Newtopia Reports Third Quarter 2022 Financial Results
Newtopia Inc. reported a 5% sequential revenue growth to $2.7 million in Q3 2022, yet a 9% year-over-year decline. Gross profit margin improved to 55%, up from 50% in Q3 2021. The company achieved record participant engagements of 113,100, a 13% increase year-over-year, and received the highest CDC Full-Plus recognition for its diabetes prevention program. To enhance profitability, Newtopia initiates a cost-cutting program, aiming for $3 to $4 million in annualized savings. A conference call is scheduled for November 8, 2022, to discuss results.
- Record year-to-date participant engagements of 113,100, up 13% year-over-year.
- Gross profit margin increased to 55%, up from 50% in Q3 2021.
- Expected annualized cost savings of $3 to $4 million from cost-cutting initiatives.
- Revenue of $2.7 million down 9% year-over-year.
- Adjusted operating loss increased to $1.8 million compared to $1.0 million in the prior-year period.
- Operating expenses rose to $3.3 million, up from $2.4 million in Q3 2021.
- Record year-to-date participant engagements of 113,100, up
13% year-over-year - Received highest CDC Full-Plus Recognition for delivering a proven and effective alternative diabetes prevention program
- Initiates cost-cutting program to improve efficiency and margins, while positioning the Company for long-term profitability
- Q3 2022 conference call scheduled for November 8, 2022 at 5 PM ET
TORONTO, Nov. 8, 2022 /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 third quarter 2022 financial results for the three and nine months ended September 30, 2022. All amounts are expressed in Canadian dollars, unless otherwise noted.
Third Quarter 2022 Financial Highlights (vs. Q3 2021):
- Revenue of
$2.7 million , up5% sequentially, and down9% from the prior-year-period - Gross profit margin1 of
55% compared to47% sequentially and to50% from the prior-year period
"Newtopia continued to make progress during the third quarter," said Jeff Ruby, Founder and CEO of Newtopia. "Revenues of
Mr. Ruby continued, "In the third quarter, we moved closer to the finish line in negotiations with a new set of health plans and employers. While we expect our new engagement platform, when rolled out across our entire client base, will enable us to fully capitalize on these opportunities, we want to get a jump start on bringing these efficiencies to our operations sooner. To proactively drive toward profitability quicker and, in light of the currently challenging macro-economic conditions, commencing in the third quarter and throughout the fourth quarter, we are eliminating costs that do not drive successful business development as well as those that will not enhance our margins or operational efficiencies. Once complete, we anticipate that these expense cuts will result in
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1 | Gross profit is defined as revenue which is comprised of onboarding welcome revenue, ongoing engagement fees and success fees, less cost of sales which is comprised of Welcome Kit costs, compensation expense for Inspirators and care specialists and genetic testing costs. Gross margin percentage is calculated by dividing gross profit by total revenue for the defined period. Gross profit is considered by management to be an integral measure of financial performance and represents the amount of revenues retained by the Company after incurring direct costs. However, gross profit is not a recognized measure of profitability under IFRS. |
Third Quarter 2022 Financial Results
Revenue for the three months ended September 30, 2022 was
Gross profit for the third quarter 2022 totaled
Adjusted operating expenses2 for the three months ended September 30, 2022 totaled
For the third quarter, the Company had an adjusted operating loss3 of
The Company ended the third quarter 2022 with approximately
Given the year-to-date performance, the Company continues to anticipate achieving full year revenue growth for 2022 over full year 2021. With an expanded business development effort and the geographic expansion with a current Fortune 50 client, revenue is expected to benefit in the final quarter of the year. In the fourth quarter, the Company will continue to work towards onboarding a new set of health plan clients in addition to driving organic growth with its current set of self-insured employer clients to position Newtopia for further revenue improvements in 2023.
Conference Call
The Company will host a conference call today at 5:00 p.m. Eastern Time to discuss the third quarter 2022 results in further detail. To access the conference call, please dial (877) 300-8521 (U.S.) or (412) 317-6026 (International) 10 minutes prior to the start time and reference Conference ID number 10172219. 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 Tuesday, November 22, 2022 which can be accessed by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International) and entering the passcode 10172219. The webcast will also be archived on the Company's website.
