NEXGEL Reports First Quarter 2024 Revenue of $1.27 Million, an Increase of 104% Year-Over-Year

Rhea-AI Summary

NEXGEL (NASDAQ: NXGL) announced its financial results for Q1 2024, reporting a 104% YoY revenue increase to $1.27 million, driven by 58% growth in contract manufacturing and 178% in consumer branded products. The gross profit for Q1 2024 was $277,000, up from a loss of $57,000 in Q1 2023. However, the company reported a net loss of $905,000, up from $807,000 in the same period last year. NEXGEL is investing in significant growth opportunities, including expanding its Texas facility and launching products in Europe. The company ended the quarter with a cash balance of $2.4 million.

Positive

• Revenue increased by 104% YoY to $1.27 million.
• Contract manufacturing revenue grew by 58%.
• Consumer branded product revenue surged by 178%.
• Gross profit increased to $277,000 from a loss of $57,000 last year.
• Gross profit margin improved to 21.9% from a negative 9.2% YoY.
• Company is nearly complete with capacity expansion of Texas facility.
• Expecting product launches with Abbvie and others.
• Anticipating the first batch of consumer branded products in Europe.
• Cash balance of $2.4 million as of March 31, 2024.

Negative

• Net loss increased to $905,000 from $807,000 YoY.
• Cost of revenues rose by 46.1% to $989,000.
• Selling, general, and administrative expenses increased by 43.8% to $1.1 million.
• Research and development expenses decreased significantly to $2,000.
• Net cash usage for investment due to non-recurring strategic investments and acquisition costs.

Financial Analyst

NEXGEL's first quarter 2024 financial results show a notable 104% increase in revenue year-over-year, reaching $1.27 million. This impressive growth is driven by a 58% rise in contract manufacturing and a 178% surge in branded products. Such growth is likely attributed to the company's strategic investments and expansion efforts, including the capacity expansion of their facility in Texas and the upcoming product launches with partners like Abbvie.

One key highlight is the improvement in gross profit margin to 21.9%, a significant rebound from a negative margin of 9.2% in Q1 2023. This positive trend indicates better operational efficiency and the scalability of their new product lines. However, it's important to note that the net loss increased marginally to $905,000 from $807,000.

Investors should closely monitor the company's progress in launching its consumer branded products in Europe and its ability to sustain revenue growth while managing costs. The substantial increase in selling, general and administrative expenses by 43.8% reflects the company's aggressive marketing and expansion strategy, which can yield high returns if successful but poses risks if not well-executed.

Key takeaway for investors: While the revenue growth and improved gross margins are promising, the bottom line remains in the red. NEXGEL's future performance will depend on its ability to convert these strategic investments into sustainable profitability.

Market Research Analyst

The significant year-over-year revenue growth for NEXGEL indicates solid market acceptance and demand for their hydrogel products. The 178% growth in the consumer branded segment is particularly noteworthy, suggesting robust consumer interest and potentially successful product differentiation in a competitive market.

The upcoming product launches in Europe, pending necessary certifications, could open new revenue streams and diversify their market presence, reducing reliance on the US market. However, the success of these launches will hinge on effective market entry strategies and local market receptivity.

However, the increased expenses in advertising, marketing and professional fees should be carefully watched. While these are critical for market penetration and brand-building efforts, they can also strain the company's financials if not appropriately managed. The market should keep an eye on the effectiveness of these expenditures in driving sales and market share growth.

Insight for investors: The company has shown potential in capturing market demand, but its ability to manage costs while expanding into new markets will be important for long-term success. Monitoring the outcomes of their strategic investments and European market entry will be key for assessing future growth potential.

LANGHORNE, Pa., May 13, 2024 (GLOBE NEWSWIRE) -- NEXGEL, Inc. (“NEXGEL” or the “Company”) (NASDAQ: “NXGL”), a leading provider of ultra-gentle, high-water-content hydrogel products for healthcare and consumer applications, today announced its financial results for the first quarter ended March 31, 2024.

Adam Levy, NEXGEL’s Chief Executive Officer, commented, “Following a record year of growth in 2023, I am pleased to report our first quarter financial results that demonstrate steady growth year-over-year and preparedness for significant growth levers we expect in 2024. Revenue for the quarter grew 104% year-over-year driven by growth in both contract manufacturing and consumer branded product business segments of approximately 58% and 178%, respectively. In the first quarter and into the second quarter of this year we are investing for the growth we expect in the back half of this year. We are nearly complete with the capacity expansion of our facility in Texas along with installation of state-of-the art equipment in preparation for product launches with Abbvie and others. Additionally, we expect to launch our first batch of consumer branded products in Europe and are in the final stages of receiving the proper certifications to do so. We have a lot to be excited about regarding our future growth opportunities at NEXGEL.”

