Newtopia Reports Third Quarter 2024 Financial Results

Rhea-AI Summary

Newtopia reported Q3 2024 financial results with revenue of $1.0 million, down from $2.4 million in the prior year period. The decrease was attributed to a client loss in June 2024 and structural incentive changes. Gross profit was $0.3 million (34% of revenue). Adjusted operating expenses decreased 16% to $1.3 million, with an adjusted operating loss of $987 thousand compared to a gain of $21 thousand last year. The company announced a new partnership with a US supplemental payvider and expects to return to profitable growth in 2025.

Positive

• Operating expenses reduced by 16% to $1.3 million
• New partnership with US supplemental payvider covering millions of employee lives
• 34% gross profit margin maintained

Negative

• Revenue declined 58% year-over-year to $1.0 million
• Adjusted operating loss of $987 thousand vs. gain of $21 thousand in prior year
• Loss of major client in June 2024
• Structural incentive changes with existing client impacting revenue

We are well-positioned to grow via key market opportunities at the forefront of global healthcare, including the incoming U.S. administration's aim to "Make America Healthy Again" by tackling chronic disease.

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

TORONTO, Nov. 27, 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 third quarter 2024 financial results, operational highlights and filing of its financial statements. These results pertain to the three months ended September 30, 2024. All amounts are expressed in Canadian dollars, unless otherwise noted.

Third Quarter 2024 Financial Highlights:

• Revenue of $1.0 million
• Opex reduction of 16%
• New partnership with US supplemental payvider positions Newtopia for profitability in 2025

"As we have for eleven years, Newtopia continues to prove our unique ability to produce industry-leading patient engagement and to cultivate healthy habits that can prevent, slow and reverse chronic metabolic disease", said Jeff Ruby, Newtopia Founder and CEO. "Most recently, we reported nine-month outcomes from our ongoing trial with Arkansas-based Heartland Whole Health Institute, in which we delivered Newtopia's best-ever engagement rates and weight loss outcomes in both provider and employer environments."

"This quarter we also further strengthened our underlying operations, and evolved our offerings to respond to emerging industry opportunities and value-based needs, including the incoming US administration's desire to 'Make America Healthy Again' by tackling chronic disease – something we do better than anyone else in the market", continued Ruby.

"Building on the strength of this progress we continue to pursue three significant opportunities to accelerate Newtopia growth in the final quarter of the year and into 2025: (1) expanding our key innovation partnerships with providers, employers and provincial payers, including a new relationship with a US Supplemental Payvider covering millions of employee lives; (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", Ruby concluded.

Third Quarter 2024 Financial Results

Revenue for the three months ended September 30, 2024 was $1.0 million compared to $2.4 million in the prior-year period. This decrease is driven by the loss of a client effective June 2024, in addition to a structural incentive change with an existing client which the Company is actively working to offset. Gross profit for the third quarter was $0.3 million, or 34% of revenue. Gross profit consists of revenue less direct expenses, including the cost of Welcome Kits and labor costs associated with the Company's frontline health coaching team.

Adjusted operating expenses for the three months ended September 30, 2024, totaled $1.3 million, compared to $1.6 million in the prior-year period. The Company posted an adjusted operating loss of $987 thousand, compared to a gain of $21 thousand in the prior-year period. Given the new partnership with a US payvider, Newtopia anticipates returning to profitable growth in the near future.

Conference Call

The Company will host a conference call November 27 at 5 p.m. eastern time to discuss the third 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 15026. 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 December 18, 2024, which can be accessed by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International) and entering the passcode 11157569. 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 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 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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	$		$		$		$
Revenue	986,116		2,434,606		4,369,086		7,440,297
Cost of revenue	(651,969)		(1,040,988)		(2,359,758)		(3,501,663)
Gross profit	334,147		1,393,618		2,009,328		3,938,634
Gross profit margin	34 %		57 %		46 %		53 %

Reconciliation of Total Operating Expenses to Adjusted Operating Expenses

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	$		$		$		$
Total expenses	1,978,493		2,164,039		6,038,822		7,313,195
Add (Subtract)
Share-based compensation	(54,851)		(158,584)		(195,941)		(466,887)
Depreciation of property and equipment	(483)		(1,386)		(1,953)		(4,965)
Debenture interest and accretion expense	(300,997)		(246,556)		(844,321)		(593,979)
Interest on promissory note	(2,000)		-		(2,000)		-
Interest on lease obligations	-		(5,221)		-		(26,784)
Finance charges	(256,482)		(145,024)		(496,171)		(376,990)
Amortization of deferred finance charges	(44,984)		(39,710)		(130,884)		(107,500)
Foreign exchange gain (loss)	2,094		17,302		32,843		(36,791)
(Loss) Gain on settlement of related party payable	-		3,111		(9,797)		10,314
Adjusted operating expenses	1,320,790		1,579,015		4,390,598		5,700,657

