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International Sales Surge: 18% Growth in Six Months Ending September 30, 2022
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Gross Profit Margin Climbs to 40% for the Quarter Ending September 30, 2022, Up from 33% Year-Over-Year
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Operating Loss Reduces by 24% to $233,000 for the Quarter Ending September 30, 2022, Compared to Previous Year
BOULDER, CO / ACCESSWIRE / November 14, 2022 / Sonoma Pharmaceuticals, Inc. (Nasdaq:SNOA), a pioneering force in global healthcare focused on the development and production of stabilized hypochlorous acid (HOCl) products for diverse applications such as wound care, eye care, nasal care, oral care, and dermatological conditions, has released its financial results for the second fiscal quarter and six months ended September 30, 2022.
“We are thrilled to report that our second quarter outcomes illustrate ongoing progress toward achieving profitability and expanding our operations,” stated Amy Trombly, CEO of Sonoma. “Although our U.S. revenues continue to be affected by the transition of our prescription dermatology business into a profitable distribution model, we are optimistic that this shift will yield a positive impact on our future financial results, enabling us to concentrate on revenue streams with higher profit margins. The rise in sales across both Europe and Asia highlights the effectiveness of our strong international business strategy, and we remain committed to launching innovative products, securing new distribution partners both domestically and internationally, while enhancing and diversifying our existing distributor relationships.”
Key Business Developments Driving Growth
Sonoma has persistently expanded its business operations by introducing new products, forming strategic partnerships, and enhancing its regulatory clearances across global markets.
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On October 27, 2022, Sonoma unveiled two new dermatological products available over-the-counter in the United States. Reliefacyn® Advanced Itch-Burn-Rash-Pain Relief Hydrogel serves as a direct-to-consumer alternative to a previously prescription-only product, designed to relieve symptoms like red bumps, rashes, shallow skin fissures, peeling, and signs of eczema or atopic dermatitis. Rejuvacyn® Advanced Skin Repair Cooling Mist is engineered for over-the-counter management of minor skin irritations post-cosmetic procedures and aids in daily skin health and hydration. Both products are readily available for purchase through our website at https://sonomapharma.com/shop-now/.
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We have advanced our U.S. distributor network by granting Loma Lux Laboratories non-exclusive rights to distribute our products focusing on pain and itch relief under a private label. More about Loma Lux Laboratories can be explored at lomalux.com. Additionally, we have bolstered our online presence by collaborating with Beauty Bridge, a curated beauty and wellness marketplace, which has commenced selling our Regenacyn® Advanced Scar Gel and Ocucyn® Eyelid & Eyelash Cleanser products on its platform. Further details about Beauty Bridge can be found at www.beautybridge.com.
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In September 2022, our partner Te Arai BioFarma successfully obtained regulatory approval to market and distribute our Microdacyn and Microdacyn Hydrogel products in Taiwan, enhancing the regulatory portfolio of our Microcyn® Technology.
Financial Performance Overview for the Quarter Ending September 30, 2022
For the quarter ending September 30, 2022, revenues totaled $3.3 million, reflecting a decrease of $0.4 million, or 11%, compared to $3.7 million during the same period last year. Notably, sales growth in Europe indicated a heightened demand for our wound care products along with the introduction of several new offerings. The revenue decline in the United States primarily stemmed from the transition of our prescription dermatology business to a distribution model, compounded by a decrease in sales of our over-the-counter animal health care products, although partially offset by increased sales in both wound care and prescription animal health care products. Additionally, the revenue from Latin America saw a decrease due to reduced manufacturing for a particular customer. Sonoma’s revenue can fluctuate significantly on a quarterly basis as customers tend to place larger, less frequent orders to optimize quantity discounts and minimize shipping costs.
During the quarter ending September 30, 2022, Sonoma reported total revenues of $3.3 million with a cost of revenues amounting to $2.0 million, leading to a gross profit of $1.3 million, which represents 40% of total revenue, compared to a gross profit of $1.2 million, or 33% of total revenue, for the corresponding period last year. This 7% increase in gross margins for the quarter is attributed to enhanced production capabilities at our manufacturing facility in Mexico, although this was partially offset by margin reductions in the Netherlands due to product mix variations and increased shipping costs to Europe.
Total operating expenses for the second quarter of fiscal year 2023 were recorded at $2.1 million, reflecting a decrease of $0.1 million, or 5%, compared to $2.2 million during the same period in the prior year. We are committed to maintaining stringent expense management across all operational areas.
The net loss before income tax for the quarter stood at $0.9 million, a significant change compared to a net loss of $0.1 million for the same quarter last year, primarily attributed to the one-time event of last year’s forgiveness of our PPP loan valued at $723,000. The EBITDAS loss for the quarter ending September 30, 2022, amounted to $0.6 million, down $0.3 million compared to an EBITDAS loss of $0.9 million for the same period last year.
