Sonoma Pharmaceuticals, Inc. (NASDAQ: SNOA, warrants SNOAW), a
specialty pharmaceutical company that develops and markets unique
and effective solutions for the treatment of dermatological
conditions and advanced tissue care, today announced financial
results for the first fiscal quarter, ended June 30, 2017.
Total revenue was $3.8 million for the first quarter as compared
to $2.6 million for the same period last year. Product revenues of
$3.6 million were up 49%, or $1.2 million, when compared to the
same period last year, driven by strong growth in the U.S. and
international markets. The numbers in this press release reflect
the reclassification of the financial components of the Latin
American operations as a discontinued business due to the sale of
this business in October 2016.
“We continue to make good progress executing on our corporate
strategy of growing our dermatology business with our expanding
product lines and direct sales force,” said Jim Schutz, Sonoma
Pharmaceuticals CEO. “This progress is evidenced by our current
robust product portfolio and 66% growth in prescriptions filled for
the first fiscal quarter of 2018, compared to the same period last
year. We believe our growing sales force coupled with additional
planned product launches provide a high level of confidence in our
future revenue growth.”
Business Highlights:
- Dermatology prescriptions filled for the first quarter were up
66% over last year and up 24% over the March 2017 quarter.
- Robust product portfolio of eight products for treatment of
atopic and seborrheic dermatitis, scar management, surgical
procedures, severe acne and skin repair.
- Loyon® skin descaling product, which was approved by the FDA,
is expected to be launched in Fall 2017.
- Continued to expand the dermatology sales force to drive
revenue growth.
Financial Highlights:Product revenues in the
United States for the quarter ended June 30, 2017, of $1.9 million,
increased by $486,000, or 35%, when compared to the same period in
the prior year. This increase was the result of higher sales of the
company’s dermatology and acute scar products, partly offset by a
deline in the animal health sales.
Product revenue in Latin America for the quarter ended June 30,
2017, was $569,000. This amount reflects the sale of products to
Invekra, following completion of Sonoma’s asset sale to Invekra in
October 2016. Sonoma will continue to supply Invekra until its
manufacturing facility is operational.
Product revenue in Europe and the rest of the world for the
quarter ended June 30, 2017, of $1.2 million, increased by $137,000
or 13%, as compared to the same period in the prior year, with
increases in Middle East, Europe, Hong Kong and Singapore, partly
offset by decreases in China and India.
Sonoma reported gross profit of $1.8 million, or 46% of total
revenue, during the three months ended June 30, 2017, compared to a
gross profit of $981,000, or 37% of total revenue when compared to
the same period in the prior year. The gross profit percentage
increased as compared to last year, primarily due to the
reclassification of gross margin between the continuing and
discontinued operations.
Total operating expenses of $5.1 million for the three months
ended June 30, 2017, increased by $655,000, or 15%, as compared to
the same period in the prior year. Operating expenses minus
non-cash expenses during the first quarter of fiscal year 2018 were
$4.7 million, up $570,000, or 14%, as compared to the same period
in the prior year. This increase in operating expenses was mostly
due to higher sales, marketing and administrative expenses in the
United States related to the growth of a direct sales force in
dermatology, partly offset by a decline in European expenses. A key
driver to the growth in operating expenses is the increase in the
number of sales representatives, compared to the same period last
year.
Net loss from continuing operations for the quarter ended June
30, 2017, was $3.5 million, an increase of $330,000, as compared to
net loss from continuing operations of $3.2 million for the same
period in the prior year. The operating loss minus non-cash
expenses was $2.8 million, down $201,000, compared to $3.0 million
for the same period last year.
As of June 30, 2017, Sonoma had cash and cash
equivalents of $12.6 million, as compared with $17.5 million as of
March 31, 2017. The decline from March 31, 2017 consists primarily
of $2.8 million cash operating loss, increases of $630,000 of
prepaid expenses (comprised mostly of taxes paid in Mexico),
$157,000 of capital expenditures and an increase in accounts
receivables of $592,000.
Conference CallSonoma’s management will hold a
conference call today to discuss first quarter fiscal year 2018
results and answer questions, beginning at 4:30 p.m. EDT.
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
http://ir.sonomapharma.com/events.cfm. Please log on approximately
30 minutes prior to the presentation in order to register and
download the appropriate software.
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 47563590. A webcast replay will be available on the
site at http://ir.sonomapharma.com/events.cfm for one year
following the call.
Sale of Latin American Business and Impact on Accounting
TreatmentWith the sale of the Latin American business
during the third quarter, ended December 31, 2016, the components
of the financial statements related to this transaction have been
classified as a discontinued business for accounting purposes and
in accordance with this accounting treatment, the income statement
and balance sheet have been retroactively revised to reflect the
revenue, expenses and balance sheet items of the continuing
businesses for this fiscal year and last fiscal year. All of the
income statement categories related to Latin America have been
condensed to a one line item on the income statement as “Income
from discontinued operations.” Also, the discontinued balance
sheets items have been listed separately from the continuing
operations. As a result, the comparison of results discussed in
this press release relate primarily to the continuing businesses in
accordance with generally accepted accounting principles.
