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Form 8-K Neptune Wellness Solutio For: Aug 15

August 16, 2022 12:20 PM EDT

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00-00000000001401395false00014013952022-08-152022-08-15

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 15, 2022

 

 

NEPTUNE WELLNESS SOLUTIONS INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Quebec

001-33526

Not applicable

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

545 Promenade du Centropolis

Suite 100

 

Laval, Quebec, Canada

 

H7T 0A3

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 450 687-2262

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common Shares, no par value per share

 

NEPT

 

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 


Item 2.02 Results of Operation and Financial Condition.

On August 15, 2022, Neptune Wellness Solutions Inc. (the “Company”) issued a press release announcing its financial results for the three months ended June 30, 2022. The Company also held a conference call regarding these financial results. A copy of the press release is furnished hereto as Exhibit 99.1.



The information provided in this Item 2.02 of this Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. Such information shall not be deemed incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as otherwise expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.

 

Description

 

99.1

 

Press release, dated August 15, 2022

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

Neptune Wellness Solutions Inc.

 

 

 

 

Date:

August 16, 2022

By:

/s/ John S. Wirt

 

 

 

John S. Wirt
General Counsel and Corporate Secretary

 


Exhibit 99.1

img153526410_0.jpg 

EARNINGS RELEASE

 

SOURCE: Neptune Wellness Solutions Inc.

 

Neptune Reports Fiscal First Quarter 2023 Financial Results

 

Fiscal Q1 2023 revenue totaled $16.3 million, an increase of 61% year-over-year

 

Sprout recorded $8.2 million in revenue, its largest net sales quarter on record

 

Personal Care and Beauty recorded $5.1 million in revenue, the highest in over two years

 

Company will host a conference call at 5:00 p.m. (Eastern Time) Monday, August 15, 2022, to discuss these results

 

LAVAL, QUÉBEC, CANADA – August 15, 2022 – Neptune Wellness Solutions Inc. ("Neptune" or the "Company") (NASDAQ: NEPT) (TSX: NEPT), a diversified and fully integrated health and wellness company focused on plant-based, sustainable and purpose-driven lifestyle brands, today announced its financial and operating results for the three-month period ending June 30, 2022.

 

Statement from Neptune Management and Board of Directors:

 

"The results Neptune achieved in the first quarter of fiscal 2023 reflect the impacts of strategic decisions we have made over the past year to become a leading consumer packaged goods company. We reported revenue of $16.3 million, an increase of 61% year-over-year, led by Sprout, which had its largest net sales quarter yet, and our personal care and beauty products, which generated the largest quarter of revenue in two years.”

 

“We are also continually striving to reduce expenses. Since our strategic review in late 2021, and including our most recent payroll reductions at cannabis and corporate, we have now reduced expenditures by approximately $18 million. This figure includes $7.6 million of reduced payroll expense across corporate and business units, with total headcount decreasing from 170 to 56, a 67% reduction. While it has been a year of tough strategic decisions, we are laser-focused on a path to growth and profitability and believe we are well-positioned to create value going forward.”

 

First Quarter 2023 Financial Highlights:

 

Fiscal first quarter 2023 revenue totaled $16.3 million, as compared to $10.1 million or an increase of 61% for the same period in fiscal 2022.
Reported fiscal first quarter 2023 gross profit loss of $2.9 million compared to a gross profit loss of $2.3 million for the fiscal first quarter 2022.
Adjusted EBITDA (non-GAAP) loss for fiscal first quarter 2023 was $9.8 million compared to an Adjusted EBITDA (non-GAAP)1 loss of $12.9 million for fiscal first quarter 2022

 


 

Reported first quarter net loss of $6.5 million compared to a reported net loss of $18.9 million in the prior comparable period in fiscal 2022.

[1] This is a non-GAAP measure. For further information on non-GAAP measures, please refer to the “Non-GAAP Measures” section of this news release. Please also refer to the tables in this news release for a reconciliation of this Non-GAAP measure to the most directly comparable GAAP measure.

 

First Quarter Business Highlights:

Launched a new CPG-focused strategic plan to profitability, including divestiture of cannabis business.
Announced appointment of Raymond Silcock as Chief Financial Officer.
Announced the addition of Philip Sanford as Audit Chair of Neptune’s Board of Directors.
Launched a new line of CoComelon co-branded organic snack bars.
Announced the completion of a share consolidation.
Closed a US$5,000,000 Registered Direct Offering Priced At-the-Market Under Nasdaq Rules.

