- Reduction in Year-Over-Year Net Loss by 75%
- Total Revenues Flat Year-Over-Year at $18.9 million
- Strong International Growth with 53% Increased Product
Revenues
Sonoma Pharmaceuticals, Inc. (Nasdaq: SNOA), a global healthcare
leader developing and producing stabilized hypochlorous acid (HOCl)
products for a wide range of applications, including wound care,
eye care and dermatological conditions today announced financial
results for fiscal year 2020 and the fourth quarter ended March 31,
2020.
“We began this fiscal year with a goal of reducing our losses
and cash burn and are pleased with an 75% drop in our net loss
while maintaining revenues,” said Amy Trombly, CEO of Sonoma
Pharmaceuticals. “We are now on a stronger foundation on which to
grow revenues and margins. During the pandemic, we have seen demand
for our Microcyn® technology-based products increase globally and
we continue to build and improve upon our experience in killing
pathogens with a safe, non-toxic product. One of our key strengths
is innovating products for specific markets and we are working to
expand our existing sales channels, as well as to develop new
partnerships to distribute our Microcyn-powered products in the
U.S. and around the world.”
Business Highlights
The COVID-19 pandemic has influenced the Company in positive and
negative ways. The pandemic has increased worldwide demand for
virucidal and disinfectant technology, areas that Microcyn™
technology has been shown to be effective. On May 28, 2020, the
Company announced that its partner MicroSafe Group, Dubai and
MicroSafe Care Australia received approval for their patented and
trademarked Nanocyn® Disinfectant & Sanitizer, which is
manufactured by Sonoma using its patented Microcyn Technology, to
be entered into the Australian Register of Therapeutic Goods (ARTG)
for use against SARS-CoV-2 (COVID-19). Claims that a disinfectant
has a virucidal effect must be expressly permitted by the
Australian Therapeutic Goods Administration before being used in
consumer advertising (including on the label) in Australia.
Sonoma’s increased international sales reflect, in part,
Sonoma’s work with key partners to expand their territories and
product offerings. Over the last year, Sonoma expanded its
agreement with Petagon, Ltd. for certain international animal
health care rights, Microsafe Group for certain European, Middle
Eastern and Australian disinfectant markets and Brill
International, S.L. for certain eye care products in Europe. Sonoma
also received a new CE mark in Europe in April 2020 related to eye
care.
Moreover, during fiscal year 2020, Sonoma’s partnership with
Manna Pro Products, LLC for animal health care products expanded
with several new products and sales channels, such as PetSmart,
Chewy.com and Tractor Supply Company stores. This resulted in
annual revenues of over $2 million, the most in Sonoma’s animal
health care divison’s history.
The COVID-19 pandemic has also created challenges in U.S.
dermatolgy sales which have been primarily marketed via a direct
sales force which calls on dermatologists. As states began their
shelter-in-place process in March, many doctors shut their offices
to outside sales representatives or closed their offices entirely.
Sonoma’s sales representatives were unable to do in-person sales
and revenues declined. The decrease continued through April and May
of this year but June 2020 has brought increased sales for some
products. Management is closely tracking sales in this division and
exploring alternative ways to sell dermatology products that do not
need face to face interactions. Sonoma also expanded its strategy
to seek distribution partners for its U.S. dermatology products
instead of solely relying on an internal sales force.
Results for the Quarter Ended March 31, 2020
Total revenue of $4.6 million for the fourth quarter ended March
31, 2020, increased by $197,000, or 5%, from $4.4 million for the
same period last year. Product revenues of $4.3 million for the
fourth quarter ended March 31, 2020, were up by 5%, or $193,000,
when compared to $4.1 million in the same period last year, largely
as the result of increased sales in Latin America, Europe and Rest
of World.
During the quarter ended March 31, 2020, Sonoma reported total
revenues of $4.6 million and cost of revenues of $3.1 million
resulting in total gross profit of $1.5 million, or 33% of total
revenue, compared to a gross profit of $1.9 million, or 43% of
total revenue in the same period last year. The reduction in gross
profit margin is related to a one-time adjustment of $510,000 for
obsolete inventory in the Mexico facility.
Total operating expenses during the fourth quarter of fiscal
year 2020 were $4.3 million, down $308,000, or 7%, 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 a refocusing of the business
activities resulting in cost-reductions across all divisions.
Net loss for the fourth quarter of fiscal 2020 was $1.4 million,
down by $1.9 million, or 58%, compared to the same period last
year. The decrease in net loss was due to a decrease in operating
expenses and a gain on sale of assets to Microsafe. EBITDAS loss
for the fourth quarter of fiscal 2020 of $2.4 million, was up by
$91,000, or 4%, compared to an EBITDAS loss of $2.3 million for the
same period last year.
