Newtopia Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Newtopia (TSXV: NEWU, OTCQB: NEWUF) reported its Q2 2024 financial results, showing a decline in revenue to $1.6 million from $2.4 million YoY. The gross profit margin decreased to 48% from 50%, and the company achieved an 18% reduction in operating expenses. Despite these improvements, Newtopia posted an operating loss of $727 thousand, larger than the $436 thousand loss in Q2 2023. The company ended the quarter with $0.52 million in cash.

The company highlighted ongoing successes, including high engagement rates and weight loss outcomes in recent trials, and outlined three strategic opportunities for growth: expanding partnerships, integrating its platform with GLP-1 drugs, and leveraging health AI and clinical discovery.

The company remains optimistic about its industry position and is focused on returning to EBITDA positivity.

Positive

• Achieved 18% reduction in operating expenses year over year.
• Reported high engagement rates and best-ever weight loss outcomes in recent trials.

Negative

• Revenue decline to $1.6 million from $2.4 million year over year.
• Gross profit margin decreased to 48% from 50%.
• Posted an operating loss of $727 thousand, larger than the $436 thousand loss in Q2 2023.

Newtopia is well-positioned to grow and create value in key market opportunities at the forefront of global healthcare:

• Growth of GLP-1s: Our engagement expertise provides unique ability to facilitate sustainable health outcomes and demonstrable ROI to GLP-1 sponsors
• Rise of Health AI: Our unique data sets and capabilities will enrich and accelerate progress of next-gen clinical discovery platforms
• Commercial and Community Care-Delivery: We see continued expansion with our market-leading employer, provider and provincial innovation partners

TORONTO, Aug. 8, 2024 /PRNewswire/ - Newtopia Inc. ("Newtopia" or the "Company") (TSXV: NEWU) (OTCQB: NEWUF), a tech-enabled whole health platform creating sustainable habits that prevent, slow and reverse chronic disease, today announced its second quarter 2024 financial results, operational highlights and filing of its financial statements. These results pertain to the three months ended June 30, 2024. All amounts are expressed in Canadian dollars, unless otherwise noted.

Second Quarter 2024 Financial Highlights (vs. Q2 2023):

• Revenue of $1.6 million, as compared to $2.4 million
• Gross Profit margin of 48%, as compared to 50%
• Opex reduction of 18% year over year

"Over the last eleven years Newtopia's habit change solution has repeatedly proven our unique ability to produce industry leading patient engagement and to cultivate in our users the healthy habits that can prevent, slow and even reverse chronic metabolic disease. We've positioned ourselves at the forefront of healthcare developments, strengthened underlying operations, and evolved with value-based industry needs. As the economy strengthens Newtopia will be best positioned to support the innovative payers looking to drive proven health outcomes."

"Beginning with our industry-first randomized, controlled clinical trial between 2013-2016 and extending to the Fortune 500 employers that have adopted our solution, Newtopia has consistently delivered weight loss and reductions in A1C in participants that are not only clinically significant, but also sustainable over time. This has translated into meaningful cost-savings for our employer-partners and program sponsors and improved the health and well-being for the more than 100,000 individuals whom we have served, irrespective of their setting, geography, healthy equity or socio-economic status. Most recently, Newtopia reported six-month outcomes from its trial with Heartland Whole Health Institute in which we delivered our best-ever engagement rates and weight loss outcomes in both provider and employer environments."

"On the strength of this foundation,  we are pursuing three distinct and significant opportunities to accelerate Newtopia's growth including: (1) expanding our key innovation partnerships with providers, employers and provincial payers; (2) combining Newtopia's proven habit change platform with GLP-1 drugs for obesity and type 2 diabetes; and (3) partnering with health AI and clinical discovery innovators to improve our collective ability to deliver best in breed outcomes that prevent, reverse and slow chronic disease", said Jeff Ruby, Founder and CEO of Newtopia.