First Quarter 2024 Financial Highlights

For the quarter ended March 31, 2024, revenue totaled $1.27 million, an increase of $646,000, or 104%, as compared to $620,000 for the quarter ended March 31, 2023. The increase in revenue was driven by sales growth in contract manufacturing of approximately 58% and branded products of 178%.

Gross profit totaled $277,000 for the three months ended March 31, 2024, compared to a gross profit loss of $57,000 for the three months ended March 31, 2023. The increase of $334,000 in gross profit year-over-year was primarily due to the increase in consumer branded products.

Gross profit margin for the first quarter of 2024 was 21.9% compared to a negative gross margin for the first quarter of 2023 of 9.2% and a gross profit margin of 14.6% in the fourth quarter of 2023.

Cost of revenues increased by $312,000, or 46.1%, to $989,000 for the three months ended March 31, 2024, as compared to $677,000 for the three months ended March 31, 2023. The increase in cost of revenues is primarily aligned with the new product line growth and an increase in compensation and benefits with the increase in revenue growth.

Selling, general and administrative expenses increased by $349,000 or 43.8%, to $1.1 million for the three months ended March 31, 2024, as compared to $797,000 for the three months ended March 31, 2023. The increase in selling, general and administrative expenses is primarily attributable to an increase in advertising, marketing and Amazon fees, professional and consulting fees, and of compensation and benefits expense.

Research and development expenses decreased by $27,000 to $2,000 for the three months ended March 31, 2024, from $29,000 for the three months ended March 31, 2023.

Net loss for the three months ended March 31, 2024, was $905,000 as compared to a net loss of 807,000 in the three months ended March 31, 2023.

As of March 31, 2024, the Company had a cash balance of $2.4 million, which includes an approximate $1 million registered direct offering led by insiders. During the quarter, there was a net usage of cash for investment due to several non-recurring key strategic investments and acquisition costs.

As of March 31, 2024, NEXGEL had 6,227,624 shares of common stock outstanding.

First Quarter 2024 Financial Results Conference Call
Date: May 13, 2024
Time: 4:30 P.M. ET
Live Call: + 1-800-343-5419 (U.S. Toll Free) or + 1-203-518-9731 (International)
Webcast: Events and Presentations

For interested individuals unable to join the conference call, a replay will be available through May 27, 2024, by dialing + 1-844-512-2921 (U.S. Toll Free) or + 1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 11155952. An archived version of the webcast will also be available for 90 days.

About NEXGEL, INC.

NEXGEL is a leading provider of healthcare, beauty, and over-the-counter (OTC) products including ultra-gentle, high-water-content hydrogels. Based in Langhorne, Pa., the Company has developed and manufactured electron-beam, cross-linked hydrogels for over two decades. NEXGEL brands include Silverseal, Hexagels, Turfguard, Kenkoderm, and Dermablock. Additionally, NEXGEL has strategic contract manufacturing relationships with leading consumer healthcare companies.

Forward-Looking Statement

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “prospects,” “outlook,” and similar words or expressions, or future or conditional verbs, such as “will,” “should,” “would,” “may,” and “could,” are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance, or achievements to be materially different from any anticipated results, performance, or achievements for many reasons. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2022, including but not limited to the discussion under “Risk Factors” therein, which the Company filed with the SEC and which may be viewed at http://www.sec.gov/.

Investor Contacts:
Valter Pinto, Managing Director
KCSA Strategic Communications
212.896.1254
valter@kcsa.com

NEXGEL, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2024 AND DECEMBER 31, 2023
(Unaudited)
(in thousands, except share and per share data)

		March 31, 2024				December 31, 2023
ASSETS:
Current Assets:
Cash		$	2,419			$	2,700
Accounts receivable, net			739				633
Inventory			1,369				1,319
Prepaid expenses and other current assets			336				400
Total current assets			4,863				5,052
Goodwill			1,128				1,128
Intangibles, net			302				326
Property and equipment, net			2,194				1,499
Operating lease - right of use asset			1,803				1,855
Other assets			95				95
Total assets		$	10,385			$	9,955
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	1,053			$	1,233
Accrued expenses and other current liabilities			111				398
Deferred revenue			250				20
Current portion of note payable			87				80
Warrant liability			255				146
Contingent consideration liability			439				439
Financing lease liability, current portion			55				-
Operating lease liabilities, current portion			233				233
Total current liabilities			2,483				2,549
Operating lease liabilities, net of current portion			1,682				1,727
Financing lease liability, net of current portion			352				-
Notes payable, net of current portion			663				513
Total liabilities			5,180				4,789
Commitments and Contingencies (Note 15)			-				-
Preferred stock, par value $0.001 per share, 5,000,000 shares authorized, no shares issued and outstanding			-				-
Common stock, par value $0.001 per share, 25,000,000 shares authorized; 6,227,624 and 5,741,838 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively			6				6
Additional paid-in capital			20,350				19,406
Accumulated deficit			(15,568	)			(14,715	)
Total NexGel stockholders’ equity			4,788				4,697
Non-controlling interest in joint venture			417				469
Total stockholders’ equity			5,205				5,166
Total liabilities and stockholders’ equity		$	10,385			$	9,955

NEXGEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(Unaudited)
(in thousands, except share and per share data)

				Three months ended
				March 31,
				2024					2023
Revenues, net				$	1,266				$	620
Cost of revenues					989					677
Gross margin (loss)					277					(57	)
Operating expenses
Research and development					2					29
Selling, general and administrative					1,146					797
Total operating expenses					1,148					826
Loss from operations					(871		)			(883	)
Other income (expense)
Interest income (expense), net					(15		)			(1	)
Changes in fair value of warrant liability and warrant modification expense					(53		)			66
Gain on investment in marketable securities					34					7
Other income					—					4
Total other income (expense), net					(34		)			76
Loss before income taxes					(905		)			(807	)
Income tax expense					—					—
Net loss					(905		)			(807	)
Less: Income (loss) attributable to non-controlling interest in joint venture					(52		)			7
Net loss attributable to NexGel stockholders				$	(853		)		$	(814	)
Net loss per common share - basic				$	(0.14		)		$	(0.15	)
Net loss per common share - diluted				$	(0.14		)		$	(0.15	)
Weighted average shares used in computing net loss per common share - basic					5,982,062					5,586,326
Weighted average shares used in computing net loss per common share – diluted					5,982,062					5,586,326

NEXGEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(Unaudited)
(in thousands)

					Three Months Ended March 31,
					2024					2023
Operating Activities
Net loss					$	(853		)		$	(814		)
Adjustments to reconcile net loss to net cash used in operating activities:
Income (loss) attributable to non-controlling interest in joint venture						(52		)			7
Depreciation and amortization						62					31
Share-based compensation and restricted stock vesting						54					24
Gain on investment in marketable securities						(34		)			7
Changes in fair value of warrant liability						53					(66		)
Amortization of right of use asset						52					49
Changes in operating assets and liabilities:
Accounts receivable						(106		)			(158		)
Inventory						(50		)			(466		)
Prepaid expenses and other assets						64					11
Accounts payable						(180		)			722
Accrued expenses and other current liabilities						(287		)			(18		)
Deferred revenue						230					—
Operating lease liability						(45		)			(38		)
Net Cash Used in Operating Activities						(1,092		)			(709		)
Investing Activities
Proceeds from sales of marketable securities						34					485
Capital expenditures						(152		)			(88		)
Net Cash Provided by (Used in) Investing Activities						(118		)			397
Financing Activities
Proceeds from rights offering, net of expenses						946					—
Principal payment on financing lease liability						(9		)			—
Principal payments of notes payable						(8		)			(2		)
Net Cash Provided by (Used in) Financing Activities						929					(2		)
Net Decrease in Cash						(281		)			(314		)
Cash – Beginning of period						2,700					1,101
Cash – End of period					$	2,419				$	787
Supplemental Disclosure of Cash Flows Information
Cash paid during the year for:
Interest					$	10				$	—
Taxes					$	—				$	—
Supplemental Non-cash Investing and Financing activities
Property and equipment financed under notes payable					$	165				$	—
Property and equipment financed under financing leases					$	416				$	—
Property and equipment contributed as capital investment to JV					$	—				$	500
ROU asset and operating lease liabilities recognized upon consolidation of JV					$	—				$	334

FAQ

What was NEXGEL's revenue for Q1 2024?

NEXGEL reported a revenue of $1.27 million for Q1 2024, a 104% increase year-over-year.

How much did NEXGEL's contract manufacturing revenue grow in Q1 2024?

NEXGEL's contract manufacturing revenue grew by 58% in Q1 2024.

What was the growth in consumer branded products for NEXGEL in Q1 2024?

Consumer branded product revenue for NEXGEL surged by 178% in Q1 2024.

What was NEXGEL's gross profit margin for Q1 2024?

NEXGEL's gross profit margin was 21.9% for Q1 2024.

What was NEXGEL's net loss for Q1 2024?

NEXGEL reported a net loss of $905,000 for Q1 2024.

What were NEXGEL's selling, general, and administrative expenses for Q1 2024?

NEXGEL's selling, general, and administrative expenses were $1.1 million for Q1 2024.

What was NEXGEL's cash balance as of March 31, 2024?

NEXGEL had a cash balance of $2.4 million as of March 31, 2024.

What significant investments is NEXGEL making in 2024?

NEXGEL is expanding its Texas facility and preparing for product launches with Abbvie and others, as well as launching consumer branded products in Europe.