As of March 31, 2020, Sonoma had cash and cash equivalents of
$3.7 million.
Results for the Year Ended March 31, 2020
Total revenues for the year ended March 31, 2020 of $18.9
million decreased marginally by $34,000 as compared to $19.0 for
the year ended March 31, 2019. Product revenues for the year ended
March 31, 2020 of $17.8 million decreased by $104,000, or 1%, as
compared to $17.9 million for the year ended March 31, 2019. The
product revenue consisted of a decrease in product revenue of $2.4
million, or 27%, in the United States, a decrease in product
revenue of $278,000, or 7%, in Latin America, offset by growth of
product revenue of $2.6 million, or 53%, in Europe and Rest of
World.
For the year ended March 31, 2020, Sonoma reported total
revenues of $18.9 million and total cost of revenues of $10.6
million, resulting in total gross profit of $8.3 million, or 44% of
total revenues, compared to a gross profit of $8.9 million, or 47%
of total revenues, for the same period in the prior year. The
reduction in gross profit margin is related to a one-time
adjustment of $510,000 for obsolete inventory in the Mexico
facility.
Total operating expenses during fiscal year 2020 were $15.0
million, down $5.1 million, or 26%, 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 a refocusing of the business activities
resulting in cost-reductions across all divisions.
Net loss during fiscal year 2020 was $2.9 million, down $8.9
million, or 75%, compared to the same period last year. EBITDAS
loss for fiscal 2020 of $5.5 million, was down $3.7 million, or
40%, compared to an EBITDAS loss of $9.2 million for the same
period last year.
About Sonoma Pharmaceuticals, Inc.
Sonoma Pharmaceuticals is a global healthcare leader for
developing and producing stabilized hypochlorous acid (HOCl)
products for a wide range of applications, including wound care,
animal health care, eye care, oral care and dermatological
conditions. The company’s products reduce infections, itch, pain,
scarring and harmful inflammatory responses in a safe and effective
manner. In-vitro and clinical studies of hypochlorous acid (HOCl)
show it to have impressive antipruritic, antimicrobial, antiviral
and anti-inflammatory properties. Sonoma’s stabilized HOCl
immediately relieves itch and pain, kills pathogens and breaks down
biofilm, does not sting or irritate skin and oxygenates the cells
in the area treated assisting the body in its natural healing
process. The company’s products are sold either directly or via
partners in 53 countries worldwide and the company actively seeks
new distribution partners. The company’s principal office is in
Woodstock, Georgia, with manufacturing operations in Latin America.
European marketing and sales are headquartered in Roermond,
Netherlands. More information can be found at www.sonomapharma.com.
For partnership opportunities, please contact
businessdevelopment@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,” “reduce,” “develop” 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, as well as uncertainties relative to the COVID-19
pandemic and economic development, 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
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share amounts)
March 31
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
3,691
$
3,689
Accounts receivable, net
4,062
3,481
Inventories
2,192
3,409
Prepaid expenses and other current
assets
2,256
1,694
Current portion of deferred consideration,
net of discount
182
223
Total current assets
12,383
12,496
Property and equipment, net
365
727
Operating lease, right of use assets
963
–
Deferred consideration, net of discount,
less current portion
786
1,103
Other assets
64
122
Total assets
$
14,561
$
14,448
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
2,086
$
1,255
Accrued expenses and other current
liabilities
1,774
1,501
Deferred revenue
228
47
Deferred revenue Invekra
45
55
Current portion of long-term debt
481
322
Operating lease liabilities
251
–
Current portion of finance leases
–
141
Common stock liability
–
270
Total current liabilities
4,865
3,591
Long-term deferred revenue Invekra
245
356
Long-term debt, less current portion
–
12
Operating lease liabilities, less current
