Nanalysis Announces Second Quarter 2025 Results

Rhea-AI Summary

Nanalysis Scientific Corp. (OTCQX: NSCIF) reported challenging Q2 2025 results marked by a 17% decline in total revenue to $9.6 million. Product sales dropped significantly by 46% to $2.9 million, while security services revenue increased by 7% to $5.6 million.

Despite revenue challenges, the company achieved notable improvements in product sales gross margins, increasing to 61% from 50% year-over-year. The company reported an Adjusted EBITDA loss of $462,000 compared to a profit of $759,000 in Q2 2024, and a net loss of $2.1 million.

Key developments include closing a $2 million promissory note financing, implementing efficiency measures in security services, and securing loan amendments to reduce principal payments through April 2026.

Positive

• Product sales gross margin improved significantly to 61% from 50% year-over-year
• Security services revenue grew 7% to $5.6 million
• Successfully secured $2 million in financing through promissory notes
• Obtained favorable loan amendments reducing principal payments and extending amortization to 2028

Negative

• Total revenue declined 17% to $9.6 million year-over-year
• Product sales dropped severely by 46% to $2.9 million
• Adjusted EBITDA turned negative at -$462,000 versus +$759,000 in Q2 2024
• Net loss increased to $2.1 million from $2.0 million year-over-year

CALGARY, AB, Aug. 28, 2025 /PRNewswire/ - Nanalysis Scientific Corp. ("the Company") (TSXV: NSCI) (OTCQX: NSCIF) (FRA: 1N1), a leader in portable NMR spectrometers and MRI technology for industrial and research applications announces second quarter results for the period ending on June 30, 2025. Chief Executive Officer Sean Krakiwsky and Chief Financial Officer Randall McRae will host a conference call at 5 P.M. Eastern Time today to discuss the results. A second call will be held for European investors at 8:30 A.M. Eastern Time tomorrow, Friday, August 29th. All interested parties are invited to join these calls.  All dollar figures in this press release are in thousands of Canadian dollars, except per share amounts or unless otherwise stated.    

"The first half of 2025 has been challenging because of economic uncertainty caused by global tariff and trade conditions. The second quarter reflected lower product sales, which had a direct impact on our financial results," said Sean Krakiwsky, Founder and CEO of Nanalysis. "Even so, our cost reduction and efficiency measures have continued to support stronger margins in the scientific equipment business. In our security services segment, the team's focus on scheduling, logistics, and cost management has led to sequential margin improvement, and we expect these efforts will continue to benefit margins in the coming quarters.

"Our plan remains unchanged, we are focused on building a vertically integrated scientific instrumentation company, advancing our Benchtop NMR platforms, and strengthening our service business. Operational execution and efficiency will remain at the core of how we deliver results as we progress on the path to long-term profitable growth."

Financial highlights for the three months ended June 30, 2025:

		Three months ended June 30
($000's)		2025	2024	Change $	Change %
Product sales		2,902	5,402	(2,500)	-46 %
Security services revenue		5,617	5,265	352	7 %
Flow-through inventory revenue		1,057	807	250	31 %
Total sales and revenue		9,576	11,474	(1,898)	-17 %
Gross margin percentage - product sales		61 %	50 %	11 %
Gross margin percentage - service revenue		10 %	10 %	0 %
Adjusted EBITDA		(462)	759	(1,221)
Normalized net loss (excludes impairment of assets)		(2,122)	(1,795)	(327)	-18 %
Net loss		(2,122)	(1,995)	(127)	-6 %

• For the three months ended June 30, 2025, the Company reported consolidated revenue of $9,576, a decrease of $1,898 or 17% from the comparative period in 2024. This decline was primarily driven by lower product sales, as ongoing global economic uncertainty and tariff risks continued to constrain customer capital budgets. Within the security services segment, revenue increased modestly by 7% year-over-year.
• Gross margin percentage for the three-month period ended June 30, 2025, on product sales was 61%, versus 50% for the three-month period ended June 30, 2024. Continuous improvement efforts have resulted in significantly improved margins over the prior year.
• Security service gross margin percentage in the quarter was 10%, the same as in the prior year comparative period. The Company has initiated improvements in its processes to better manage cost of security services, including better scheduling, improving logistics processes and managing overtime and on-call hours. This has resulted in an improvement in margins of 4% over Q1 2025, and the Company expects to continue seeing margins improve for the remainder of the year.
• Adjusted EBITDA (loss) for the three months ended June 30, 2025, was ($462) versus an Adjusted EBITDA profit of $759 in the same period last year. This was primarily the result of a drop in scientific equipment sales in the quarter.
• Net loss was $2,122 for the second quarter of 2025, which is $127 higher than the same period in 2024. The increase in net loss was due to lower revenues from scientific equipment sales offset by lower depreciation, stock-based compensation, and the fact that losses from associate are no longer recorded in the consolidated statement of loss and comprehensive loss due to the impairment of the Quad investment in 2024.

