period last year, with
increases in the United States, European and Latin American
revenues.
“A record high quarterly revenue for the company of $4.9
million, along with higher gross profitability enabled us to
achieve a two-year low in EBITDA loss, which is operating loss
minus non-cash expenses,” said Jim Schutz, Sonoma Pharmaceuticals
CEO. “We are also excited to be preparing for the upcoming
commercial launches of our Epicyn™ Antimicrobial Facial Cleanser in
the United States and our acne product, Gramacyn™, in Brazil.
These markets represent significant opportunity for the company, as
physicians and patients desire safe and efficacious alternatives to
antibiotics.”
Business Highlights:
- In June 2018, Sonoma signed a license and supply agreement with
the largest pharmaceutical company in Brazil, NC Group/U.SK, to
commercialize seven of Sonoma’s HOCl products, including
two products for acne, one for scar treatment, two for atopic
dermatitis and two for post-cosmetic treatments.
- Sonoma’s Brazilian partner is in the final stages of launching
Gramacyn™, Sonoma’s proprietary acne product.
- The results of clinical studies on the use of
Sonoma’s HOCl-based solution as part of an acne management regimen
were presented in August at the 5th Annual Practical
Symposium Dermatology Conference in Colorado. The
data from these studies showed statistically significant
reductions in both inflammatory and non-inflammatory acne lesions,
with no reports of irritation.
- In November 2018, Sonoma launched its Ceramax™ lotion product,
an extension of the company’s Lipogrid Skin Enriching TechnologyTM,
indicated for seborrea, burning, itching and atopic
dermatitis.
- Sonoma’s U.S. patient-friendly home delivery mail order
program, which was launched in the first quarter of FY 2019, has
rapidly gained popularity, currently making up about 42% of the
company’s dermatology prescription shipments during the quarter
ending September 30, 2018.
Results for the Three Months Ended September
30, 2018Product revenues in the United States of
$2.4 million for the three months ended September
30, 2018, increased by $158,000, or 7%, as compared to
$2.3 million for the three months ended September
30, 2017. This increase was mostly the result of higher
sales of the company’s animal health care products, partly offset
by a small decrease in sales of the company’s acute care and
dermatology products. Product revenue in Latin
America for the quarter ended September 30, 2018, was
$1.0 million, up 32% from the same period last year. This amount
reflects the high growth in the sale of products
to Invekra and the sale of products into the Brazilian
market. Sonoma will continue to supply products to
Invekra until its manufacturing facility is
operational.
Product revenue in Europe and the rest of the world of
$1.2 million for the second quarter ended September 30, 2018,
increased by $90,000, or 8%, as compared to
$1.1 million for the three months ended September
30, 2017. This increase was the result of higher
sales in Europe and India, partly offset by lower sales
in the Middle East, Far East and New Zealand.
Gross profit for the quarter ended September
30, 2018, was $2.4 million, or 49% of total revenue, compared
to a gross profit of $1.8 million, or 43% of total
revenue for the same period in the prior
year. The increase in gross profit, as a percentage of
revenue, was primarily due to the higher unit volume in the
United States and higher margin products sold into Brazil.
Operating expenses minus non-cash expenses during
the second quarter of fiscal year 2019 were
$4.5 million, up $231,000 or 5%, as compared to the
same period in the prior year. This increase in
operating expenses was mostly due to higher marketing and
legal expenses in the United States, partly offset by a
decline in Latin American expenses.
Loss from operations was $2.7 million, down $205,000,
compared to $2.9 million for the same period last
year. Operating loss less non-cash expenses (EBITDA) for
the three months ended September 30, 2018, was $1.95 million, down
$313,000, or 14%, compared to $2.26 million for the same period
last year.
As of September 30, 2018, Sonoma had cash and
cash equivalents of $4 million, as compared to $10.1 million
as of March 31, 2018. While the operating loss minus
non-cash expenses (EBITDA) was $1.95 million for the quarter ended
September 30, 2018, the reduction in cash for the quarter was $3.6
million. The $1.6 million difference is mostly the result of an
increase in working capital of $1.4 million including $0.8 million
in receivables, which are being collected; and a $0.4 million
increase in international inventory, which has been shipped and is
being sold to our partners.
