Sonoma Pharmaceuticals Reports Third Fiscal Quarter 2024 Financial Results
Sonoma Pharmaceuticals, Inc. (Nasdaq:SNOA) reported a 7% increase in revenues compared to the previous year and a 15% increase from the prior quarter. The company also saw a 19% improvement in gross margin and a net loss of $1.0 million for the quarter. Sonoma's expansion efforts and cost control measures have positively impacted its financial results. The company also announced the launch of new products and partnerships, including Lumacyn Clarifying Mist and an agreement with NovaBay Pharmaceuticals, Inc. for the sale and marketing of Avenova-branded products in the European Union.
Positive
7% increase in revenues compared to the previous year
15% increase in revenues from the prior quarter
19% improvement in gross margin
Net loss of $1.0 million for the quarter
Expansion efforts and cost control measures positively impacted financial results
Launch of new products and partnerships
The reported 7% year-over-year revenue increase for Sonoma Pharmaceuticals, accompanied by a 15% rise from the previous quarter, indicates a positive trajectory in sales performance. The improvement in gross margin by 19% is particularly noteworthy, suggesting enhanced operational efficiency or a favorable shift in product mix. The reduction in net loss by $1.0 million compared to the prior year also signals a strengthening financial position.
From a financial perspective, the company's ability to control costs and improve margins while expanding its product offerings and distribution networks is commendable. The strategic partnership with NovaBay Pharmaceuticals to market Avenova-branded products in the European Union could further bolster European sales, which have already seen a 10% increase. However, the decline in Latin American and Rest of World revenues, particularly in India, raises concerns about market volatility and the need for a more diversified and resilient sales strategy.
Investors should consider the company's performance in light of the broader healthcare market trends, particularly in the segments of wound care and animal health products. The company's focus on stabilized hypochlorous acid (HOCl) products positions it within a niche market, which may offer both opportunities for growth and risks associated with market acceptance and competition.
The launch of new products such as LumacynTM Clarifying Mist and the intraoperative pulse lavage irrigation treatment indicates Sonoma Pharmaceuticals is actively pursuing innovation and market expansion. Direct-to-consumer strategies, as seen with Lumacyn, cater to the growing trend of consumer-driven healthcare and personal wellness products. The company's investment in research and development, as evidenced by increased R&D expenses, is a critical factor in maintaining a competitive edge in the healthcare products industry.
Moreover, the agreement with NovaBay Pharmaceuticals for the sale and marketing of Avenova-branded products in the European Union is a strategic move that leverages Sonoma's established European distribution network. This could potentially increase market penetration and brand recognition in a significant healthcare market.
Analyzing the uneven sales performance across different regions, it's clear that Sonoma must navigate international market fluctuations and devise strategies to mitigate the impact of 'choppy' sales patterns, particularly in Asia and the Rest of World segment. The anticipated recovery in sales over the next two fiscal quarters should be monitored to assess the effectiveness of the company's international sales strategies.
The introduction of Sonoma's intraoperative pulse lavage irrigation treatment represents a significant advancement in wound care technology, addressing an unmet need for non-toxic irrigation solutions. This innovation could lead to improved patient outcomes, reduced infection rates and faster healing times, which are critical factors in surgical care and post-operative recovery.
HOCl products, such as those developed by Sonoma, are gaining attention in the medical community due to their non-toxic and effective antimicrobial properties. As healthcare providers increasingly seek safer and more effective treatment options, Sonoma's product portfolio could see heightened demand, particularly in applications like wound care and eye care. The company's continued investment in R&D to support new product releases and regulatory efforts is essential for maintaining compliance and achieving market acceptance in these specialized healthcare sectors.
Understanding the clinical benefits and the potential market size for HOCl-based products is crucial for stakeholders to evaluate the company's long-term growth prospects. The impact of these products on patient care and the potential to displace traditional treatment options could significantly influence Sonoma's market share and financial performance.