 

 

Subsequent Events and Business Updates:

Announced Amendment and Expansion of Sprout Secured Promissory Notes led by Morgan Stanley to expand the facility from US$22.5 million to a maximum of US$37.5 million.
Provided a Sprout Organics Distribution Update and discussed potential expansion into new product categories beyond Baby Food Aisle.

 

 

Conference Call Details:

The Company will host a conference call at 5:00 p.m. (Eastern Time) on Monday, August 15, 2022, to discuss these results. The conference call will be webcast live and can be accessed by registering on the Events and Presentations portion of Neptune's Investor Relations website at www.investors.neptunewellness.com. The webcast will be archived for approximately 90 days.

 

 

 

 


 

neptune WELLNESS SOLUTIONS inc.

Condensed Consolidated Interim Balance Sheets

(Unaudited) (in U.S. dollars)

 

 

 

As at

 

As at

 

 

 

June 30,
2022

 

March 31,
2022

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

 

$6,231,968

 

$8,726,341

Short-term investment

 

 

  18,715

 

  19,255

Trade and other receivables

 

 

  6,182,876

 

  7,599,584

Prepaid expenses

 

 

  2,865,974

 

  3,983,427

Inventories

 

 

  14,056,514

 

  17,059,406

Assets held for sale

 

 

  21,834,039

 

  —

Total current assets

 

 

  51,190,086

 

  37,388,013

 

 

 

 

 

 

Property, plant and equipment

 

 

  1,412,323

 

  21,448,123

Operating lease right-of-use assets

 

 

  2,046,835

 

  2,295,263

Intangible assets

 

 

  21,013,953

 

  21,655,035

Goodwill

 

 

  22,093,222

 

  22,168,288

Total assets

 

 

$97,756,419

 

$104,954,722

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Trade and other payables

 

 

$21,296,277

 

$22,700,849

Current portion of operating lease liabilities

 

 

  626,928

 

  641,698

Deferred revenues

 

 

  351,551

 

  285,004

Provisions

 

 

  1,229,462

 

  1,118,613

Liability related to warrants

 

 

  3,167,947

 

  5,570,530

Liabilities directly associated with assets held for sale

 

 

  3,537,176

 

  —

Total current liabilities

 

 

  30,209,341

 

  30,316,694

 

 

 

 

 

 

Operating lease liabilities

 

 

  1,873,919

 

  2,063,421

Loans and borrowings

 

 

  11,881,589

 

  11,648,320

Other liability

 

 

  12,931

 

  88,688

Total liabilities

 

 

  43,977,780

 

  44,117,123

 

 

 

 

 

 

Shareholders' Equity:

 

 

 

 

 

Share capital - without par value (7,614,434 shares issued and outstanding as of
     June 30, 2022; 5,560,829 shares issued and outstanding as of March 31, 2022)

 

 

  318,921,917

 

  317,051,125

Warrants

 

 

  6,079,890

 

  6,079,890

Additional paid-in capital

 

 

  56,346,589

 

  55,980,367

Accumulated other comprehensive loss

 

 

  (10,605,642)

 

  (7,814,163)

Deficit

 

 

  (327,466,047)

 

  (323,181,697)

Total equity attributable to equity holders of the Corporation

 

 

  43,276,707

 

  48,115,522

 

 

 

 

 

 

Non-controlling interest

 

 

  10,501,932

 

  12,722,077

Total shareholders' equity

 

 

  53,778,639

 

  60,837,599

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

Subsequent events

 

 

 

 

 

Total liabilities and shareholders' equity

 

 

$97,756,419

 

$104,954,722

 

 

 

 


 

neptune WELLNESS SOLUTIONS inc.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited) (in U.S. dollars)

For the three-month periods ended June 30, 2022 and 2021

 

 

 

 

 

 

 

 

 

June 30,
2022

 

June 30,
2021

 

 

 

 

 

 

 

Revenue from sales, net of excise taxes

 

 

$15,968,098

 

$9,821,640

Royalty revenues

 

 

  284,189

 

  236,067

Other revenues

 

