Neptune Wellness Solutions Inc. (NEPT) Reports Fourth Quarter and Fiscal 2020 Results

Neptune reported a net loss of $39,239 for the three-month period ended March 31, 2020, compared to a net loss of $12,384 in the prior year period. Net loss includes an impairment of goodwill of $41,451, which was partially offset by a gain of $36,782 related to a reduction in the fair value of the contingent consideration in connection to the acquisition of SugarLeaf Labs. The increase in net loss was also driven by investments in the associated with new capacity start-up, investments in staffing and other overhead to support cannabis operations, as well as co-development expenses to support innovation and non-cash marketing expense.

For the three-month period ended March 31, 2020, adjusted EBITDA¹ was a loss of $25,354 compared with a loss of $2,707 in the prior year period.

Fiscal Year 2020 Financial Results
Total revenues for the twelve-month period ended March 31, 2020 increased 21% to $29,578 compared to $24,442 in the prior year period. The increase in revenue was a primarily driven by revenues in the cannabis segment, which were $12 in the same period last year, partially offset by a 13% decrease in the nutraceutical segment.

Neptune reported a net loss of $60,863 for the twelve-month period ended March 31, 2020, compared to a net loss of $23,192 last year.

For the twelve-month period ended March 31, 2020, adjusted EBITDA¹ was a loss of $40,572 compared with a loss of $8,114 in the prior year period.

Cash, cash equivalents and short-term investment were $16,613 as of March 31, 2020. During the fourth quarter of fiscal 2020, the Company raised gross proceeds of $7,069 through the sale of 4,159 share of common stock under its At-the-Market program.

Outlook
For the first quarter of fiscal 2021, the Company is reiterating its guidance for revenue of between $18,000 and $22,000, reflecting accelerated growth across several of the Company’s business units.

COVID-19 Update
Neptune’s operations have been deemed essential and thus its facility in both Canada and the United States continued to operate without any material disruption, reflecting existing high operating standards and a rapid response to the pandemic. While the global health crisis had negative impacts on certain aspects of the business, including the pace of retailers accepting new products and other disruptions, the Company was able to continue to service its customers. Additionally, Neptune has launched a new line of hand sanitizers and has begun marketing Neptune Air, a non-contact infrared thermometer (NCIT) optimized for measuring a person’s temperature while reducing cross-contamination risk and minimizing the risk of spreading disease. Neptune will continue to focus on identifying incremental health and wellness innovations that reflect strong consumer demand.

Establishment of Six Business Units to Support Accelerated Growth
Reflecting the broadening category and product portfolio that has and will continue to be developed, the Company has recently restructured its business into six business units. Each unit has dedicated sales resources to drive accelerated growth and innovation across each of the business platforms. The six business units include:

• Consumer Brands includes the Forest Remedies and Ocean Remedies brands. The recently announced partnership with Dr. Jane Goodall to co-create products that are good for consumers and benefit the Jane Goodall Foundation is also included in this business unit.
• Cannabis and Hemp includes extraction operations in both Canada and the U.S. The Phase II expansion in Sherbrooke became operational at the beginning of fiscal 2021, providing incremental capacity to support existing and new extraction clients.
• Turnkey Solutions is built on the Biodroga business and an important asset that is positioned to drive product development with extensive supply chain capabilities to provide end-to-end consumer solutions across the health and wellness industry.
• Health and Wellness Innovations is the unit positioned to rapidly respond to evolving consumer trends. The recent launches of hand sanitizers and Neptune Air non-contact thermometer are two of the first significant innovations in this business unit.
• Neptune Ventures is the platform for strategic investments and provides an incubator for emerging technologies, brands and other innovations. Neptune Ventures is an important contributor to our long-term growth and shareholder value creation.
• Neptune Royalties is focused on growing and capitalizing on intellectual property and licensing opportunities.

A webcast of the call can be accessed through the Investors section of Neptune’s website under Investor Events and Presentations.

A replay of the call will be available shortly after the call’s completion and until July 10, 2020. The replay can be accessed online in the Investors section of Neptune’s website under Investor Events and Presentations.

About Neptune Wellness Solutions Inc.