Second Quarter 2024 Financial Results

Revenue for the three months ended June 30, 2024 was $1.6 million, compared to $2.4 million in the prior-year period. This decline was driven by a change made by a client with a long-standing incentive program, which the Company is actively working to offset.

Gross profit for the second quarter 2024 totaled $0.8 million, as compared to $1.2 million in the prior-year period. Gross profit is comprised of Newtopia's revenue less the cost of Welcome Kits sold to new participants, labor costs associated with the Company's coaching team of Inspirators, and amortization on the Company's capitalized technology investments.

Operating expenses for the three months ended June 30, 2024 totaled $1.5 million, compared to $1.8 million in the prior-year period. For the second quarter, the Company posted an operating loss of $727 thousand, compared to a loss of $436 thousand in the prior year period.

The Company ended the second quarter 2024 with $0.52 million in cash, with additional access to their revolving line of credit with a Canadian Schedule 1 bank.

2024 Outlook

Despite a challenging macro environment, the Company remains bullish regarding its strategic fit within the broader healthcare industry. Newtopia will continue to execute on its pipeline to return to EBITDA positive.

Conference Call

The Company will host a conference call on August 8^th at 5 p.m. Eastern Time to discuss the second quarter 2024 results in further detail. To access the conference call, please dial (800) 717-1738 (U.S.) or (646) 307-1865 (International) 10 minutes prior to the start time and reference Conference ID number 04296. The call will also be available via live webcast on the investor relations portion of the Company's website located at investor.newtopia.com.

A replay of the conference call will be available through August 29, 2024, which can be accessed by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International) and entering the passcode 11156555. The webcast will also be archived on the Company's website.

About Newtopia

Newtopia is a personalized whole health platform helping people create positive lifelong habits that prevent, slow, or reverse chronic disease while reducing healthcare costs. The platform leverages genetic, social and behavioral insights to create individualized prevention programs with a focus on metabolic disease, diabetes, mental health challenges, hypertension, weight management and musculoskeletal disorders. With a person-centered approach that combines virtual care, digital tools, connected devices and actionable data science, Newtopia delivers sustainable clinical and financial outcomes. Newtopia serves some of the largest nationwide employers and health plans and is currently listed in Canada on the TSX Venture Exchange (TSXV: NEWU) and is quoted in the US on the OTCQB^® Venture Market (OTCQB: NEWUF). To  learn more, visit newtopia.com, LinkedIn or X.

Forward Looking Statements

This news release contains forward-looking information and forward-looking statements, within the meaning of applicable Canadian securities legislation, and forward looking statements, within the meaning of applicable United States securities legislation (collectively, "forward-looking statements"), which reflects management's expectations regarding Newtopia's future growth, results from operations (including, without limitation, future production and capital expenditures), performance (both operational and financial) and business prospects and opportunities. Wherever possible, words such as "predicts", "projects", "targets", "plans", "expects", "does not expect", "budget", "scheduled", "estimates", "forecasts", "anticipate" or "does not anticipate", "believe", "intend" and similar expressions or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative or grammatical variation thereof or other variations thereof, or comparable terminology have been used to identify forward-looking statements. All statements other than statements of historical fact may be forward- looking information. Such statements reflect Newtopia's current views and intentions with respect to future events, based on information available to Newtopia, and are subject to certain risks, uncertainties, and assumptions. Material factors or assumptions were applied in providing forward-looking information. While forward-looking statements are based on data, assumptions and analyses that Newtopia believes are reasonable under the circumstances, whether actual results, performance or developments will meet Newtopia's expectations and predictions depends on a number of risks and uncertainties that could cause the actual results, performance and financial condition of Newtopia to differ materially from its expectations. Forward-looking statements are not a guarantee and are based on a number of estimates and assumptions management believes to be relevant and reasonable, whether actual results, performance or developments will meet Newtopia's expectations and predictions depends on a number of risks and uncertainties that could cause the actual results, performance and financial condition of Newtopia to differ materially from its expectations. Certain of the "risk factors" that could cause actual results to differ materially from Newtopia's forward-looking statements in this press release include, without limitation: the termination of contracts by clients, risks related to COVID-19 including various recommendations, orders and measures of governmental authorities to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters- in-place and social distancing, disruptions to markets, economic activity, financing, supply chains and sales channels, and a deterioration of general economic conditions including a possible national or global recession; and other general economic, market and business conditions and factors, including the risk factors discussed or referred to in Newtopia's disclosure documents, filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedarplus.ca including Newtopia's final long form prospectus dated March 30, 2020.