 

  19,941

 

  20,802

Total revenues

 

 

  16,272,228

 

  10,078,509

 

 

 

 

 

 

 

Cost of sales other than loss on inventories, net of subsidies

 

 

  (16,086,578)

 

  (12,401,043)

Impairment loss on inventories

 

 

  (3,079,997)

 

  —

Total Cost of sales

 

 

  (19,166,575)

 

  (12,401,043)

Gross profit (loss)

 

 

  (2,894,347)

 

  (2,322,534)

 

 

 

 

 

 

 

Research and development expenses

 

 

  (214,687)

 

  (259,666)

Selling, general and administrative expenses, net of subsidies

 

 

  (10,553,734)

 

  (16,014,634)

Impairment loss related to property, plant and equipment

 

 

  (815,661)

 

  (529,732)

Net gain on sale of assets

 

 

  85,002

 

  —

Loss from operating activities

 

 

  (14,393,427)

 

  (19,126,566)

 

 

 

 

 

 

 

Finance income

 

 

  1,424

 

  7,339

Finance costs

 

 

  (916,522)

 

  (358,116)

Loss on issuance of derivatives

 

 

  (2,126,955)

 

  —

Foreign exchange gains (losses)

 

 

  1,407,285

 

  (1,287,387)

Change in revaluation of marketable securities

 

 

  —

 

  (12,212)

Gain on revaluation of derivatives

 

 

  9,523,700

 

  1,933,330

 

 

 

 

  7,888,932

 

  282,954

Loss before income taxes

 

 

  (6,504,495)

 

  (18,843,612)

 

 

 

 

 

 

 

Income tax expense

 

 

  —

 

  (12,098)

Net loss

 

 

  (6,504,495)

 

  (18,855,710)

 

 

 

 

 

 

 

Other comprehensive (loss) income

 

 

 

 

 

Net change in unrealized foreign currency (losses) gains on translation of
     net investments in foreign operations

 

 

  (2,791,479)

 

  1,976,562

Total other comprehensive (loss) income

 

 

  (2,791,479)

 

  1,976,562

 

 

 

 

 

 

 

Total comprehensive loss

 

 

$(9,295,974)

 

$(16,879,148)

 

 

 

 

 

 

 

Net loss attributable to:

 

 

 

 

 

Equity holders of the Corporation

 

 

$(4,284,350)

 

$(16,907,628)

Non-controlling interest

 

 

  (2,220,145)

 

  (1,948,082)

Net loss

 

 

$(6,504,495)

 

$(18,855,710)

 

 

 

 

 

 

 

Total comprehensive loss attributable to:

 

 

 

 

 

Equity holders of the Corporation

 

 

$(7,075,829)

 

$(14,931,066)

Non-controlling interest

 

 

  (2,220,145)

 

  (1,948,082)

Total comprehensive loss

 

 

$(9,295,974)

 

$(16,879,148)

 

 

 

 

 

 

 

Basic and diluted loss per share attributable to:

 

 

 

 

 

Equity holders of the Corporation

 

 

$(0.72)

 

$(3.56)

Non-controlling interest

 

 

$(0.37)

 

$(0.41)

Total loss per share

 

 

$(1.09)

 

$(3.97)

 

 

 

 

 

 

 

Basic and diluted weighted average number of common shares

 

 

  5,958,266

 

  4,744,685

 

 

 

 


 

Adjusted EBITDA1 reconciliation, in millions of dollars

 

 

 

Three-month periods ended

 

 

June 30,
2022

 

June 30,
2021

 

 

 

 

 

Net loss for the period

 

$(6.504)

 

$(18.856)

Add (deduct):

 

 

 

 

Depreciation and amortization

 

  1.039

 

  1.344

Revaluation of derivatives

 

  (9.524)

 

  (1.933)

Net finance costs

 

  1.635

 

  1.638

Equity classified stock-based compensation

 

  2.706

 

  3.080

Non-employee compensation related to warrants

 

  —

 

  0.093

Litigation provisions

 

  (0.263)

 

  0.116

Business acquisition and integration costs

 

  —

 

  1.048

CEO D&O insurance

 

  (3.154)

 

  —

Signing bonuses, severances and related costs

 

  0.390

 

  —

Write-down of inventories and deposits

 