Financial highlights for the six months ended June 30, 2025:

		Six months ended June 30
($000's)		2025	2024	Change $	Change %
Product sales		6,589	9,618	(3,029)	-31 %
Security services revenue		10,640	9,988	652	7 %
Flow-through inventory revenue		2,941	3,030	(89)	-3 %
Total sales and revenue		20,170	22,636	(2,466)	-11 %
Gross margin percentage - product sales		64 %	49 %	15 %
Gross margin percentage - service revenue		8 %	9 %	-1 %
Adjusted EBITDA		(282)	655	(937)
Normalized net loss (excludes impairment of assets)		(3,429)	(4,317)	888	21 %
Net loss		(3,429)	(4,517)	1,088	24 %

• The Company reported consolidated revenue of $20,170, a decrease of $2,466 or 11% from the comparative period in 2024. This is primarily the result of a $3,029 decrease in product sales, offset by a $652 increase in security services revenue.
• Gross margin percentage on product sales was 64% for the six months ended June 30, 2025, up from 49% in the prior year. Continuous improvement programs continue to support improvements in 2025 gross margins.
• Gross margin percentage on service revenue was 8% for the six months ended June 30, 2025, compared to 9% in 2024. The Company has reversed its margin decline from Q4 2024 and Q1 2025 and looks to continue growing margins for the rest of 2025.
• Adjusted EBITDA loss for the six months ended June 30, 2025, was ($282) versus Adjusted EBITDA $655 for the same period last year. The drop was primarily due to a $3,029 decrease in product sales.

Quarterly Trend:

($000's)	Q2 2025	Q1 2025	Q4 2024	Q3 2024
Product sales	2,902	3,687	5,536	4,242
Security services revenue	5,617	5,023	5,602	5,420
Flow-through parts revenue	1,057	1,884	1,151	908
Total revenue	9,576	10,594	12,289	10,570
Adjusted EBITDA	(462)	180	1,904	545
Normalized net loss	(2,122)	(1,307)	(400)	(1,570)

• In Q2 2025, product sales were down by $785 from Q1 2025 mainly due to full quarter impacts of economic uncertainty and tariff risks. This has cooled markets for capital equipment globally and eliminated expected 2025 growth and, in fact, resulted in a decline in overall sales globally. This was offset by an increase in security service revenue of $594 due to increased labour hours as well as the realization of certain contractual service bonuses.

Recent strategic and operational highlights during and after the second quarter of 2025 include:

• Margin Improvement in Security Services: Process and logistics improvements initiated in Q2 led to better scheduling and cost control in the Airport Security Maintenance Business, resulting in sequential gross margin improvement from Q1. This is expected to continue through the remainder of 2025, as our new EVP of Services begins to have an impact on improved operations.
• Closed Promissory Note Financing: On June 12, 2025, the Company closed a fully subscribed private placement of unsecured promissory notes for gross proceeds of $2,000. The notes bear 12% annual interest, payable in cash or, in common shares of the Company. In connection with the financing, the Company issued 1,600,000 common shares at $0.25 per share to the lenders, representing 20% of the principal amount. Net proceeds will be used for general working capital purposes and to support ongoing operations.
• Signed an amending agreement with its lender: During the period ending June 30, 2025, the Company signed an amending agreement with its lender, obtaining a reduction in its loan principal payment from May 31, 2025, to April 30, 2026, as well as an extension of its loan amortization to May 31, 2028.

Outlook

"As we move into the second half of 2025, we continue to see a solid sales funnel; however, the first half highlighted how tariff risks and broader economic conditions can influence the timing of capital equipment purchases," said Mr. Krakiwsky.