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2 Adjusted operating expenses consist of all cash-based technology, sales and marketing and administrative expenses including employment expenses for these functions excluding equity-settled share-based compensation. Adjusted operating expense is not a measure of financial performance under IFRS and should not be considered a substitute for total operating expenses, which we believe to be the most directly comparable IFRS measure. |
3 Adjusted operating loss consists of gross profit less adjusted operating income. Adjusted operating loss is not a measure of financial performance under IFRS and should not be considered a substitute for loss from operations which we believe to be the most directly comparable IFRS measure. |
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 Toronto Stock Exchange (TSXV: NEWU) and is quoted in the US on the OTCQB® Venture Market (OTCQB: NEWUF). To learn more, visit newtopia.com , LinkedIn or Twitter.
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.sedar.com including Newtopia's final long form prospectus dated March 30, 2020.
Should any factor affect Newtopia's 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 press release is made as of the date of this press release, and Newtopia undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
Non-GAAP Financial Measures
The Company's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). Management uses certain non-GAAP measures, which are defined in the appropriate sections of this press release, to better assess the Company's underlying performance. These measures are reviewed regularly by management and the Company's Board of Directors in assessing the Company's performance and in making decisions about ongoing operations. In addition, we use certain non-GAAP measures to determine the components of management compensation. We believe that these measures are also used by investors as an indicator of the Company's operating performance. Readers are cautioned that these terms are not recognized GAAP measures and do not have a standardized GAAP meaning under IFRS and should not be construed as alternatives to IFRS terms, such as net income.
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.
Newtopia Inc.
Key Financial Measures and Schedule of Non-GAAP Reconciliations
Gross Profit Information [1]
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
$ | $ | $ | $ | |||||
Revenue | 2,653,411 | 2,904,863 | 8,052,111 | 8,053,055 | ||||
Cost of sales | (1,201,016) | (1,460,870) | (4,060,793) | (4,219,501) | ||||
Gross profit | 1,452,395 | 1,443,993 | 3,991,318 | 3,833,554 | ||||
Gross margin | 55 % | 50 % | 50 % | 48 % |
Reconciliation of Total Expenses to Adjusted Operating Expenses [2]
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
$ | $ | $ | $ | |||||
Total expenses | 3,703,525 | 2,564,597 | 10,101,882 | 9,687,931 | ||||
Add (Subtract) | ||||||||
Share-based compensation | (140,314) | (45,122) | (404,112) | (932,065) | ||||
Depreciation of property and equipment | (11,891) | (16,163) | (39,674) | (50,938) | ||||
Depreciation of right-of-use asset | (46,192) | (46,192) | (138,579) | (138,579) | ||||
Interest and accretion expense | - | - | - | - | ||||
Interest on lease obligations | (17,485) | (27,875) | (60,747) | (88,189) | ||||
Interest and accretion expense | (79,163) | (15,652) | (276,884) | (15,652) | ||||
