Neptune Reports Fourth Quarter and Fiscal 2021 Results

Announces First Quarter Revenue Range of $10 to $12 Million

LAVAL, QC, July 15, 2021 /PRNewswire/ – Neptune Wellness Solutions Inc. (“Neptune” or the “Company”) (NASDAQ: NEPT) (TSX: NEPT), a diversified and fully integrated health and wellness company focused on plant-based, sustainable and purpose-driven lifestyle brands, today announced its financial and operating results for the three-month and twelve-month periods ending March 31, 2021.

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 AlbertaBritish ColumbiaOntario, 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.

Conference Call Details

Neptune will host a conference call with management on Thursday, July 15th at 5:00 PM EST. The call will be webcast and can be accessed at www.investors.neptunewellness.com. To listen to the live call, please go to the website at least 15 minutes early to register, download and install any necessary audio software. The webcast will be archived for approximately 30 days.

The audited consolidated financial statements of Neptune Wellness Solutions Inc., which were prepared in accordance with IFRS, and the management discussion and analysis report for the year ended on March 31, 2021 have been filed on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml, and may also be found on our investor relations website at www.investors.neptunewellness.com. All amounts are in Canadian dollars except if specified otherwise.

The Company restated its previously reported condensed consolidated interim financial statements as at and for the three-month and six-month periods ended September 30, 2020 and as at and for three-month and nine-month periods December 31, 2020 with respect to recognition of revenue relating to two transactions, for which revenues were recognized during the three-month period ended September 30, 2020, that did not meet the conditions for recognition of revenue pursuant to the guidance of IFRS 15, specifically related to transfer of control of goods. Accordingly, the cost of sales, trade receivables and inventories were adjusted. The related inventories were written down during the third and fourth quarters of fiscal year 2021, resulting in a restatement for the three-month and nine-month periods ended December 31, 2020.

About Neptune Wellness Solutions Inc.

Headquartered in Laval, Quebec, Neptune is a diversified health and wellness company with a mission to redefine health and wellness. Neptune is focused on building a portfolio of high quality, affordable consumer products in response to long-term secular trends and market demand for natural, plant-based, sustainable and purpose-driven lifestyle brands. The Company utilizes a highly flexible, cost-efficient manufacturing and supply chain infrastructure that can be scaled to quickly adapt to consumer demand and bring new products to market through its mass retail partners and e-commerce channels. For additional information, please visit: https://neptunewellness.com/.

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.

SOURCE Neptune Wellness Solutions Inc.

Related Links

https://neptunecorp.com

 

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