For more information on these risks please see the "Risk Factors" in Newtopia's final long-form prospectus dated March 30, 2020. Should any factor affect Newtopia in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, Newtopia does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this news release is made as of the date of this news release, and Newtopia undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Key Financial Measures and Schedule of Non-GAAP Reconciliations
Unaudited Gross Profit Information- including
amortization

		Three Months Ended June 30				Six Months Ended June 30
		2024		2023		2024		2023
		$		$		$		$
Revenue		1,568,970		2,357,034		3,382,970		5,005,691
Cost of revenue		(808,397)		(1,184,993)		(1,707,793)		(2,460,675)
Gross profit		760,573		1,172,041		1,675,177		2,545,016
Gross profit margin		48 %		50 %		50 %		51 %

Reconciliation of Total Operating Expenses to Adjusted Operating Expenses

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
	$		$		$		$
Total expenses	1,936,354		2,403,354		4,060,329		5,149,156
Add (Subtract)
Share-based compensation	(67,425)		(215,013)		(141,090)		(308,303)
Depreciation of property and equipment	(735)		(2,030)		(1,470)		(3,579)
Interest and accretion expense	(275,963)		(177,728)		(543,324)		(347,423)
Interest on lease obligations	-		(8,973)		-		(21,563)
Finance charges	(110,664)		(122,318)		(239,689)		(231,966)
Amortization of deferred finance charges	(27,887)		(33,975)		(85,900)		(67,790)
Foreign exchange gain (loss)	34,057		(35,821)		30,749		(54,093)
(Loss) Gain on settlement of related party payable	-		7,203		(9,797)		7,203
Adjusted operating expenses	1,487,737		1,814,699		3,069,808		4,121,642

Unaudited Adjusted Operating Loss

			Three Months Ended June 30						Six Months Ended June 30
				2024		2023					2024		2023
				$		$				$				$
Gross profit				760,573		1,172,041				1,675,177				2,545,016
Add back amortization of intangible asset				-		206,514				-				413,028
Adjusted gross profit				760,573		1,378,555				1,675,177				2,958,044
Adjusted operating expenses				(1,487,737)		(1,814,699)				(3,069,808)				(4,121,642)
Adjusted operating loss				(727,164)		(436,144)				(1,394,631)				(1,163,598)

Newtopia Inc.
Condensed Interim Consolidated Statements of Financial Position  (Unaudited)
As at June 30, 2024 and December 31, 2023
(Expressed in Canadian Dollars)

		June 30,		December 31,
		2024		2023
		$		$
Assets
Current assets
	Cash	519,927		387,339
	Trade and other receivables	430,176		1,400,959
	Contract assets	4,044		259,072
	Prepaid expenses and deposits	254,018		101,043
	Inventories	156,268		115,232
	Deferred costs	25,233		64,583
		1,389,666		2,328,228
	Property and equipment	3,195		4,665
		1,392,861		2,332,893
Liabilities
Current liabilities
	Trade and other payables	2,223,873		1,825,356
	Credit facility	4,745,798		4,767,006
	Deferred revenue	-		48,185
	Debentures	3,996,311		3,723,530
		10,965,982		10,364,077
	Debentures	1,438,364		1,387,476
		12,404,346		11,751,553
Shareholders' Equity (Deficit)
	Common shares	49,754,858		49,404,596
	Contributed surplus	14,593,253		14,151,188
	Deficit	(75,359,596)		(72,974,444)
		(11,011,485)		(9,418,660)
		1,392,861		2,332,893