  3.080

 

  —

Impairment loss on long-lived assets

 

  0.816

 

  0.530

Change in revaluation of marketable securities

 

  —

 

  0.012

Income tax expense (recovery)

 

  —

 

  0.012

Adjusted EBITDA1

 

$(9.779)

 

$(12.916)

 

1 The Adjusted EBITDA is not a standard measure endorsed by US GAAP requirements.

 

ADJUSTED EBITDA

Although the concept of Adjusted EBITDA is not a financial or accounting measure defined under US GAAP and it may not be comparable to other issuers, it is widely used by companies. Neptune obtains its Adjusted EBITDA measurement by adding to net loss, net finance costs (income) and depreciation and amortization, and income tax expense (recovery). Other items such as equity classified stock-based compensation, non-employee compensation related to warrants, litigation provisions, business acquisition and integration costs, signing bonuses, severances and related costs, impairment losses on non-financial assets, write-downs of non-financial assets, revaluations of derivatives, system migration, conversion and implementation, CEO directors and officers insurance, costs related to conversion from IFRS to US GAAP and other changes in fair values are also added back. The exclusion of net finance costs (income) eliminates the impact on earnings derived from non-operational activities. The exclusion of depreciation and amortization, stock-based compensation, non-employee compensation related to warrants, litigation provisions, impairment losses, write-downs revaluations of derivatives and other changes in fair values eliminates the non-cash impact, and the exclusion of acquisition costs, integration costs, signing bonuses, severance and related costs, costs related to cybersecurity and costs related to conversion from IFRS to US GAAP present the results of the on-going business. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. In Q4 2022, the Company added the costs related to the conversion from IFRS to US GAAP as an adjustment to the definition of Adjusted EBITDA. Adjusting for these items does not imply they are non-recurring. For purposes of this analysis, the Net finance costs (income) caption in the reconciliation below includes the impact of the revaluation of foreign exchange rates.

 

 

About Neptune Wellness Solutions Inc.

 

Headquartered in Laval, Quebec, Neptune is a diversified health and wellness company with a mission to redefine health and wellness. Neptune is focused on building a portfolio of high quality, affordable consumer products in response to long-term secular trends and market demand for natural, plant-based, sustainable and purpose-driven lifestyle brands. The Company utilizes a highly flexible, cost-efficient manufacturing and supply chain infrastructure that can be scaled to quickly adapt to consumer demand and bring new products to market through its mass retail partners and e-commerce channels. For additional information, please visit: https://neptunewellness.com/.

 

 


 

Disclaimer – Safe Harbor Forward–Looking Statements

 

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates, and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements include, among other things, statements with respect to the Company’s strategic review, expected cost savings, projected growth of Sprout and Biodroga, the success of the Company’s action plan, including the divestiture of the Company’s cannabis business, future increased revenues, expectations regarding expenses, cash needs, cash flow, liquidity and sources of funding, future expansion plans, initiatives and strategies of the Company, and the Company's performance, growth initiatives, profitability, future product launches and plans and gain in market share, as well as the timing for the filing of the Restated Filings.

 

These forward-looking statements are based on assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: the ability of the Company to successfully implement its strategic initiatives; implications of the COVID-19 pandemic on the Company's operations; fluctuations in general macroeconomic conditions; fluctuations in securities markets; changing consumer habits; the ability of the Company to successfully achieve its business objectives and cost cutting plans; plans for expansion; political and social uncertainties; inability to obtain adequate insurance to cover risks and hazards; the ability of the Company to obtain financing on acceptable terms, the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); the ability of the Company to obtain financing on acceptable terms, expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations; employee relations; and the presence of laws and regulations that may impose restrictions in the markets where the Company operates. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.

 

Additional information regarding these and other risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in the Company's Annual Report on Form 10-K dated July 7, 2022, for the year ended March 31, 2022.

 

Neither NASDAQ nor the Toronto Stock Exchange accepts responsibility for the adequacy or accuracy of this release.

 

Media Contacts:

[email protected]

 

 


 

Investor Contacts:

Morry Brown, VP Investor Relations

Neptune Wellness Solutions, Inc.

[email protected]

 

Valter Pinto, Managing Director

KCSA Strategic Communications

[email protected]

212.896.1254

 




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