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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Crescita Therapeutics Inc | TSX:CTX | Toronto | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.43 | 0.43 | 0.45 | 0 | 20:59:59 |
Over 120% sales growth with Record Manufacturing Revenue of $3.9M
Adjusted EBITDA1 of $0.6M, up $0.9M Year-over-Year
Repayment of $1.0 M of Convertible Debentures
Crescita Therapeutics Inc. (TSX: CTX and OTC US: CRRTF) (“Crescita” or the “Company”), a growth-oriented, innovation-driven Canadian commercial dermatology company, today reported its financial results for the second quarter ended June 30, 2022 (“Q2-F2022”). All amounts presented are in thousands of Canadian dollars (“CAD”) unless otherwise noted.
Financial Highlights
Q2-F2022 vs. Q2-F2021
“This was a very good quarter,” said Serge Verreault, President and CEO of Crescita. “We set a manufacturing revenue record of $3.9 million, delivering on previously announced purchase orders, and our commercial skincare business grew $0.5 million or 28% versus Q2-21. We also generated operating cash flow by posting significant positive adjusted EBITDA in a quarter where we didn’t receive any milestones or upfront payments from licensing transactions. We expanded our medical product portfolio with the Health Canada approval of the ART FILLER® injectables, which we plan to launch in the fall. Even after retiring $1.0 million of convertible debentures, we maintain a healthy cash balance and an unutilized credit facility that are available to support organic growth and potential strategic transactions. Moving forward, we are focused on and committed to strategic growth supported by fundamental execution.”
Q2-F2022 Corporate Developments
Approval of ART FILLER® Injectables
Launch of Obagi Medical® Product Line in Canada
Repayment of Convertible Debentures
Q2-F2022 Financial Results
Note: The Management’s Discussion and Analysis (“MD&A”), Condensed Consolidated Interim Financial Statements and accompanying notes for the three and six months ended June 30, 2022 are available at www.crescitatherapeutics.com/financial-reporting and have been filed with SEDAR at www.sedar.com.
Summary Financial Results
In thousands of CAD, except per share data and number of shares
Three months ended June 30,
Six months ended June 30,
2022
2021
2022
2021
$
$
$
$
Commercial Skincare
2,392
1,869
3,928
3,636
Licensing and Royalties
227
475
227
1,281
Manufacturing and Services
3,893
605
7,308
1,297
Revenues
6,512
2,949
11,463
6,214
Cost of goods sold
2,865
1,227
5,104
2,376
Gross profit
3,647
1,722
6,359
3,838
Gross margin (%)
56.0%
58.4%
55.5%
61.8%
Research and development
161
118
288
337
Selling, general and administrative
2,916
1,930
5,511
3,793
Depreciation and amortization
370
351
736
682
Total operating expenses
3,447
2,399
6,535
4,812
Operating profit (loss)
200
(677)
(176)
(974)
Interest expense
48
63
109
111
Interest income
(41)
(38)
(87)
(98)
Foreign exchange loss
118
10
189
161
Share of loss of an associate
17
-
29
-
Net loss on convertible note measured at
fair value through profit or loss
95
-
95
-
Net loss
(37)
(712)
(511)
(1,148)
Adjusted EBITDA1
646
(269)
712
(182)
Earnings per share
Basic and diluted
$
(0.00)
$
(0.03)
$
(0.02)
$
(0.06)
Weighted average number of common shares outstanding
Basic and diluted
20,813,853
20,612,840
20,874,923
20,619,686
Selected Balance Sheet Information
Cash and cash equivalents, end of period
10,502
13,083
Selected Cash Flow Information
Cash provided by (used in) operating activities
80
(743)
739
(939)
Cash used in investing activities
(169)
(39)
(214)
(43)
Cash used in financing activities
(1,185)
(82)
(1,353)
(202)
Revenue We have three reportable segments: 1) Commercial Skincare (“Commercial”), which manufactures and sells branded non-prescription skincare products in the Canadian and international markets, and also commercializes Pliaglis, NCTF® Boost 135 HA, and the Obagi Medical product line in Canada; 2) Licensing and Royalties (“Licensing”), which primarily generates revenue from licensing our intellectual property related to Pliaglis or our transdermal delivery technologies; and 3) Manufacturing and Services (“Manufacturing”), which generates revenue from contract manufacturing and product development services.