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 “believe,”
“achieve,” and “strive,” 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 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™ and Microcyn® Technology are trademarks
or registered trademarks 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 and per share amounts) |
|
|
June 30, |
|
|
March 31, |
|
|
|
2017 |
|
|
2017 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
12,638 |
|
|
$ |
17,461 |
|
Accounts
receivable, net |
|
|
2,741 |
|
|
|
2,108 |
|
Inventories, net |
|
|
2,380 |
|
|
|
2,221 |
|
Prepaid
expenses and other current assets |
|
|
1,304 |
|
|
|
616 |
|
Current
portion of deferred consideration, net of discount |
|
|
250 |
|
|
|
237 |
|
Total
current assets |
|
|
19,313 |
|
|
|
22,643 |
|
Property
and equipment, net |
|
|
1,496 |
|
|
|
1,239 |
|
Deferred
consideration, net of discount, less current portion |
|
|
1,517 |
|
|
|
1,497 |
|
Other
assets |
|
|
95 |
|
|
|
80 |
|
Total
assets |
|
$ |
22,421 |
|
|
$ |
25,459 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
774 |
|
|
$ |
1,255 |
|
Accrued
expenses and other current liabilities |
|
|
1,546 |
|
|
|
1,302 |
|
Deferred
revenue |
|
|
285 |
|
|
|
345 |
|
Deferred
revenue Invekra |
|
|
152 |
|
|
|
176 |
|
Current
portion of long-term debt |
|
|
87 |
|
|
|
123 |
|
Current
portion of capital leases |
|
|
139 |
|
|
|
74 |
|
Taxes
payable |
|
|
– |
|
|
|
13 |
|
Total
current liabilities |
|
|
2,983 |
|
|
|
3,288 |
|
Long-term deferred
revenue Invekra |
|
|
538 |
|
|
|
527 |
|
Long-term debt, less
current portion |
|
|
42 |
|
|
|
45 |
|
Long-term capital
leases, less current portion |
|
|
252 |
|
|
|
168 |
|
Total
liabilities |
|
|
3,815 |
|
|
|
4,028 |
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
|
|
|
|
Convertible preferred stock, $0.0001 par value; 714,286 shares
authorized, none issued and outstanding at June 30, 2017 and
March 31, 2017, respectively |
|
|
– |
|
|
|
– |
|
Common
stock, $0.0001 par value; 12,000,000 shares authorized at
June 30, 2017 and March 31, 2017, 4,307,062 and 4,289,322
shares issued and outstanding at June 30, 2017 and March 31, 2017,
respectively |
|
|
1 |
|
|
|
1 |
|
Additional paid-in capital |
|
|
169,203 |
|
|
|
168,709 |
|
Accumulated deficit |
|
|
(146,620 |
) |
|
|
(143,101 |
) |
Accumulated other comprehensive loss |
|
|
(3,978 |
) |
|
|
(4,178 |
) |
Total
stockholders’ equity |
|
|
18,606 |
|
|
|
21,431 |
|
Total
liabilities and stockholders’ equity |
|
$ |
22,421 |
|
|
$ |
25,459 |
|
|
|
|
|
|
|
|
|
|
|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIES |
Condensed Consolidated Statements of
Comprehensive Loss |
(In thousands, except per share amounts) |
(Unaudited) |
|
|
|
Three Months Ended June 30, |
|
|
|
2017 |
|
|
2016 |
|
Revenues |
|
|
|
|
|
|
Product |
|
$ |
3,603 |
|
|
$ |
2,411 |
|
Service |
|
|
232 |
|
|
|
227 |
|
Total
revenues |
|
|
3,835 |
|
|
|
2,638 |
|
Cost of revenues |
|
|
|
|
|
|
|
|
Product |
|
|
1,913 |
|
|
|
1,472 |
|
Service |
|
|
160 |
|
|
|
185 |
|
Total
cost of revenues |
|
|
2,073 |
|
|
|
1,657 |
|
Gross profit |
|
|
1,762 |
|
|
|
981 |
|
Operating expenses |
|
|
|
|
|
|
|
|
Research
and development |
|
|
382 |
|
|
|
360 |
|
Selling,
general and administrative |
|
|
4,763 |
|
|
|
4,130 |
|
Total
operating expenses |
|
|
5,145 |
|
|
|
4,490 |
|
Loss from
operations |
|
|
(3,383 |
) |
|
|
(3,509 |
) |
Interest expense |
|
|
(10 |
) |
|
|
(1 |
) |
Interest income |
|
|
53 |
|
|
|
1 |
|
Other (expense) income,
net |
|
|
(168 |
) |
|
|
3 |
|
Loss from continuing
operations before income taxes |
|
|
(3,508 |
) |
|
|
(3,506 |
) |