Unaudited Adjusted Operating Loss

	Three Months Ended Sep 30,				Nine Months Ended Sep 30,
	2024		2023		2024		2023
	$		$		$		$
Gross profit	334,147		1,393,618		2,009,328		3,938,634
Add back amortization of intangible asset	-		206,509		-		619,537
Adjusted gross profit	334,147		1,600,127		2,009,328		4,558,171
Adjusted operating expenses	(1,320,790)		(1,579,015)		(4,390,598)		(5,700,657)
Adjusted operating loss	(986,643)		21,112		(2,381,270)		(1,142,486)

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

		September 30,		December 31,
		2024		2023
		$		$
Assets
Current assets
	Cash	10,200		387,339
	Trade and other receivables	381,061		1,400,959
	Contract assets	-		259,072
	Prepaid expenses and deposits	137,226		101,043
	Inventories	91,654		115,232
	Deferred costs	41,979		64,583
		662,120		2,328,228
	Property and equipment	2,712		4,665
		664,832		2,332,893
Liabilities
Current liabilities
	Trade and other payables	2,415,716		1,825,356
	Credit facility	4,865,674		4,767,006
	Promissory note	200,000		-
	Contract Liability	48,746		-
	Deferred revenue	-		48,185
	Debentures	5,735,672		3,723,530
		13,265,808		10,364,077
	Debentures	-		1,387,476
		13,265,808		11,751,553
Shareholders' Equity (Deficit)
	Common shares	49,754,858		49,404,596
	Contributed surplus	14,648,104		14,151,188
	Deficit	(77,003,938)		(72,974,444)
		(12,600,976)		(9,418,660)
		664,832		2,332,893

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

		2024	2023
		$	$
Revenue		986,116	2,434,606
Cost revenue		651,969	1,040,988
Gross profit		334,147	1,393,618
Operating expenses
Technology and development		366,732	446,504
Sales and marketing		163,261	317,544
General and administrative		790,797	814,967
Share-based compensation		54,851	158,584
Depreciation of property and equipment		483	1,386
		1,376,124	1,738,985
Other expenses (income)
Interest on lease obligations		-	5,221
Debenture interest and accretion expense		300,997	246,556
Interest on promissory note		2,000	-
Finance charges		256,482	145,024
Foreign exchange (gain) loss		(2,094)	(17,302)
(Gain) Loss on settlement of related party payable		-	(3,111)
Amortization of deferred finance charges		44,984	39,710
		602,369	425,054
Net loss and comprehensive loss		(1,644,346)	(770,421)
Loss per share
Basic and diluted loss per share		(0.01)	(0.01)
Weighted average number of shares outstanding
Basic and diluted		173,265,303	153,829,313

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

			2024	2023
			$	$
Cash flows used in operating activities
	Net loss and comprehensive loss		(4,029,494)	(3,374,561)
	Items not involving cash
		Depreciation of property and equipment	1,953	4,965
		Amortization of intangible asset	-	619,537
		Amortization of deferred finance charge	130,884	107,500
		Debenture interest and accretion expense	624,661	353,530
		Interest on promissory note	2,000	-
		Interest on lease obligations	-	26,784
		Debt modification	-	8,956
		Credit facility interest	130,466	-
		Share-based compensation	195,941	466,887
		(Gain) Loss on settlement of related party payable	9,797	(10,314)
			(2,933,792)	(1,796,716)
	Change in non-cash working capital
		Trade and other receivables	1,019,898	(216,987)
		Prepaid expenses and deposits	(36,183)	(33,712)
		Inventories	23,578	208,151
		Trade and other payables	442,895	(502,016)
		Deferred revenue	(48,185)	-
		Contract asset/liability	307,818	174,670
			(1,223,971)	(2,166,610)
Cash flows used in investing activities
		Purchase of property and equipment	-	(2,548)
			-	(2,548)
Cash flows from financing activities
		Credit facility withdrawals	(3,726,407)	4,706,984
		Credit facility repayments	3,825,080	(5,167,679)
		Credit facility financing  costs	(93,280)	(117,260)
		Promissory note	200,000	-
		Repayment of lease obligation	-	(464,998)
		Proceeds from private placement issuance of Units, net of costs	641,440	1,467,295
		Proceeds from issuance of debenture units, net of costs	-	1,746,201
		Repayment of debentures	-	(30,000)
		proceeds from exercise of warrants	-	258,299
			846,833	2,398,842
(Decrease) Increase in cash			(377,139)	229,684
Cash, beginning of period			387,339	345,950
Cash, end of period			10,200	575,634

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SOURCE Newtopia Inc.

FAQ

What was Newtopia's (NEWUF) revenue in Q3 2024?

Newtopia reported revenue of $1.0 million in Q3 2024, compared to $2.4 million in the same period last year.

What caused Newtopia's (NEWUF) revenue decline in Q3 2024?

The revenue decline was due to the loss of a client in June 2024 and structural incentive changes with an existing client.

When does Newtopia (NEWUF) expect to return to profitability?

Following the new partnership with a US supplemental payvider, Newtopia anticipates returning to profitable growth in 2025.

What was Newtopia's (NEWUF) gross profit margin in Q3 2024?

Newtopia's gross profit margin was 34% of revenue, with gross profit of $0.3 million in Q3 2024.