"In the Security Services segment, the team has been implementing efficiency measures introduced in the second quarter, with a focus on scheduling, logistics, and cost management. These efforts, together with ongoing cost control and working capital discipline, are directed at improving operational effectiveness.

"Across both product and services, our focus remains on efficiency, margin improvement, and the continued advancement of our Benchtop NMR platforms and service offerings. The team is committed to process improvements and execution, as we persevere through these difficult economic conditions" added Mr. Krakiwsky.

Conference Call:

Investors interested in participating in the live full year call can dial 437-900-0527 or 1-888-510-2154 from abroad. Investors can also access the call online through a listen-only webcast here https://app.webinar.net/eXAlax953qK or on the investor relations section of the Company's website HERE.

The webcast will be archived on the Company's investor relations webpage for at least 90 days, and a telephonic playback will be available for seven days after the conference call by calling 1-888-660-6345 or 289-819-1450, conference ID #83432.

Additionally, the Company will be hosting a Q&A session for its European investors at 8:30am ET tomorrow, Friday, August  29^th, which can be accessed by the following link: Join the meeting now.

Non-IFRS and Supplementary Financial Measures

The Company prepares and reports its consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, ‎as adopted ‎by the Canadian Accounting Standards Board ("IFRS"). However, this press release may make reference to certain non-IFRS measures including key ‎performance indicators used by management. These measures are not recognized measures under IFRS ‎and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable ‎to similar measures presented by other companies. Rather, these measures are provided as additional ‎information to complement those IFRS measures by providing further understanding of the Company's results of ‎operations from management's perspective. Accordingly, these measures should not be considered in ‎isolation nor as a substitute for analysis of the Company's financial information reported under IFRS.

The ‎Company uses Flow-through parts revenue, Security services revenue, Adjusted Earnings Before Interest, Tax, Depreciation and Amortization ("Adjusted EBITDA"), and Normalized net loss as non-IFRS measures, which may be calculated ‎differently by other companies. These non-IFRS measure are used to provide investors supplemental measures of the Company's operating performance and liquidity and thus highlight trends in the Company's ‎business that may not otherwise be apparent when relying solely on IFRS measures. The Company also ‎believes that securities analysts, investors and other interested parties frequently use non-IFRS measures ‎in the evaluation of companies in similar industries.

Flow through parts revenue and Security services revenue

		Three months ended June 30
($000's)		2025	2024	($) Change
Security services revenue		5,617	5,265	352
Flow-through inventory revenue		1,057	807	250
Total Service Revenue		6,674	6,072	602
Security services costs		5,065	4,759	306
Flow-through inventory costs		1,057	807	250
Total Cost of Services		6,122	5,566	556
		Six months ended June 30
($000's)		2025	2024	($) Change
Security services revenue		10,640	9,988	652
Flow-through inventory revenue		2,941	3,030	(89)
Total Service Revenue		13,581	13,018	563
Security services costs		9,789	9,114	675
Flow-through inventory costs		2,941	3,030	(89)
Total Cost of Services		12,730	12,144	586

Adjusted EBITDA

		Three months ended June 30
($000's)		2025	2024	($) Change
Net loss		(2,122)	(1,995)	(127)
Depreciation and amortization expense		1,051	1,154	(103)
Finance expense		359	357	2
Stock-based compensation		112	388	(276)
Other (income) expenses		(44)	350	(394)
Amortization of deferred wages		216	276	(60)
Loss from associate		-	235	(235)
Current income tax expense		10	2	8
Deferred income tax recovery		(44)	(8)	(36)
Adjusted EBITDA		(462)	759	(1,221)
		Six months ended June 30
($000's)		2025	2024	($) Change
Net loss		(3,429)	(4,517)	1,088
Depreciation and amortization expense		1,975	2,306	(331)
Finance expense		686	711	(25)
Stock-based compensation		243	648	(405)
Other (income) expenses		(182)	604	(786)
Amortization of deferred wages		406	466	(60)
Loss from associate		-	435	(435)
Current income tax expense		37	34	3
Deferred income tax recovery		(18)	(32)	14
Adjusted EBITDA		(282)	655	(937)