portion
746
–
Total liabilities
5,856
3,959
Commitments and Contingencies
Stockholders’ Equity
Convertible preferred stock, $0.0001 par
value; 714,286 shares authorized at March 31, 2020 and March 31,
2019, respectively, 1.55 shares issued and outstanding at March 31,
2020 and March 31, 2019, respectively
–
–
Common stock, $0.0001 par value;
24,000,000 shares authorized at March 31, 2020 and March 31, 2019,
respectively, 1,777,483 and 1,316,335 shares issued and outstanding
at March 31, 2020 and March 31, 2019, respectively
2
2
Additional paid-in capital
186,559
184,074
Accumulated deficit
(172,246
)
(169,238
)
Accumulated other comprehensive loss
(5,610
)
(4,349
)
Total stockholders’ equity
8,705
10,489
Total liabilities and stockholders’
equity
$
14,561
$
14,448
SONOMA PHARMACEUTICALS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE (LOSS) INCOME
(In thousands, except per
share amounts)
Three Months Ended March
31,
Year Ended March 31,
(Unaudited)
2020
2019
2020
2019
Revenues
Product
$
4,299
$
4,106
$
17,777
$
17,881
Service
280
276
1,159
1,089
Total revenues
4,579
4,382
18,936
18,970
Cost of revenues
Product
2,935
2,328
10,082
9,334
Service
130
179
521
756
Total cost of revenues
3,065
2,507
10,603
10,090
Gross profit
1,514
1,875
8,333
8,880
Operating expenses
Research and development
483
327
1,339
1,518
Selling, general and administrative
3,788
4,252
13,665
18,620
Total operating expenses
4,271
4,579
15,004
20,138
Loss from operations
(2,757
)
(2,704
)
(6,671
)
(11,258
)
Interest expense
(3
)
(7
)
(16
)
(33
)
Interest income
8
51
50
190
Gain on sale of assets
1,100
–
3,572
–
Other income (expense), net
399
(104
)
240
(239
)
Loss before income taxes
(1,253)
(2,764
)
(2,825
)
(11,340
)
Income tax expense
(121
)
(458
)
(121
)
(458
)
Net loss
$
(1,374
)
$
(3,222
)
$
(2,946
)
$
(11,798
)
Net loss per share: basic and diluted
$
(0.77
)
$
(2.45
)
$
(1.99
)
$
(12.77
)
Weighted-average number of shares used in
per share calculations: basic and diluted
1,777
1,318
1,477
924
Other comprehensive loss
Net loss
$
(1,374
)
$
(3,222
)
$
(2,946
)
$
(11,798
)
Foreign currency translation
adjustments
(1,429
)
69
(1,261
)
(374
)
Comprehensive loss
$
(2,803
)
$
(3,153
)
$
(4,207
)
$
(12,172
)
SONOMA PHARMACEUTICALS, INC.
AND SUBSIDIARIES
RECONCILIATION OF GAAP
MEASURES TO NON-GAAP MEASURES
(In thousands)
(Unaudited)
Three Months Ended
March 31,
Year Ended
March 31,
2020
2019
2020
2019
(1) Loss from operations minus non-cash
expenses EBITDAS loss:
GAAP loss from operations as reported
$
(2,757
)
$
(2,704
)
$
(6,671
)
$
(11,258
)
Non-cash adjustments:
Stock-based compensation
301
301
839
1,635
Depreciation and amortization
68
106
312
453
Non-GAAP loss from operations minus
non-cash expenses EBITDAS loss
$
(2,388
)
$
(2,297
)
$
(5,520
)
$
(9,170
)
(2) Net loss minus non-cash
expenses:
GAAP net (loss) income as reported
$
(1,374
)
$
(3,222
)
$
(2,946
)
$
(11,798
)
Non-cash adjustments:
Stock-based compensation
301
301
839
1,635
Depreciation and amortization
68
106
312
453
Non-GAAP net (loss) income minus non-cash
expenses
$
(1,005
)
$
(2,815
)
$
(1,795
)
$
(9,710
)
(3) Operating expenses minus non-cash
expenses
GAAP operating expenses as reported
$
4,271
$
4,579
$
15,004
$
20,138
Non-cash adjustments:
Stock-based compensation
(259
)
(300
)
(745
)
(1,545
)
Depreciation and amortization
(63
)
(52
)
(106
)
(221
)
Non-GAAP operating expenses minus non-cash
expenses
$
3,949
$
4,227
$
14,153
$
18,372
(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)
(Unaudited)
The following table shows the Company’s
product revenues by geographic region
Three Months Ended
March 31,
2020
2019
$ Change
% Change
United States
$
1,546
$
1,666
$
(120
)
7%
Latin America
1,107
957
150
16%
Europe and Rest of the World
1,646
1,483
163
11%
Total
$
4,299
$
4,106
$
193
5%
Year Ended March 31,
2020
2019
$ Change
% Change
United States
$
6,633
$
9,040
$
(2,407
)
27%
Latin America
3,684
3,962
(278
)
7%
Europe and Rest of the World
7,460
4,879
2,581
53%
Total
$
17,777
$
17,881
$
(104
)
1%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200710005474/en/
Media and Investor Contact: Sonoma Pharmaceuticals,
Inc. ir@sonomapharmaceuticals.com
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