02/08/2024 - 04:15 PM
Revenues increased 7% compared to quarter from prior year and 15% from prior quarter Improvement in gross margin for quarter of 19% compared to prior year Improvement in net loss for quarter of $1.0 million compared to prior year BOULDER, CO / ACCESSWIRE / February 8, 2024 / Sonoma Pharmaceuticals, Inc. (Nasdaq:SNOA),a global healthcare leader developing and producing stabilized hypochlorous acid (HOCl) products for a wide range of applications, including wound care, eye, oral and nasal care, dermatological conditions, podiatry, animal health care and non-toxic disinfectants, today announced financial results for its third fiscal quarter and nine months ended December 31, 2023.
"We are pleased to report increased revenues in the quarter ended December 31, 2023, both year over year and compared to the prior quarter," said Amy Trombly, CEO of Sonoma. "We are starting to see the results of our investment in research and development leading to new products as well as our efforts to add new distributors while supporting our existing distributors in expanding their offerings and territories. Our continued efforts to control costs have also positively impacted the bottom line. Along with improving margins, these trends point Sonoma in the right direction as we move into calendar year 2024 and our fourth fiscal quarter."
Business Highlights
Sonoma continued to expand its business by launching new products and building new partnerships while growing its existing distributor relationships:
On January 23, 2024, Sonoma launched LumacynTM Clarifying Mist, a new direct-to-consumer skincare product, in the United States. Lumacyn is an all-natural daily toner formulated with Microcyn® technology to soothe the skin, reduce redness and irritation, and manage blemishes by reducing infection. On January 9, 2024, Sonoma announced an agreement with NovaBay Pharmaceuticals, Inc. for the sale and marketing of Avenova® -branded products by Sonoma in the European Union. These products will be based on Sonoma's existing eye product Ocudox® , and marketed through Sonoma's established European distribution network. On November 3, 2023, Sonoma launched its intraoperative pulse lavage irrigation treatment in the United States, a new application of its wound care technology developed in response to an unmet need for a non-toxic irrigation solution that can prevent infection and improve healing time. Results for the Quarter Ended December 31, 2023
Revenues for the quarter ended December 31, 2023 of $3.2 million increased 7% compared to the same period last year. U.S. sales increased 14% , driven by increased sales of consumer-focused animal health care products and wound care products. European sales increased by 10% , reflecting increased demand for Sonoma's wound care products. Asia sales were up 2% , though these revenues tend to be choppy when viewed on a quarterly basis due to international customers placing larger but less frequent orders to benefit from quantity discounts and reduced shipping costs. Latin America was down 4% . Rest of World revenues decreased as a result of decreased sales in India as well as timing of orders. These sales also tend to be choppy and management expects sales to recover in the next two fiscal quarters.
For the quarter ended December 31, 2023, Sonoma reported revenues of approximately $3.2 million and cost of revenues of $1.7 million , resulting in gross profit of $1.5 million , or 47% of revenue, compared to a gross profit of $0.8 million , or 28% of revenue, for the same period last year. Gross margins increased by 19% for the quarter ended December 31, 2023 when compared to the same period last year as a result of overall product mix and higher costs of materials and transportation in the prior year.
Total operating expenses during the quarter ended December 31, 2023 were $2.3 million , down $0.4 million , or 14% , when compared to $2.7 million during the same period in the prior year, as a result of reduction of $900,000 in selling, general and administrative expenses from tightly managing expenses across all operations, and $350,000 of additional expenses for settling a long term contract in the prior year, which management expects to be a one-time event. The decrease was partially offset by an increase in research and development expenses, related to product development and expanded regulatory efforts in the U.S. and Europe to support new product releases.
Net loss before income taxes for the quarter was $0.9 million , compared to $1.9 million for the same period last year. EBITDAS loss for the quarter ended December 31, 2023 of $0.7 million improved by $0.9 million , compared to an EBITDAS loss of $1.6 million for the same period last year.
Results for the Nine Months Ended December 31, 2023
Revenues of $9.3 million for the nine months ended December 31, 2023 decreased by $1.0 million compared to the same period last year. Prior period revenues included $750,000 from the sale of machinery to a customer, which management expects to be a one-time event. Decreased sales in the United States were primarily due to a decline in sales of consumer-focused animal health care products over the nine-month period, as well as an overall retail market slowdown. The decline in Asia and Rest of World sales is due to international customers tending to place larger but less frequent orders to benefit from quantity discounts and reduced shipping costs. Management expects these trends to correct in the next few quarters.