Income tax benefit |
|
|
– |
|
|
|
319 |
|
Loss from continuing
operations |
|
|
(3,508 |
) |
|
|
(3,187 |
) |
Income from
discontinued operations (net of tax) |
|
|
– |
|
|
|
619 |
|
Net loss |
|
$ |
(3,508 |
) |
|
$ |
(2,568 |
) |
|
|
|
|
|
|
|
|
|
Net loss per share:
basic and diluted |
|
|
|
|
|
|
|
|
Continuing operations |
|
$ |
(0.82 |
) |
|
$ |
(0.76 |
) |
Discontinued operations |
|
|
– |
|
|
|
0.15 |
|
|
|
$ |
(0.82 |
) |
|
$ |
(0.61 |
) |
|
|
|
|
|
|
|
|
|
Weighted-average number
of shares used in per share calculations: basic and diluted |
|
|
4,294 |
|
|
|
4,198 |
|
|
|
|
|
|
|
|
|
|
Other comprehensive
loss |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(3,508 |
) |
|
$ |
(2,568 |
) |
Foreign currency
translation adjustments |
|
|
200 |
|
|
|
(233 |
) |
Comprehensive loss |
|
$ |
(3,308 |
) |
|
$ |
(2,801 |
) |
|
|
|
|
|
|
|
|
|
|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIES |
RECONCILIATION OF GAAP MEASURES TO NON-GAAP
MEASURES |
(In thousands) and (Unaudited) |
|
|
|
Three Months Ended June 30, |
|
|
|
2017 |
|
|
2016 |
|
(1) Loss from
operations minus non-cash expenses (EBITDA): |
|
|
|
|
|
|
|
|
GAAP loss from
operations as reported |
|
$ |
(3,383 |
) |
|
$ |
(3,509 |
) |
Non-cash
adjustments: |
|
|
|
|
|
|
|
|
Stock-based
compensation |
|
|
438 |
|
|
|
411 |
|
Depreciation and
amortization |
|
|
109 |
|
|
|
61 |
|
Non-GAAP loss from
operations minus non-cash expenses (EBITDA) |
|
$ |
(2,836 |
) |
|
$ |
(3,037 |
) |
|
|
|
|
|
|
|
|
|
(2) Net loss
minus non-cash expenses: |
|
|
|
|
|
|
|
|
GAAP net loss as
reported |
|
$ |
(3,508 |
) |
|
$ |
(2,568 |
) |
Non-cash
adjustments: |
|
|
|
|
|
|
|
|
Stock-based
compensation |
|
|
438 |
|
|
|
411 |
|
Depreciation and
amortization |
|
|
109 |
|
|
|
61 |
|
Non-GAAP net loss minus
non-cash expenses |
|
$ |
(2,961 |
) |
|
$ |
(2,096 |
) |
|
|
|
|
|
|
|
|
|
(3) Operating
expenses minus non-cash expenses |
|
|
|
|
|
|
|
|
GAAP operating expenses
as reported |
|
$ |
5,145 |
|
|
$ |
4,490 |
|
Non-cash
adjustments: |
|
|
|
|
|
|
|
|
Stock-based
compensation |
|
|
(394 |
) |
|
|
(343 |
) |
Depreciation and
amortization |
|
|
(42 |
) |
|
|
(8 |
) |
Non-GAAP operating
expenses minus non-cash expenses |
|
$ |
4,709 |
|
|
$ |
4,139 |
|
|
|
|
|
|
|
|
|
|
(1) Loss from operations minus non-cash expenses (EBITDAS)
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SONOMA PHARMACEUTICALS, INC. AND
SUBSIDIARIES |
PRODUCT RELATED REVENUE
SCHEDULES |
(In thousands) and (Unaudited) |
|
|
|
|
|
|
|
|
|
The
following table shows the Company’s product revenues by geographic
region: |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
$ Change |
|
|
% Change |
United States |
|
$ |
1,859 |
|
|
$ |
1,373 |
|
|
$ |
486 |
|
|
35% |
Latin America |
|
|
569 |
|
|
|
– |
|
|
|
569 |
|
|
100% |
Europe and Rest of the
World |
|
|
1,175 |
|
|
|
1,038 |
|
|
|
137 |
|
|
13% |
Total |
|
$ |
3,603 |
|
|
$ |
2,411 |
|
|
$ |
1,192 |
|
|
49% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In connection with the Company’s sale of its
Latin American business to Invekra, product revenues were
reclassified from continuing operations to discontinued operations
as follows:
|
|
|
|
|
Three Months Ended June 30, |
|
|
2017 |
|
|
2016 |
Product revenues |
|
$ |
– |
|
|
$ |
1,098 |
Product license fees
and royalties |
|
|
– |
|
|
|
75 |
Total product related
revenues |
|
$ |
– |
|
|
$ |
1,173 |
|
|
|
|
|
|
|
|
Media and Investor Contact:
Sonoma Pharmaceuticals, Inc.
Dan McFadden
VP of Public and Investor Relations
(425) 753-2105
dmcfadden@sonomapharma.com
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