Newtopia Inc.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss (Unaudited)
Six Months Ended June 30, 2024
(Expressed in Canadian Dollars)

		2024	2023
		$	$
Revenue		3,382,970	5,005,691
Cost revenue		1,707,793	2,460,675
Gross profit		1,675,177	2,545,016
Operating expenses
Technology and development		820,640	1,444,772
Sales and marketing		458,216	777,432
General and administrative		1,790,952	1,899,438
Share-based compensation		141,090	308,303
Depreciation of property and equipment		1,470	3,579
		3,212,368	4,433,524
Other expenses (income)
Interest on lease obligations		-	21,563
Interest and accretion expense		543,324	347,423
Finance charges		239,689	231,966
Foreign exchange (gain) loss		(30,749)	54,093
(Gain) Loss on settlement of related party payable		9,797	(7,203)
Amortization of deferred finance charges		85,900	67,790
		847,961	715,632
Net loss and comprehensive loss		(2,385,152)	(2,604,140)
Loss per share
Basic and diluted loss per share		(0.01)	(0.02)
Weighted average number of shares outstanding
Basic and diluted		168,425,358	141,046,080

Newtopia Inc.
Condensed Interim Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 2024 
(Expressed in Canadian Dollars)

			Six Months Ended June 30
			2024	2023
Cash flows used in operating activities
	Net loss and comprehensive loss		(2,385,152)	(2,604,140)
	Items not involving cash
		Depreciation of property and equipment	1,470	3,579
		Amortization of intangible asset	-	413,028
		Amortization of deferred finance charge	85,900	67,790
		Debenture interest and accretion expense	323,665	252,648
		Interest on lease obligations	-	21,563
		Share-based compensation	141,090	308,303
		(Gain) Loss on settlement of related party payable	9,797	(7,203)
			(1,823,230)	(1,544,432)
	Change in non-cash working capital
		Trade and other receivables	970,783	37,266
		Prepaid expenses and deposits	(152,975)	(53,322)
		Inventories	(41,036)	185,395
		Trade and other payables	398,516	(10,602)
		Deferred revenue	(48,185)	-
		Contract asset/liability	255,028	270,100
			(441,099)	(1,115,595)
Cash flows used in investing activities
		Purchase of property and equipment	-	(1,099)
			-	(1,099)
Cash flows from financing activities
		Credit facility withdrawals	2,737,120	2,864,097
		Credit facility repayments	(2,758,323)	(2,877,729)
		Credit facility financing costs	(46,550)	(29,160)
		Repayment of lease obligation	-	(357,186)
		Proceeds from private placement offering, net of costs	641,440	1,467,295
			573,687	1,067,317
Increase (decrease) in cash			132,588	(49,377)
Cash, beginning of period			387,339	345,950
Cash, end of period			519,927	296,573

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SOURCE Newtopia Inc.

FAQ

What were Newtopia's second quarter 2024 financial results?

Newtopia reported a revenue decline to $1.6 million, a gross profit margin decrease to 48%, and an operating loss of $727 thousand for Q2 2024.

How did Newtopia's Q2 2024 revenue compare to Q2 2023?

Newtopia's Q2 2024 revenue decreased to $1.6 million from $2.4 million in Q2 2023.

What was Newtopia's operating loss in Q2 2024?

Newtopia posted an operating loss of $727 thousand in Q2 2024.

What are Newtopia's strategic opportunities for growth in 2024?

Newtopia plans to expand partnerships with providers, employers, and provincial payers, integrate its platform with GLP-1 drugs, and leverage health AI and clinical discovery.

How much cash did Newtopia have at the end of Q2 2024?

Newtopia ended Q2 2024 with $0.52 million in cash.