Finance charges | (70,269) | (23,802) | (147,816) | (44,750) | ||||
Amortization of deferred finance charges | (68,140) | (27,890) | (191,910) | (112,926) | ||||
Foreign exchange loss (gain) | 5,534 | 34,524 | 28,998 | (32,414) | ||||
Change in value of derivative liability | - | - | - | 47,508 | ||||
Capitalized borrowing costs | - | - | 67,000 | - | ||||
Adjusted operating expenses | 3,275,605 | 2,396,425 | 8,938,158 | 8,319,926 |
Adjusted Operating Loss [3]
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
$ | $ | $ | $ | |||||
Gross profit | 1,452,395 | 1,443,993 | 3,991,318 | 3,833,554 | ||||
Adjusted operating expenses | (3,275,605) | (2,396,425) | (8,938,158) | (8,319,926) | ||||
(1,823,210) | (952,432) | (4,946,840) | (4,486,372) |
NEWTOPIA INC. | ||||
September 30, | December 31, | |||
$ | $ | |||
Assets | ||||
Current Assets | ||||
Cash | 388,492 | 811,584 | ||
Trade and other receivables | 1,613,182 | 1,381,977 | ||
Prepaid expenses and deposits | 275,112 | 330,992 | ||
Inventories | 391,852 | 131,000 | ||
Deferred costs | 52,793 | 162,872 | ||
2,721,431 | 2,818,425 | |||
Property and equipment | 30,302 | 66,147 | ||
Right‑of‑use asset | 230,959 | 369,538 | ||
Intangible asset | 3,304,201 | 2,251,852 | ||
6,286,893 | 5,505,962 | |||
Liabilities | ||||
Current Liabilities | ||||
Trade and other payables | 2,863,166 | 1,965,420 | ||
Credit facility | 4,880,760 | 2,331,314 | ||
Lease obligations | 349,449 | 300,555 | ||
Deferred revenue | 49,301 | 59,549 | ||
Contract liability | 9,000 | 144,034 | ||
Debentures | 2,360,854 | ‑ | ||
10,512,530 | 4,800,872 | |||
Non‑current lease obligations | 96,941 | 367,001 | ||
Debentures | ‑ | 2,182,403 | ||
10,609,471 | 7,350,276 | |||
Equity/Deficit | ||||
Common shares | 47,718,385 | 45,177,120 | ||
Contributed surplus | 12,743,235 | 11,652,200 | ||
Deficit | (64,784,198) | (58,673,634) | ||
(4,322,578) | (1,844,314) | |||
6,286,893 | 5,505,962 |
NEWTOPIA INC. | |||||||
Three Months Ended | Nine Months Ended | ||||||
2022 | 2021 | 2022 | 2021 | ||||
$ | $ | $ | $ | ||||
Revenue | 2,653,411 | 2,904,863 | 8,052,111 | 8,053,055 | |||
Cost of revenue | 1,201,016 | 1,460,870 | 4,060,793 | 4,219,501 | |||
Gross profit | 1,452,395 | 1,443,993 | 3,991,318 | 3,833,554 | |||
Operating expenses | |||||||
Technology and development | 1,259,596 | 715,966 | 2,909,996 | 2,428,187 | |||
Sales and marketing | 645,452 | 644,184 | 2,158,597 | 2,543,717 | |||
General and administrative | 1,370,557 | 1,036,275 | 3,869,565 | 3,348,022 | |||
Share‑based compensation | 140,314 | 45,122 | 404,112 | 932,065 | |||
3,415,919 | 2,441,547 | 9,342,270 | 9,251,991 | ||||
Other expenses (income) | |||||||
Depreciation of property and equipment | 11,891 | 16,163 | 39,674 | 50,938 | |||
Depreciation of right‑of‑use asset | 46,192 | 46,192 | 138,579 | 138,579 | |||
Interest and accretion expense | 79,163 | 15,652 | 276,884 | 15,652 | |||
Interest on lease obligations | 17,485 | 27,875 | 60,747 | 88,189 | |||
Finance charges | 70,269 | 23,802 | 147,816 | 44,750 | |||
Amortization of deferred finance charges | 68,140 | 27,890 | 191,910 | 112,926 | |||
Foreign exchange (gain)/loss | (5,534) | (34,524) | (28,998) | 32,414 | |||
Capitalized borrowing costs | ‑ | ‑ | (67,000) | ‑ | |||
Change in value of derivative liability | ‑ | ‑ | ‑ | (47,508) | |||
287,606 | 123,050 | 759,612 | 435,940 | ||||
Net loss and comprehensive loss | (2,251,130) | (1,120,604) | (6,110,564) | (5,854,377) |
