Earnings Recap: Neptune Wellness, Medicine Man Technologies

Neptune Wellness

Neptune Wellness Solutions Inc.  (NASDAQ: NEPT) (TSX: NEPT) stock fell over 6% to $3.32 after the company reported a decrease in sales. Neptune reported total revenues for the second quarter ending September 30, 2019, amounted to $6.5 million, representing an increase of 49% over the first quarter but a decrease of 8% versus last year’s $7 million for the same time period. The decrease in revenues was attributed to the timing of orders in the nutrition business.

The company also delivered a net loss of $20 million versus last year’s net loss of $3 million. The company blamed the increase in losses to an increase in stock-based compensation expense, depreciation and amortization and to accretion expense on contingent consideration combined with a lower adjusted EBITDA.

The adjusted EBITDA was a loss of $4.5 million versus a loss of $1.2 million last year. The increased Adjusted EBITDA. loss is due to investments made in the cannabis segment to grow the workforce in anticipation of increased sales volume as well as an increase in salaries and benefits at the corporate level. “The decrease can also be explained by an increase in litigation legal fees and additional SG&A coming from SugarLeaf,” read the company statement.

“We achieved a significant milestone in mid-October when we completed our Phase II capacity expansion. This additional capacity will alleviate our constraints in the near-term and help accelerate the company’s revenue growth in the cannabis segment. However, the start-up of our ethanol process has been longer than initially expected which has delayed the full ramp-up by one month to the end of December. With regards to our CO2 operations, we have been running seven days a week since the end of July and we are pleased with our yields and quality of extracts.” Said Stephen Lijoi, VP Operations.

Medicine Man

Medicine Man Technologies, Inc. (OTCQX: MDCL) delivered total revenue in the third quarter of $5,338,868, an increase of approximately 14% compared to revenues of $4,672,519 in the quarter ended September 30, 2018. Strong product sales and litigation revenue in the most recent quarter offset a one-time licensing sale in the same quarter of 2018. Unfortunately, Medicine Man reported net losses of $1,827,978 or five cents per share, versus last year’s net income of $4,950,601, or $0.18 per share.

“The third quarter of 2019 was a transformational one for the Company,” said Mr. Andy Williams, Co-Founder and Chief Executive Officer of Medicine Man Technologies. “We reported seven additional proposed acquisitions, bringing our total to 12 pending acquisitions, we filled a key leadership role within the Company and saw positive initiatives in the industry both locally and federally, which strengthened our industry-leading position. In looking at our operations related to the consulting services and our products, the continued positive trends we see in the third quarter are encouraging, as both grew at double-digit percentage growth rates.”

Operating expenses grew to $3,478,232 as compared to $1,842,954 for the same period in 2018. The increase was primarily attributable to non-cash, stock-based compensation and costs associated with activities related to building an infrastructure to ensure seamless integration of the company’s numerous pending acquisitions and to help build the proper platform for sustainable growth.

The company’s cash balance on September 30, 2019, was $15,204,587 as compared to $529,674 on September 30, 2018. The increased cash position was due primarily to the equity investment by strategic partner Dye Capital & Company.

 

 

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