Neptune Wellness Solutions is a diversified and fully integrated health and wellness company. Through its flagship consumer-facing brands, Forest Remedies™ and Ocean Remedies™, Neptune is redefining health and wellness by building a broad portfolio of natural, plant-based, sustainable and purpose-driven lifestyle brands and consumer packaged goods products in key health and wellness markets, including hemp, nutraceuticals, personal care and home care.  Leveraging decades of expertise in extraction and specialty ingredient formulation, Neptune is a leading provider of turnkey product development and supply chain solutions to businesses and government customers across several health and wellness verticals, including legal cannabis and hemp, nutraceuticals and white label consumer packaged goods.  The Company utilizes a highly flexible and low cost supply chain infrastructure that can be scaled up and down or into adjacent product categories to quickly adapt to market demand. Neptune’s corporate headquarters is located in Laval, Quebec, with a 50,000-square-foot production facility located in Sherbrooke, Quebec and a 24,000 square-foot facility located in North Carolina.  For additional information, please visit: https://neptunecorp.com/

Caution Regarding Non-IFRS Financial Measures

The Corporation uses two adjusted financial measures, Adjusted Segment Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted Segment EBITDA) and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) to assess its operating performance. These non-IFRS financial measures are comprised of adjustments that are derived from the Corporation’s financial statements and are presented in a consistent manner. The Corporation uses these measures for the purposes of evaluating its historical and prospective financial performance, as well as its performance relative to competitors. These measures also help the Corporation to plan and forecast for future periods as well as to make operational and strategic decisions. The Corporation believes that providing this information to investors, in addition to IFRS measures, allows them to see the Corporation’s results through the eyes of management, and to better understand its historical and future financial performance.

Securities regulations require that companies caution readers that earnings and other measures adjusted to a basis other than IFRS do not have standardized meanings and are unlikely to be comparable to similar measures used by other companies. Accordingly, they should not be considered in isolation. The Corporation uses Adjusted Segment EBITDA and Adjusted EBITDA to measure its performance from one period to the next without the variation caused by certain adjustments that could potentially distort the analysis of trends in our operating performance, and because the Corporation believes it provides meaningful information on the Corporation’s financial condition and operating results. Neptune’s method for calculating Adjusted Segment EBITDA and Adjusted EBITDA may differ from that used by other corporations.

Neptune obtains its Adjusted Segment EBITDA measurement by adding depreciation and amortization, stock-based compensation and impairment loss on goodwill to segment income (loss) before corporate expenses. Neptune obtains its Adjusted EBITDA measurement by adding to net income (loss), net finance costs, depreciation and amortization and income tax expense and by subtracting income tax recovery and net finance income. Other items such as stock-based compensation, litigation provisions, acquisition costs, change in fair value of contingent consideration, impairment loss on goodwill and severance and related costs that do not impact core operating performance of the Corporation are also added back as they may vary significantly from one period to another. Adjusting for these items does not imply they are non-recurring. 

Forward Looking Statements

Statements in this press release that are not statements of historical or current fact constitute “forward-looking statements” within the meaning of the U.S. securities laws and Canadian securities laws. Such forward-looking statements involve known and unknown risks, uncertainties, and other unknown factors that could cause the actual results of Neptune to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “believes”, “belief”, “expects”, “intends”, “projects”, “anticipates”, “will”, “should” or “plans” to be uncertain and forward-looking. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.

The forward-looking statements contained in this press release are expressly qualified in their entirety by this cautionary statement and the “Cautionary Note Regarding Forward-Looking Information” section contained in Neptune’s latest Annual Information Form (the “AIF”), which also forms part of Neptune’s latest annual report on Form 40-F, and which is available on SEDAR at www.sedar.com, on EDGAR at https://www.sec.gov/edgar.shtml and on the investor section of Neptune’s website at www.neptunecorp.com. All forward-looking statements in this press release are made as of the date of this press release. Neptune does not undertake to update any such forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in Neptune public securities filings with the Securities and Exchange Commission and the Canadian securities commissions. Additional information about these assumptions and risks and uncertainties is contained in the AIF under “Risk Factors”.

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

SOURCE Neptune Wellness Solutions Inc.