Adjusted EBITDA by Quarter

($000's)	Q2 2025	Q1 2025	Q4 2024	Q3 2024
Net loss	(2,122)	(1,307)	(7,452)	(1,644)
Depreciation and amortization expense	1,051	924	1,155	1,165
Finance expense	359	327	293	341
Stock-based compensation	112	131	199	181
Other (income) expenses	(44)	(138)	124	(94)
Amortization of deferred wages	216	190	215	214
Loss from associate	-	-	345	305
Impairment of assets	-	-	7,052	74
Current income tax expense (recovery)	10	27	33	(22)
Deferred income tax (recovery) expense	(44)	26	(60)	25
Adjusted EBITDA	(462)	180	1,904	545

Normalized net loss

($000's)	Q2 2025	Q1 2025	Q4 2024	Q3 2024
Net loss	(2,122)	(1,307)	(7,452)	(1,644)
Impairment of assets	-	-	7,052	74
Normalized net loss	(2,122)	(1,307)	(400)	(1,570)

Supplementary Financial Measures 

The Company may also use supplementary financial measures which are intended to be disclosed on a periodic basis to depict the historical or expected future financial performance, cash position, or cash flow of the Company, are not a non-IFRS measure, and are not presented in the financial statements. The measures as discussed in this press release include:

• Gross margin percentage, which is defined as either (Product sales less Cost of product sold) divided by Product sales or (Security services revenue less Security services costs) divided by Security services revenue

About Nanalysis Scientific Corp. (TSXV: NSCI, OTCQX: NSCIF, FRA:1N1)

Nanalysis Scientific Corp. is a scientific instrumentation company with proprietary products and services groups working synergistically. The Company is a leading developer and supplier of cryogen-free portable Nuclear Magnetic Resonance (NMR) spectrometers, with a family of proprietary products that sell around the world in the pharma, biotech, energy, food, chemical, advanced materials, and security verticals, as well as in universities and government labs. Whether it is a new drug being developed, a lithium brine pool sample, polymer analysis, or assessing adulteration in foods, customers use the company's products to identify molecular structure. The Company's products are patent protected and manufactured in-house to protect intellectual property and optimize quality and costs. The Company leverages its technology by selling hardware and software on an original equipment manufacturer (OEM) basis to medical imaging customers. The Company provides services to its customers on its proprietary products, as well as on third-party imaging equipment, such as x-ray scanners in airports, border crossings, consulates, and correctional facilities. In 2022, the company won a $160 million services contract with the Canadian Air Transport Security Authority (CATSA) to service scanning equipment in over 80 Canadian airports: After three years of ramping up, the contract is profitable, and the Company continues to expand its services business.

Notice regarding Forward Looking Statements and Legal Disclaimer

This news release contains certain "forward-looking statements" within the meaning of such statements under applicable securities law. Forward-looking statements are frequently characterized by words such as "anticipates", "plan", "continue", "expect", "project", "intend", "believe", "anticipate", "estimate", "may", "will", "potential", "proposed", "positioned" and other similar words, or statements that certain events or conditions "may" or "will" occur. These statements are only predictions. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. The Company is under no obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable law.

Neither TSX Venture Exchange nor its Regulation Services Provider accepts responsibility for the adequacy or accuracy of this release.

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SOURCE Nanalysis Scientific Corp.

FAQ

What were Nanalysis Scientific's (NSCIF) key financial results for Q2 2025?

Nanalysis reported total revenue of $9.6 million (down 17%), with product sales of $2.9 million (down 46%) and security services revenue of $5.6 million (up 7%). The company posted an Adjusted EBITDA loss of $462,000 and a net loss of $2.1 million.

How did Nanalysis's gross margins perform in Q2 2025?

Product sales gross margin improved significantly to 61% from 50% year-over-year, while security services gross margin remained stable at 10%.

What financing activities did NSCIF complete in Q2 2025?

Nanalysis closed a $2 million private placement of unsecured promissory notes bearing 12% annual interest and issued 1.6 million common shares at $0.25 per share to lenders.

What are the main challenges affecting Nanalysis's business in 2025?

The company faces challenges from economic uncertainty, global tariff and trade conditions, and constrained customer capital budgets, particularly affecting product sales performance.

What operational improvements is Nanalysis implementing to address current challenges?

The company is focusing on cost reduction, efficiency measures, improved scheduling and logistics in security services, and working capital discipline to enhance operational effectiveness and margins.