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29.08.2022 07:00
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Covalon Announces Third Quarter Fiscal 2022 Results
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PR Newswire
MISSISSAUGA, ON, Aug. 29, 2022
MISSISSAUGA, ON, Aug. 29, 2022 /PRNewswire/ - Covalon Technologies Ltd. (the "Company" or "Covalon") (TSXV: COV) (OTCQX: CVALF), an advanced medical technologies company, today announced its third quarter fiscal 2022 results.
Brian Pedlar, Covalon's President and CEO, said, "Covalon is making real and significant progress in transforming our sales, marketing, and operations teams to position us to achieve growth over the next few years. We are currently in active discussion regarding new business opportunities, while bringing on experienced and talented new executives that allow us to expand our United States hospital customer base. Given the adoption of Covalon's products, such as VALGuard®, IV Clear® and SurgiClear®, in four of the top five pediatric hospitals and over 50 major teaching hospitals in the United States to date, we are positioned to become standard of care in helping doctors and clinicians prevent blood stream and surgical site infections in these hospitals.
"The investments we are making today have yet to impact our top line, as revenue from continuing operations for the nine months ended June 30, 2022, was $12.8 million, compared to $13.0 last year. Even though our United States product revenue has grown 10% over the last nine months, revenue during the third quarter was $4.5 million compared to $6.0 million last year, which simply reflects the timing of orders from our United States collagen distributors.
"Covalon is in the fortunate financial position of having a strong balance sheet with significant cash, no debt, and a loyal customer base. Our management team is laser-focused on building Covalon into the healthcare powerhouse we are destined to be, given our unique life-saving medical technologies and relationships with major prestigious hospitals and large multinational medical companies we are actively working with today.
"I'm very encouraged with the growth prospects we are seeing today and our growing base of customers and clinicians that are using our products on a daily basis. We are a much stronger company today than a year ago. We strengthened our balance sheet and improved our operations since last year at this time. We also have a stronger, more talented leadership team. These improvements are already positively impacting our growth prospects and I am looking forward to seeing their impact on our financial performance in 2023 and 2024," continued Mr. Pedlar.
As previously announced, Covalon's Board of Directors decided to use our strong cash position to further strengthen the Company by buying back up to 5% of Covalon's shares for cancellation. The Company received approval to make a normal course issuer bid ("NCIB") for its common shares with the TSX Venture Exchange, and to date, has purchased 574,500 shares for cancellation, which strengthens the value of existing shareholders' shares.
Conference Call Scheduled
A conference call and webcast to discuss Covalon's Q3 fiscal 2022 financial results will be held Monday, August 29th, 2022, at 9:00am EST. To view, listen to, and participate in the live webcast, please follow the link below:
https://app.webinar.net/nwjXzxokLQl
To listen and participate via the conference call, please dial:
North American Toll-Free: 1-888-664-6392
Local (Toronto): 416-764-8659
Confirmation Number: 97297097
Participants will be able to ask questions of Company management during the Q&A portion of the conference call either by asking them on the call or by submitting them using the chat function on the webcast.
A recording of the call will be available by calling 1-888-390-0541 or 416-764-8677 and entering the encore replay entry code 297097# until September 12th, 2022. A recording of the call will also be available on www.covalon.com under News & Events on the Investors tab.
Q3 Fiscal 2022 Financial Results
Revenue for the three months ended June 30th, 2022 decreased 25% to $4.5 million, compared to $6.0 million in the prior year. Gross profit was $2.1 million, compared to $3.2 million in Q3 fiscal 2021. Net loss for continuing operations was $1.6 million or $0.06 per share, compared to net income from continuing operations of $0.7 million or $0.03 per share in Q3 fiscal 2021. Net loss from discontinued operations was $nil or $nil per share, compared to net income from discontinued operations of $0.3 million or $0.01 per share in Q3 fiscal 2021.