Financial Performance Overview for the Six Months Ending September 30, 2022
For the six-month period ending September 30, 2022, revenue totaled $7.3 million, indicating a slight decrease of $0.1 million, or 2%, from $7.4 million in the previous year. Revenue growth was evident in Latin America, Europe, and Asia, while the decline in U.S. sales was largely due to the ongoing transition of our prescription dermatology business into a distribution model, coupled with a reduction in sales of our over-the-counter animal health care products. However, this decline was offset to some extent by increased sales in both wound care and prescription animal health care products. The drop in revenue from the Rest of the World segment is attributed to decreased disinfectant sales in the Middle East, although this was partially compensated by increased sales from New Zealand.
Sonoma reported total revenues of $7.3 million for the six months ending September 30, 2022, alongside a cost of revenues of $4.5 million, resulting in a gross profit of $2.8 million, or 38% of total revenues, compared to a gross profit of $2.7 million, or 36% of revenues during the same period last year. The increase in gross profit margin for this six-month period is mainly due to a one-time sale of machinery to a customer in Latin America, which management does not expect to recur.
Total operating expenses for the six months ending September 30, 2022 reached $4.4 million, a decrease of $0.2 million, or 4%, compared to $4.6 million in the corresponding period last year.
The net loss before taxes for the six-month period was $1.9 million, compared to a net loss of $1.2 million for the same period last year, primarily influenced by the one-time event of last year’s PPP loan forgiveness of $723,000. The EBITDAS loss for the six months ending September 30, 2022 totaled $1.2 million, down $0.5 million compared to an EBITDAS loss of $1.7 million for the same period last year.
Discover More About Sonoma Pharmaceuticals, Inc.
Sonoma Pharmaceuticals is a leading global healthcare innovator specializing in the development and production of stabilized hypochlorous acid (HOCl) products tailored for an extensive range of applications, including wound care, animal health care, eye care, nasal care, oral care, and various dermatological conditions. Our products are engineered to effectively reduce infections, alleviate itch, diminish pain, minimize scarring, and mitigate harmful inflammatory responses safely and efficiently. Clinical and in-vitro studies have demonstrated that hypochlorous acid (HOCl) possesses remarkable antipruritic, antimicrobial, antiviral, and anti-inflammatory properties. Sonoma’s stabilized HOCl offers immediate relief from itch and pain, effectively eliminates pathogens, disrupts biofilm, does not cause stinging or irritation, and oxygenates treated cells, facilitating the body’s natural healing process. Our products are available for purchase directly or through strategic partners in 55 countries around the globe, and we continually seek new distribution opportunities. Sonoma’s headquarters is located in Boulder, Colorado, with manufacturing facilities positioned in Latin America, while our European marketing and sales operations are based in Roermond, Netherlands. For more information, visit www.sonomapharma.com. For inquiries related to partnership opportunities, please reach out to [email protected].
Important Forward-Looking Statements
Except for historical facts mentioned herein, the statements made in this press release qualify as forward-looking under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include predictions regarding commercial and technological advancements and future financial performance of Sonoma Pharmaceuticals, Inc. and its subsidiaries (the “company”). Such statements are identified by terms such as “expect,” “continue,” “believe,” and “expand,” among others. Forward-looking statements are subject to inherent risks and uncertainties that may cause actual results to differ significantly, including potential changes in regulatory clinical and guideline developments, insufficient scientific data to meet regulatory standards, challenges in patent protection, market opportunities not meeting expectations, and uncertainties related to the COVID-19 pandemic, economic conditions, varying product formulations, and diverse regulatory and marketing requirements globally. The company disclaims any obligation to update these forward-looking statements unless required by law. Sonoma Pharmaceuticals™ and Microcyn® are recognized trademarks of Sonoma Pharmaceuticals, Inc. All other trademarks and service marks belong to their respective owners.
For Media and Investor Inquiries:
Sonoma Pharmaceuticals, Inc.
[email protected]
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
|
September 30, |
March 31, 2022 |
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|
ASSETS |
(Unaudited) |
|||||||
|
Current assets: |
||||||||
|
Cash and cash equivalents |
$ |
3,351 |
$ |
7,396 |
||||
|
Accounts receivable, net |
2,487 |
2,407 |
||||||
|
Inventories, net |
3,025 |
2,663 |
||||||
|
Prepaid expenses and other current assets |
3,315 |
3,746 |
||||||
|
Current portion of deferred consideration, net of discount |
215 |
218 |
||||||
|
Total current assets |
12,393 |
16,430 |
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|
Property and equipment, net |
305 |
320 |
||||||
|
Operating lease, right of use assets |
530 |
559 |
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|
Deferred tax asset |
957 |
829 |
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|
Deferred consideration, net of discount, less current portion |
539 |
630 |
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|
Other assets |
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