Results for the Six Months Ended September 30,
2018 Total revenues of $9.3
million increased by $1.1 million, or 14%, for the six months ended
September 30, 2018, as compared to $8.2 million for the six months
ended September 30, 2017. Product revenue of $8.7 million for the
six months ended September 30, 2017, increased $983,000, or 13%,
compared to the same period last year. This increase in product
revenue was driven by growth in Latin America of 57% and in the
United States of 7%.
The company reported gross profit related to sales of its
products of $4.2 million, or 45% of total revenues, for the six
months ended September 30, 2018, compared to a gross profit of $3.6
million, or 44% of total revenues, for the same period in the prior
year.
Total operating expenses less non-cash expenses of $9.4 million
increased $437,000, or 5%, for the six months ended September 30,
2018, as compared to the same period in the prior year. This
increase was primarily due to higher marketing and legal expenses
in the United States. Operating loss less non-cash expenses
(EBITDA) for the six months ended September 30, 2018, was $5
million, as compared to $5.1 million for the same period last
year.
Conference CallSonoma’s management will hold a
conference call today to discuss second quarter fiscal year 2019
results and answer questions beginning at 4:30 p.m. EST.
Individuals interested in participating in the conference call may
do so by dialing 877-303-7607 for domestic callers or 973-638-3203
for international callers. Those interested in listening to the
conference call live via the Internet may do so at
https://edge.media-server.com/m6/p/gxh562de. Please log on
approximately 10 minutes prior to the presentation in order to
register and download the appropriate software, if any. Also,
participants can download a graphical presentation of the quarterly
results at this same site, which provides greater granular detail
in conjunction with the call.
A telephone replay will be available for seven days following
the conclusion of the call by dialing 855-859-2056 for domestic
callers or 404-537-3406 for international callers, and entering
conference code 1292509. A webcast replay will be available on the
site at
http://ir.sonomapharma.com/events-and-presentations for one
year following the call.
About Sonoma Pharmaceuticals, Inc.Sonoma is a
specialty pharmaceutical company that develops and markets unique
and effective solutions for the treatment of dermatological
conditions and advanced tissue care. The company’s
products, which are sold throughout the United States and
internationally, have improved outcomes for more than five million
patients globally by reducing infections, itch, pain, scarring
and harmful inflammatory responses. 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 StatementsExcept 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 “preparing,”
“represent,” and “upcoming,” 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.
Media and Investor
Contact:
Sonoma Pharmaceuticals,
Inc.Bob MillerCFO(925) 787-6218
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SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESCondensed Consolidated Balance
Sheets(In thousands, except share and per share
amounts) |
|
|
|
|
|
|
|
|
|
September 30, |
|
|
March 31, |
|
|
|
2018 |
|
|
2018 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
4,048 |
|
|
$ |
10,066 |
|
Accounts
receivable, net |
|
|
2,971 |
|
|
|
1,537 |
|
Inventories |
|
|
2,953 |
|
|
|
2,865 |
|
Prepaid
expenses and other current assets |
|
|
1,464 |
|
|
|
1,547 |
|
Current
portion of deferred consideration, net of discount |