Product revenue for the nine-month period ended June 30, 2022 was consistent at $11.6 million compared to the same period of the prior year. Product revenue for the three months ended June 30th, 2022 decreased 27% to $4.1 million, compared to $5.7 million in the previous year. The decrease is substantially due to the timing of collagen sales in the United States. During the prior year, collagen sales in the United States were more heavily weighted to Q3 and Q4, whereas this year collagen sales were spread more evenly throughout the three quarters to date.
Development and consulting services revenue for the three-month period ended June 30th, 2022 increased by 17% to $0.4 million, compared to $0.3 million for the same period of the prior year. Cost of sales for the three-month period ended June 30th, 2022 decreased by 15% to $2.4 million, compared to $2.8 million for the same period the prior year. During the quarter, we engaged in 15 customer development projects of various sizes with 4 medical product companies that included the various projects underway associated with the previously announced major contract with one of the world's largest medical device companies that licensed Covalon's proprietary medical coating technologies. Licensing revenue and royalty fees was $0.04 million for the quarter ended June 30th, 2022, compared to $0.05 million for the prior year.
Gross margin decreased to 47% for Q3 fiscal 2022, compared to 54% for the prior year. The gross margin is significantly influenced by provisions, source of revenue and by the relative mix of products sold in any given financial period.
Adjusted gross margin(1), for the nine-month period ended June 30, 2022, increased to 58% compared to 54% for the same period of the prior year.
Operating expenses for the three months ended June 30, 2022 increased $1.3 million to $3.7 million, compared to $2.4 million for the prior year's comparative period. Excluding the impact of government subsidies of $0.3 million, which were netted against operating expenses in the prior period, operating expenses increased $1.0 million. The increase is due mostly to increased headcount in sales and marketing as the Company continues to invest in growing its direct sales and marketing team in the United States. To support continued commercial growth, sales, marketing, operations and administrative staff previously dedicated to the discontinued AquaGuard business last year, were re-deployed to continuing operations accounting for an increase of $0.4 million in the quarter.
Adjusted EBITDA(1) for Q3 fiscal 2022 was a loss of $1.1 million, compared to positive EBITDA of $0.9 million in the prior year's comparative period.
| | |
| (1) | See "Non-IFRS Measures" below, including for a reconciliation of the non-IFRS measures used in this release to the most comparable IFRS measures. |
| | |
Statement of Operations
The following unaudited table presents Covalon's consolidated statements of operations for the three- and nine-month periods ended June 30th, 2022 and 2021.
| | | Three months ended June 30, | | Nine months ended June 30, | |||
| | | 2022 | 2021 | | 2022 | 2021 | |
| Revenue | | | | | | ||
| | Product | $4,125,650 | $5,674,004 | | $11,599,140 | $11,623,110 | |
| | Development and consulting services | 364,733 | 312,102 | | 986,424 | 1,168,997 | |
| | Licensing and royalty fees | 35,623 | 48,268 | | 170,621 | 158,614 | |
| | | | | | | | |
| Total revenue | 4,526,006 | 6,034,374 | | 12,756,185 | 12,950,721 | ||
| | | | | | | | |
| Cost of sales | 2,378,276 | 2,786,874 | | 6,574,017 | 6,319,487 | ||
| | | | | | | | |
| Gross profit before operating expenses | 2,147,730 | 3,247,500 | | 6,182,168 | 6,631,234 | ||
| | | | | | | | |
| Operating expenses | | | | | | ||
| | Operations | 586,071 | 231,772 | | 1,472,250 | 806,158 | |
| | Research and development activities | 288,882 | 295,716 | | 846,530 | 840,892 | |
| | Sales, marketing and agency fees | 1,580,128 | 555,536 | | 4,316,515 | 1,621,888 | |
| | General and administrative | 1,269,873 | 1,343,662 | | 4,643,373 | 3,667,101 | |
| | | 3,724,954 | 2,426,686 | | 11,278,668 | 6,936,039 | |
| | | | | | | | |
| Finance expenses | 31,376 | 105,769 | | 81,617 | 301,475 | ||
| | | | | | | | |
| Net income (loss) from continuing operations | (1,608,600) | 715,045 | | (5,178,117) Werbung Mehr Nachrichten zur Covalon Tech Aktie kostenlos abonnieren
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