Neptune Wellness Solutions Inc. (NASDAQ: NEPT) (TSX: NEPT) announced its financial results for its fiscal third-quarter ending December 31, 2019. Total revenues for Neptune were $9.1 million, a sequential increase of $2.6 million or 41% over the second quarter ended September 30, 2019. This was also an increase of $2.6 million or 40% compared to $6,538 for the three-month period ended December 31, 2018.
Revenues from the cannabis segment reached $2.8 million, an increase of $1.5 million sequentially from the three-month period ended September 30, 2019. Neptune started the commercial operations of its Cannabis segment in March 2019 and had no revenues in the prior-year period ended December 31, 2018.
Net income was $5.6 million for the quarter versus a net loss of $3.6 million for the same time period in 2019. The transition from net loss to net income is due to a gain of $64.5 million related to a reduction in the fair value of the contingent consideration in connection to the acquisition of SugarLeaf Labs. The company stated that this gain was partly offset by an impairment of goodwill of $44 million related to SugarLeaf.
CEO Michael Cammarata said: “Since I joined the company six months ago, we’ve had to reassess all facets of our business plans. It quickly became apparent that there were several operational challenges that needed to be addressed immediately. Our revenue growth of 41% sequentially is a solid testament to this, considering the current cannabis and hemp environment. While our profitability this quarter was short of our expectations due to the slower than expected ramp-up of our Phase II cold ethanol production process and industry factors beyond our control, we are setting up our long-term success by expanding our channel strategy with an increased focus on end clients, in Canada and the US.”
Revenues from the Nutraceutical segment for the three-month period amounted to $6.3 million, representing an increase of 23% sequentially, over the second quarter ended September 30, 2019, and a slight decrease of $202 or 3% compared to $6.5 million for the three-month period ended December 31, 2018.
Cammarata went on to add, “The US launch today of our Forest Remedies and Ocean Remedies products is a significant step forward in expanding our footprint and brand equity and will be followed by a similar launch in Canada, once approved by health authorities. The Forest Remedies hemp-derived wellness products include ingestibles in soft gel and extract forms, topical balms, massage oils, and a pet soother. We are also launching an essential oil and aromatherapy line that we developed in collaboration with our partner, International Flavors & Fragrances. Despite a slightly slower than anticipated ramp-up on the production side and changes to planned capacity expansion, we are building the foundation for this company for many years to come. I am excited about the future prospects, in particular the launch and significant potential of our consumer brands.”
Neptune said it had identified underserved segments of the Cannabis 2.0 products in Canada. “There is currently limited availability of cannabis concentrates on the market and Neptune intends to fill that void by expanding its production capabilities to produce these cannabis derivatives and other niche product forms. Neptune is exploring the potential to diversify its extraction capabilities to include solvent-less and hydrocarbon extraction methods, which are well suited to produce high-quality cannabis concentrates.”