For the nine months ended December 31, 2023, Sonoma reported revenues of $9.3 million and cost of revenues of $5.6 million , resulting in gross profit of $3.7 million , or 39% of revenues, compared to a gross profit of $3.6 million , or 35% or revenues, in the same period last year. Gross profit margin in the prior year was assisted by the sale of $750,000 of machinery to a customer, which management expects to be a one-time event.
Total operating expenses during the nine months ended December 31, 2023 of $6.9 million decreased by $0.1 million , or 1% , compared to $7.0 million during the same period last year.
Net loss before income taxes for the nine months ended December 31, 2023 was $3.8 million , compared to $3.8 million for the same period in the prior year. EBITDAS loss for the nine months ended December 31, 2023 of $2.7 million improved by $0.1 million , compared to an EBITDAS loss of $2.8 million for the same period last year.
About Sonoma Pharmaceuticals, Inc.
Sonoma Pharmaceuticals is a global healthcare leader for developing and producing stabilized hypochlorous acid (HOCl) products for a wide range of applications, including wound care, animal health care, eye care, nasal care, oral care, and dermatological conditions. The company's products reduce infections, itch, pain, scarring and harmful inflammatory responses in a safe and effective manner. In-vitro and clinical studies of hypochlorous acid (HOCl) show it to have impressive antipruritic, antimicrobial, antiviral and anti-inflammatory properties. Sonoma's stabilized HOCl immediately relieves itch and pain, kills pathogens and breaks down biofilm, does not sting or irritate skin and oxygenates the cells in the area treated assisting the body in its natural healing process. The company's products are sold either directly or via partners in 55 countries worldwide and the company actively seeks new distribution partners. The company's principal office is in Boulder, Colorado, with manufacturing operations in Guadalajara, Mexico. European marketing and sales are headquartered in Roermond, Netherlands. More information can be found at www.sonomapharma.com . For partnership opportunities, please contact
businessdevelopment@sonomapharma.com .
Forward-Looking Statements
Except for historical information herein, matters set forth in this press release are forward looking within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements about the commercial and technology progress and future financial performance of Sonoma Pharmaceuticals, Inc. and its subsidiaries (the "company"). These forward-looking statements are identified by the use of words such as "expect," "continue," "believe" and "expand," among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the company's business that could cause actual results to vary, including such risks that regulatory clinical and guideline developments may change, scientific data may not be sufficient to meet regulatory standards or receipt of required regulatory clearances or approvals, clinical results may not be replicated in actual patient settings, protection offered by the company's patents and patent applications may be challenged, invalidated or circumvented by its competitors, the available market for the company's products will not be as large as expected, the company's products will not be able to penetrate one or more targeted markets, revenues will not be sufficient to meet the company's cash needs, fund further development, as well as uncertainties relative to the recent pandemic and economic development, varying product formulations and a multitude of diverse regulatory and marketing requirements in different countries and municipalities, and other risks detailed from time to time in the company's filings with the Securities and Exchange Commission. The company disclaims any obligation to update these forward-looking statements, except as required by law. Sonoma Pharmaceuticals™, Microcyn® , LumacynTM and Ocudox® are trademarks or registered trademarks of Sonoma Pharmaceuticals, Inc. All other trademarks and service marks are the property of their respective owners.