NEWTOPIA INC. | |||||||||||
Common Shares | Shares To Be Issued | Contributed Surplus |
Deficit | Total | |||||||
$ | $ | $ | $ | $ | |||||||
Balance, December 31, 2021 | 45,177,120 | ‑ | 11,652,200 | (58,673,634) | (1,844,314) | ||||||
Net loss and comprehensive loss | ‑ | ‑ | ‑ | (6,110,564) | (6,110,564) | ||||||
Share‑based compensation | ‑ | ‑ | 404,112 | ‑ | 404,112 | ||||||
Private Placement Offering of Units, net of issuance costs | 2,624,495 | 511,839 | 3,136,334 | ||||||||
Compensation options issued to brokers | (83,230) | ‑ | 83,230 | ‑ | ‑ | ||||||
Adjustment of issuance costs on Debentures | ‑ | ‑ | 4,733 | ‑ | 4,733 | ||||||
Settlement of related party payable | ‑ | ‑ | 87,121 | ‑ | 87,121 | ||||||
Balance, September 30, 2022 | 47,718,385 | ‑ | 12,743,235 | (64,784,198) | (4,322,578) | ||||||
Balance, December 31, 2020 | 44,648,952 | 528,168 | 10,046,621 | (51,023,880) | 4,199,861 | ||||||
Net loss and comprehensive loss | ‑ | ‑ | ‑ | (5,854,377) | (5,854,377) | ||||||
Share‑based compensation | ‑ | ‑ | 932,065 | ‑ | 932,065 | ||||||
Warrants issued on issuance of Debentures | ‑ | ‑ | 216,588 | ‑ | 216,588 | ||||||
Issuance of shares | 528,168 | (528,168) | ‑ | ‑ | ‑ | ||||||
Settlement of related party payable | ‑ | ‑ | 265,589 | ‑ | 265,589 | ||||||
Balance, September 30, 2021 | 45,177,120 | ‑ | 11,460,863 | (56,878,257) | (240,274) | ||||||
NEWTOPIA INC. | ||||
Nine Months Ended September 30, | ||||
2022 | 2021 | |||
$ | $ | |||
Cash flows used in operating activities: | ||||
Net loss and comprehensive loss | (6,110,564) | (5,854,377) | ||
Items not involving cash: | ||||
Depreciation of property and equipment | 39,674 | 50,938 | ||
Depreciation of right‑of‑use asset | 138,579 | 138,579 | ||
Amortization of deferred finance charges | 191,910 | 112,926 | ||
Capitalized borrowing costs | (67,000) | ‑ | ||
Share‑based compensation | 404,112 | 932,065 | ||
Accretion expense | 124,184 | 15,652 | ||
Interest on lease obligations | 60,747 | 88,189 | ||
Change in value of derivative liability | ‑ | (47,508) | ||
(5,218,358) | (4,563,536) | |||
Net change in non‑cash working capital | ||||
Trade and other receivables | (231,205) | (725,713) | ||
Inventories | (260,852) | 123,103 | ||
Prepaid expenses and deposits | 55,880 | 116,152 | ||
Trade and other payables | 1,043,867 | (713,275) | ||
Deferred revenue | (10,248) | 66,682 | ||
Contract asset/liability | (135,034) | 452,000 | ||
(4,755,950) | (5,244,587) | |||
Cash flows used in investing activities | ||||
Purchase of property and equipment | (3,829) | (3,025) | ||
Intangible asset development costs | (985,349) | (1,657,348) | ||
(989,178) | (1,660,373) | |||
Cash flows from (used in) financing activities: | ||||
Credit facility withdrawals | 8,028,277 | 3,829,254 | ||
Credit facility repayments | (5,478,831) | (3,162,454) | ||
Credit facility financing costs | (81,831) | (65,040) | ||
Repayment of lease obligations | (281,913) | (239,452) | ||
Proceeds from private placement issuance of Units, net of issuance costs | 3,136,334 | - | ||
Proceeds from issuance of Debenture Units, net of issuance costs | - | 2,336,901 | ||
5,322,036 | 2,699,209 | |||
Decrease in cash | (423,092) | (4,205,751) | ||
Cash, beginning of period | 811,584 | 4,673,683 | ||
Cash, end of period | 388,492 | 467,932 |
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SOURCE Newtopia Inc.
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