|
|
232 |
|
|
|
239 |
|
Total
current assets |
|
|
11,668 |
|
|
|
16,254 |
|
Property
and equipment, net |
|
|
935 |
|
|
|
1,136 |
|
Deferred
consideration, net of discount, less current portion |
|
|
1,215 |
|
|
|
1,322 |
|
Other
assets |
|
|
530 |
|
|
|
494 |
|
Total
assets |
|
$ |
14,348 |
|
|
$ |
19,206 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
1,362 |
|
|
$ |
1,272 |
|
Accrued
expenses and other current liabilities |
|
|
1,241 |
|
|
|
1,406 |
|
Deferred
revenue |
|
|
186 |
|
|
|
147 |
|
Deferred
revenue Invekra |
|
|
57 |
|
|
|
59 |
|
Current
portion of long-term debt |
|
|
74 |
|
|
|
230 |
|
Current
portion of capital leases |
|
|
157 |
|
|
|
147 |
|
Total
current liabilities |
|
|
3,077 |
|
|
|
3,261 |
|
Long-term deferred
revenue |
|
|
399 |
|
|
|
443 |
|
Long-term debt, less
current portion |
|
|
25 |
|
|
|
32 |
|
Long-term capital
leases, less current portion |
|
|
62 |
|
|
|
144 |
|
Total
liabilities |
|
|
3,563 |
|
|
|
3,880 |
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
|
|
|
|
Convertible preferred stock, $0.0001 par value; 714,286 shares
authorized, none issued and outstanding at September 30, 2018 and
March 31, 2018 respectively |
|
|
- |
|
|
|
- |
|
Common
stock, $0.0001 par value; 24,000,000 and 12,000,000 shares
authorized at September 30, 2018 and March 31, 2018, respectively,
6,479,633 and 6,171,736 shares issued and outstanding at September
30, 2018 and March 31, 2018, respectively |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
178,629 |
|
|
|
176,740 |
|
Accumulated deficit |
|
|
(163,718 |
) |
|
|
(157,440 |
) |
Accumulated other comprehensive loss |
|
|
(4,127 |
) |
|
|
(3,975 |
) |
Total
stockholders’ equity |
|
|
10,785 |
|
|
|
15,326 |
|
Total
liabilities and stockholders’ equity |
|
$ |
14,348 |
|
|
$ |
19,206 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESCondensed Consolidated Statements of
Comprehensive Loss(In thousands, except per share
amounts)(Unaudited) |
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
|
Six Months EndedSeptember
30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
4,635 |
|
|
$ |
4,144 |
|
|
$ |
8,730 |
|
|
$ |
7,747 |
|
Service |
|
|
304 |
|
|
|
181 |
|
|
|
578 |
|
|
|
413 |
|
Total
revenues |
|
|
4,939 |
|
|
|
4,325 |
|
|
|
9,308 |
|
|
|
8,160 |
|
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
2,313 |
|
|
|
2,308 |
|
|
|
4,737 |
|
|
|
4,221 |
|
Service |
|
|
199 |
|
|
|
169 |
|
|
|
413 |
|
|
|
329 |
|
Total
cost of revenues |
|
|
2,512 |
|
|
|
2,477 |
|
|
|
5,150 |
|
|
|
4,550 |
|
Gross profit |
|
|
2,427 |
|
|
|
1,848 |
|
|
|
4,158 |
|
|
|
3,610 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development |
|
|
390 |
|
|
|
368 |
|
|
|
740 |
|
|
|
750 |
|
Selling,
general and administrative |
|
|
4,689 |
|
|
|
4,337 |
|
|
|
9,622 |
|
|
|
9,100 |
|
Total
operating expenses |
|
|
5,079 |
|
|
|
4,705 |
|
|
|
10,362 |
|
|
|
9,850 |
|
Loss from
operations |
|
|
(2,652 |
) |
|
|
(2,857 |
) |
|
|
(6,204 |
) |
|
|
(6,240 |
) |
Interest expense |
|
|
(7 |
) |
|
|
(10 |
) |
|
|
(19 |
) |
|
|
(20 |
) |
Interest income |
|
|
47 |
|
|
|
18 |
|
|
|
102 |
|
|
|
71 |
|
Other expense |
|
|
(208 |
) |
|
|
(21 |
) |
|
|
(157 |
) |
|
|
(189 |
) |
Net loss |
|
|
(2,820 |
) |
|
|
(2,870 |
) |
|
|
(6,278 |
) |
|
|
(6,378 |
) |
Net loss per share:
basic and diluted |
|
$ |
(0.44 |
) |
|
$ |
(0.67 |
) |
|
$ |
(0.99 |
) |
|
$ |
(1.48 |
) |
Weighted-average number
of shares used in per common share calculations: basic and
diluted |
|
|
6,465 |
|
|
|
4,313 |
|
|
|
6,353 |
|
|
|
4,303 |
|
Other comprehensive
loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(2,820 |