Media and Investor Contact:
Sonoma Pharmaceuticals, Inc.ir@sonomapharma.com
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets
December 31, 2023 March 31, 2023 (Unaudited) ASSETS
Current assets:
Cash and cash equivalents
$ 2,406 $ 3,820 Accounts receivable, net
2,876 2,572 Inventories, net
2,955 2,858 Prepaid expenses and other current assets
4,009 4,308 Current portion of deferred consideration, net of discount
256 240 Total current assets
12,502 13,798 Property and equipment, net
397 488 Operating lease, right of use assets
341 418 Deferred tax asset
922 949 Deferred consideration, net of discount, less current portion
378 505 Other assets
78 73 Total assets
$ 14,618 $ 16,231 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 864 $ 841 Accrued expenses and other current liabilities
1,847 2,029 Deferred revenue
75 100 Deferred revenue Invekra
63 60 Short-term debt
44 431 Operating lease liabilities
181 256 Total current liabilities
3,074 3,717 Long-term deferred revenue Invekra
101 140 Withholding tax payable
4,591 4,235 Operating lease liabilities, less current portion
160 162 Total liabilities
7,926 8,254 Commitments and Contingencies
Stockholders' Equity
Convertible preferred stock, $0.00 01 par value; 714,286 shares authorized at December 31, 2023 and March 31, 2023, respectively, no shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively
- - Common stock, $0.00 01 par value; 24,000,000 shares authorized at December 31, 2023 and March 31, 2023, respectively, 13,684,333 and 4,933,550 shares issued and outstanding at December 31, 2023 and March 31, 2023, respectively
2 5 Additional paid-in capital
202,795 200,904 Accumulated deficit
(193,282 ) (189,514 ) Accumulated other comprehensive loss
(2,823 ) (3,418 ) Total stockholders' equity
6,692 7,977 Total liabilities and stockholders' equity
$ 14,618 $ 16,231
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Loss
Three Months Ended
December 31,
Nine Months Ended
December 31,
2023 2022 2023 2022 Revenues
$ 3,138 $ 2,944 $ 9,296 $ 10,258 Cost of revenues
1,678 2,113 5,642 6,645 Gross profit
1,460 831 3,654 3,613 Operating expenses
Research and development
601 - 1,462 6 Selling, general and administrative
1,703 2,665 5,484 7,030 Total operating expenses
2,304 2,665 6,946 7,036 Loss from operations
(844 ) (1,834 ) (3,292 ) (3,423 ) Other expense, net
(79 ) (71 ) (380 ) (322 ) Loss before income taxes
(923 ) (1,905 ) (3,672 ) (3,745 ) Income tax benefit (expense)
57 (34 ) (96 ) (98 ) Net loss
$ (866 ) $ (1,939 ) $ (3,768 ) $ (3,843 )
Net loss per share: basic and diluted
$ (0.08 ) $ (0.62 ) $ (0.54 ) $ (1.24 ) Weighted-average number of shares: basic and diluted
10,909 3,107 7,011 3,104
Other comprehensive loss
Net loss
$ (866 ) $ (1,939 ) $ (3,768 ) $ (3,843 ) Foreign currency translation adjustments
297 235 595 136 Comprehensive loss
$ (569 ) $ (1,704 ) $ (3,173 ) $ (3,707 )
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES (In thousands)
Three Months Ended December 31, Nine Months Ended December 31, 2023 2022 2023 2022 (1) Loss from operations minus non-cash expenses EBITDAS loss: GAAP operating loss as reported
$ (844 ) $ (1,834 ) $ (3,292 ) $ (3,423 ) Non-cash adjustments:
Stock-based compensation
140 242 447 569 Depreciation and amortization
45 31 135 91 Non-GAAP income (loss) from operations minus non-cash expenses EBITDAS income (loss)
$ (659 ) $ (1,561 ) $ (2,710 ) $ (2,763 )
(2) Net loss minus non-cash and one-time expenses:
GAAP net income (loss) as reported
$ (866 ) $ (1,939 ) $ (3,768 ) $ (3,843 ) Non-cash adjustments:
Stock-based compensation
140 242 447 569 Non-cash foreign exchange transaction losses and other (income) and expense
92 71 421 328 Income taxes
(57 ) 34 96 98 Depreciation and amortization
45 10 135 91 Non-GAAP net income (loss) minus non-cash expenses
$ (646 ) $ (1,582 ) $ (2,669 ) $ (2,757 )
(3) Operating expenses minus non-cash expenses
GAAP operating expenses as reported
$ 2,304 $ 2,665 $ 6,946 $ 7,036 Non-cash adjustments:
Stock-based compensation
(140 ) (242 ) (447 ) (569 ) Depreciation and amortization
(45 ) (31 ) (135 ) (91 ) Non-GAAP operating expenses minus non-cash expenses
$ 2,119 $ 2,392 $ 6,364 $ 6,376
(1) Income (loss) from continuing operations minus non-cash expenses (EBITDAS) is a non-GAAP financial measure. The company defines operating income (loss) minus non-cash expenses as GAAP reported operating income (loss) minus operating depreciation and amortization, and operating stock-based compensation. The company uses this measure for the purpose of modifying the operating loss to reflect direct cash related transactions during the measurement period. Non-GAAP measures should not be considered a substitute for financial measures presented in accordance with GAAP. Non-GAAP measures are not always consistent across, or comparable with, non-GAAP measures disclosed by other companies.