For the three months ended June 30, 2022, total revenue was $6,512 compared to $2,949 for the three months ended June 30, 2021, representing an increase of $3,563. The largest increase came from our Manufacturing segment in the amount of $3,288, which mainly reflected the partial fulfillment of the approximately $7,000 in purchase orders previously announced, as well as higher volumes from new and existing clients. Commercial Skincare sales grew by $523 mainly due to higher product sales across our main brands in all channels as a result of more promotions and product ramp-ups, and incremental sales from the Obagi launch, partly offset by lower Alyria® sales and sales of personal protective equipment versus the prior year.
Licensing segment revenue decreased by $248 year-over-year. Q2-F2022 Licensing revenue mainly reflected royalties above the minimum guaranteed royalties under our agreement with Cantabria Labs Inc. (the “Cantabria Agreement”) for Pliaglis, while Q2-F2021 Licensing revenue consisted of: 1) an upfront payment from Croma Pharma GmbH as part of a 9-country Pliaglis licensing agreement; 2) products sales for supplying Pliaglis under our Austria licensing agreement with Pelpharma Handels GmbH; and 3) incremental royalties beyond the minimum guaranteed royalties under the Cantabria Agreement.
Gross Profit For the three months ended June 30, 2022, gross profit was $3,647, representing a gross margin of 56.0%, compared to $1,722 and a margin of 58.4% for the three months ended June 30, 2021. The increase in gross profit of $1,925 was mainly due to the growth in our Manufacturing segment revenue year-over-year, while the decrease in gross margin of 2.4% was driven, in part, by the impact of product promotions in the Commercial segment, partly offset by the benefit of higher manufacturing volumes. Gross profit and gross margin were also impacted by the end of wage and rent subsidies under the Canada Emergency Wage Subsidy (“CEWS”) and Canada Emergency Rent (“CERS”) Subsidy programs year-over-year.
Operating Expenses For the three months ended June 30, 2022, total operating expenses were $3,447 compared to $2,399 for the three months ended June 30, 2021, representing a net increase of $1,048. The increase was mainly driven by higher selling, general and administrative (“SG&A”) expenses of $986, as well as higher depreciation and amortization and R&D expenses of $19 and $43, respectively. The increase in SG&A was largely reflective of the end of the CEWS program, higher headcount-related and travel and entertainment expenses, as well as higher advertising and promotion costs as we continued to invest in organic growth initiatives.
Net Loss on Convertible Note The Company holds a convertible note receivable related to its minority interest in The Best You for an initial principal amount of $500, that could increase up to $1,250, contingent on certain events and conditions being met. This financial instrument is remeasured at fair value at each reporting period using the discounted cash flow method, adjusted based on changes in relevant credit spreads and changes in risk free rates, among other inputs. During the three and six months ended June 30, 2022, as a result of the increase in interest rates caused by general market conditions, we recorded a fair value loss of $95.
Cash and Cash Equivalents Cash and cash equivalents were $10,502 at June 30 2022, reflecting a net decrease of $1,240 for the quarter, mainly due to the repayment of the Debentures. Refer to Repayment of Convertible Debentures earlier in this press release.