) |
|
$ |
(2,870 |
) |
|
$ |
(6,278 |
) |
|
$ |
(6,378 |
) |
Foreign currency
translation adjustments |
|
|
350 |
|
|
|
(45 |
) |
|
|
(152 |
) |
|
|
155 |
|
Comprehensive loss |
|
$ |
(2,470 |
) |
|
$ |
(2,915 |
) |
|
$ |
(6,430 |
) |
|
$ |
(6,223 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESReconciliation of GAAP Measures To
Non-GAAP Measures(In
thousands) (Unaudited) |
|
|
|
|
|
|
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|
Three Months EndedSeptember
30, |
|
|
Six Months EndedSeptember
30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
(1) Loss
from operations minus
non-cash expenses (EBITDA): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP loss from
operations as reported |
|
$ |
(2,652 |
) |
|
$ |
(2,857 |
) |
|
$ |
(6,204 |
) |
|
$ |
(6,240 |
) |
Non-cash
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
585 |
|
|
|
462 |
|
|
|
932 |
|
|
|
900 |
|
Depreciation and amortization |
|
|
117 |
|
|
|
132 |
|
|
|
238 |
|
|
|
241 |
|
Non-GAAP
loss from operations minus non-cash expenses (EBITDA) |
|
$ |
(1,950 |
) |
|
$ |
(2,263 |
) |
|
$ |
(5,034 |
) |
|
$ |
(5,099 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) Net
loss minus non-cash expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net loss as
reported |
|
$ |
(2,820 |
) |
|
$ |
(2,870 |
) |
|
$ |
(6,278 |
) |
|
$ |
(6,378 |
) |
Non-cash
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
585 |
|
|
|
462 |
|
|
|
932 |
|
|
|
900 |
|
Depreciation and amortization |
|
|
117 |
|
|
|
132 |
|
|
|
238 |
|
|
|
241 |
|
Non-GAAP
net loss minus non-cash expenses |
|
$ |
(2,118 |
) |
|
$ |
(2,276 |
) |
|
$ |
(5,108 |
) |
|
$ |
(5,237 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3)
Operating expenses minus
non-cash expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating expenses
as reported |
|
$ |
5,079 |
|
|
$ |
4,705 |
|
|
$ |
10,362 |
|
|
$ |
9,850 |
|
Non-cash
adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
(555 |
) |
|
|
(413 |
) |
|
|
(867 |
) |
|
|
(807 |
) |
Depreciation and amortization |
|
|
(56 |
) |
|
|
(55 |
) |
|
|
(112 |
) |
|
|
(97 |
) |
Non-GAAP
operating expenses minus non-cash expenses |
|
$ |
4,468 |
|
|
$ |
4,237 |
|
|
$ |
9,383 |
|
|
$ |
8,946 |
|
(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. |
|
|
|
|
|
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|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIESProduct Related Revenue
Schedules(In thousands) (Unaudited) |
|
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|
|
|
|
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|
|
|
The
following table shows the Company’s product revenues by geographic
region: |
|
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|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
$ Change |
|
|
% Change |
|
United States |
|
$ |
2,426 |
|
|
$ |
2,268 |
|
|
$ |
158 |
|
|
|
7 |
% |
Latin America |
|
|
997 |
|
|
|
754 |
|
|
|
243 |
|
|
|
32 |
% |
Europe and Rest of the
World |
|
|
1,212 |
|
|
|
1,122 |
|
|
|
90 |
|
|
|
8 |
% |
Total |
|
$ |
4,635 |
|
|
$ |
4,144 |
|
|
$ |
491 |
|
|
|
12 |
% |
|
|
Six Months Ended September 30, |
|
|
|
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
$ Change |
|
|
% Change |
|
United States |
|
$ |
4,397 |
|
|
$ |
4,127 |
|
|
$ |
270 |
|
|
|
7 |
% |
Latin America |
|
|
2,076 |
|
|
|
1,323 |
|
|
|
753 |
|
|
|
57 |
% |
Europe and Rest of the
World |
|
|
2,257 |
|
|
|
2,297 |
|
|
|
(40 |
) |
|
|
(2 |
)% |
Total |
|
$ |
8,730 |
|
|
$ |
7,747 |
|
|
$ |
983 |
|
|
|
13 |
% |
Sonoma Pharmaceuticals (NASDAQ:SNOAW)
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