(2) Net income (loss) minus non-cash and one time expenses is a non-GAAP financial measure. The company defines net income (loss) minus non-cash expenses as GAAP reported net income (loss) minus depreciation and amortization, stock-based compensation, forgiveness of PPP loan and non-cash foreign exchange transaction losses. The company uses this measure for the purpose of modifying the net loss to reflect only those expenses to reflect direct cash transactions during the measurement period. Non-GAAP measures should not be considered a substitute for financial measures presented in accordance with GAAP. Non-GAAP measures are not always consistent across, or comparable with, non-GAAP measures disclosed by other companies.
(3) Operating expenses minus non-cash expenses is a non-GAAP financial measure. The company defines operating expenses minus non-cash expenses as GAAP reported operating expenses minus operating depreciation and amortization, and operating stock-based compensation. The company uses this measure for the purpose of identifying total operating expenses involving cash transactions during the measurement period. Non-GAAP measures should not be considered a substitute for financial measures presented in accordance with GAAP. Non-GAAP measures are not always consistent across, or comparable with, non-GAAP measures disclosed by other companies.
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES PRODUCT RELATED REVENUE SCHEDULES
The following table presents the company's disaggregated product revenues by geographic region:
Three Months Ended
December 31,
(In thousands)
2023 2022 $ Change % Change United States
$ 868 $ 761 $ 107 14 % Europe
1,217 1,104 113 10 % Asia
522 514 8 2 % Latin America
368 384 (16 ) (4 %) Rest of the World
163 181 (18 ) (10 %) Total
$ 3,138 $ 2,944 $ 194 7 %
Nine Months Ended
December 31,
(In thousands)
2023 2022 $ Change % Change United States
$ 2,214 $ 2,603 $ (389 ) (15 %) Europe
3,488 3,117 371 12 % Asia
1,730 1,952 (222 ) (11 %) Latin America
1,165 1,827 (662 ) (36 %) Rest of the World
699 759 (60 ) (8 %) Total
$ 9,296 $ 10,258 $ (962 ) (9 %)
SOURCE: Sonoma Pharmaceuticals, Inc.
press release on accesswire.com
What is the ticker symbol for Sonoma Pharmaceuticals, Inc.?
The ticker symbol for Sonoma Pharmaceuticals, Inc. is SNOA.
What was the percentage increase in revenues compared to the previous year?
Sonoma Pharmaceuticals, Inc. reported a 7% increase in revenues compared to the previous year.
What was the percentage increase in revenues from the prior quarter?
Sonoma Pharmaceuticals, Inc. reported a 15% increase in revenues from the prior quarter.
What was the improvement in gross margin for the quarter?
Sonoma Pharmaceuticals, Inc. saw a 19% improvement in gross margin for the quarter.
What was the net loss for the quarter?
Sonoma Pharmaceuticals, Inc. reported a net loss of $1.0 million for the quarter.
What new product did Sonoma Pharmaceuticals, Inc. launch in the United States?
Sonoma Pharmaceuticals, Inc. launched Lumacyn Clarifying Mist, a new direct-to-consumer skincare product, in the United States.
What agreement did Sonoma Pharmaceuticals, Inc. announce on January 9, 2024?
Sonoma Pharmaceuticals, Inc. announced an agreement with NovaBay Pharmaceuticals, Inc. for the sale and marketing of Avenova-branded products by Sonoma in the European Union.