Non-IFRS Financial Measures We report our financial results in accordance with International Financial Reporting Standards (“IFRS”). However, we use certain non-IFRS financial measures to assess our Company’s performance. We believe these to be useful to management, investors, and other financial stakeholders in assessing Crescita’s performance. The non-IFRS measures used in this press release do not have any standardized meaning prescribed by IFRS and are therefore not comparable to similar measures presented by other issuers. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS. The following are the Company’s non-IFRS measures along with their respective definitions:
Management believes that Adjusted EBITDA is an important measure of operating performance and cash flow and provides useful information to investors as it highlights trends in the underlying business that may not otherwise be apparent when relying solely on IFRS measures. Below is a reconciliation of EBITDA and Adjusted EBITDA to their closest IFRS measures.
In thousands of CAD dollars
Three months ended June 30,
Six months ended June 30,
2022
2021
2022
2021
$
$
$
$
Net loss
(37)
(712)
(511)
(1,148)
Adjust for:
Depreciation and amortization
370
351
736
682
Interest expense, net
7
25
22
13
EBITDA
340
(336)
247
(453)
Adjust for:
Share of loss of an associate
17
-
29
-
Net loss on convertible note measured at fair value through profit or loss
95
-
95
-
Share-based compensation
76
57
152
110
Foreign exchange loss
118
10
189
161
Adjusted EBITDA
646
(269)
712
(182)
Caution Concerning Limitations of Summary Financial Results Press Release This summary earnings press release contains limited information meant to assist the reader in assessing Crescita’s performance, but it is not a suitable source of information for readers who are unfamiliar with Crescita and is not in any way a substitute for the Company's Consolidated Audited Financial Statements and notes thereto, MD&A and latest Annual Information Form (“AIF”) which can be found on the Company’s profile on SEDAR at www.sedar.com.
About Crescita Therapeutics Inc. Crescita (TSX: CTX and OTC US: CRRTF) is a growth-oriented, innovation-driven Canadian commercial dermatology company with in-house R&D and manufacturing capabilities. The Company offers a portfolio of high-quality, science-based non-prescription skincare products and early to commercial stage prescription products. We also own multiple proprietary transdermal delivery platforms that support the development of patented formulations to facilitate the delivery of active ingredients into or through the skin. For more information, visit www.crescitatherapeutics.com.
Forward-looking Statements This press release contains “forward-looking information” within the meaning of applicable securities laws (collectively, “forward-looking statements”). Forward-looking statements can be identified by words such as: “anticipate”, “intend”, “plan”, “goal”, “seek”, “believe”, “project”, “estimate”, “expect”, “strategy”, “future”, “likely”, “may”, “should”, “will” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements regarding the Company’s objectives, plans, goals, strategies, growth, performance, operating results, strategy for customer retention, product development, market position, business prospects, opportunities and industry trends and similar statements concerning anticipated future events, results, circumstances, performance or expectations. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on current beliefs, expectations and assumptions regarding the future of the Company’s business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Company’s control. Crescita’s actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not unduly rely on any of these forward-looking statements. Important factors that could cause Crescita’s actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others: economic and market conditions, the impact of the COVID-19 pandemic and the response thereto of governments and consumers, the Company’s ability to execute its growth strategies, reliance on third parties for clinical trials, marketing, distribution and commercialization, the impact of changing conditions in the regulatory environment and product development processes, manufacturing and supply risks, increasing competition in the industries in which the Company operates, the Company’s ability to meet its debt commitments, the impact of unexpected product liability matters, the impact of litigation involving the Company and/or its products, the impact of changes in relationships with customers and suppliers, the degree of intellectual property protection of the Company’s products, the degree of market acceptance of the Company’s products, developments and changes in applicable laws and regulations, as well as other risk factors discussed in the “Risk Factors” sections of the Company’s most recent annual MD&A for the year ended December 31, 2021 and the Company’s AIF dated March 22, 2022. Any forward-looking statement made in this press release is based only on information currently available and speaks only as of the date on which it is made. Except as required by applicable securities laws, Crescita undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
________________________ 1Please refer to the Non-IFRS Financial Measures section of this press release.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220810005119/en/
Crescita Therapeutics Investor Relations Linda Kisa, CPA, CA lkisa@crescitatx.com
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