Full Press Release Details
Reports Second Quarter 2023 Record Revenue of
$1.17 Million, an Increase of 108% Year-Over-Year
Pa. - August 14, 2023 - NEXGEL, Inc. ("NEXGEL" or the "Company") (NASDAQ: "NXGL"),
a leading provider of ultra-gentle, high-water-content hydrogel products for healthcare and consumer applications, today announced financial
results for the second quarter ended June 30, 2023.
Levy, NEXGEL's Chief Executive Officer, commented, "Record second quarter revenue of $1.17 million, an increase of 108% year-over-year,
exceeded our projections. Our contract manufacturing line of business increased 174% year-over-year, predominately due to the full quarter
contribution of our joint venture with C.G. Laboratories as well as increased demand from our existing contract customers. New and existing
direct-to-consumer branded products also continued to sell through well during the quarter, increasing 44% year-over-year."
Levy continued, "During the second quarter, we strategically invested in inventory and capital expenditure to improve equipment
and increase capacity in anticipation of demand we expect during the second half of this year and beyond. Thus far the branded products
sequential growth trend we saw in the first half of the year has continued into the current third quarter. Taking into account the investments
we made during the quarter, we continue to have a sufficient runway of cash to operate and invest in accelerating our growth going forward."
Operational Highlights to Date
| Announced a new strategic relationship with Enigma Health, a new joint venture company, for retail distribution and marketing services in North America. | ||
| Acquired a 50% interest in a newly formed joint venture ("JV"), CG Converting and Packaging, LLC, with C.G. Laboratories Inc. ("CG Labs") for its converting and packaging business. | ||
| Executed a supply agreement with a large new customer relating to a new consumer product. | ||
| Launched advertising and marketing initiative, which has increased branded product sales. |
Quarter 2023 Financial Highlights
the second quarter of 2023, revenue totaled $1.17 million, an increase of $606 thousand or 108%, as compared to $561 thousand for the
same period the year prior. The quarterly increase in overall revenues was primarily due to sales growth in contract manufacturing of
174% and branded products of 44% year-over-year. Revenue for the quarter included a full quarter contribution from the newly formed joint
venture with C.G. Laboratories.
profit for the second quarter of 2023 was $175 thousand, compared to a gross profit of $101 thousand for the same prior year period.
Gross profit margin for the second quarter of 2023 was 15% as compared to 18% for the same period the year prior. The increase in gross
profit was mainly due to the higher volume of contract manufacturing sales against fixed costs partially offset by higher manufacturing
labor costs and increased manufacturing of promotional materials and customer product samples to support new product line growth.
operating expenses, including R&D and SG&A expenses, increased to $937 thousand for the three months ended June 30, 2023, compared
to $819 thousand for the prior year period. The year-over-year increase was attributable to an increase in compensation and benefits
and professional fees. Advertising, marketing, and Amazon fees also increased period-over-period to support new product line growth.
loss for the quarter ended June 30, 2023, improved to $687 thousand or $0.13 per basic and diluted share, compared to net loss of $1
million or $0.19 per basic and diluted share for the same period in 2022.
of March 31, 2023, NEXGEL had approximately $4.3 million of cash and cash equivalents and marketable securities. During the quarter the
Company invested in inventory and capital expenditures for new equipment and increase in capacity at its manufacturing facility in anticipation
of increased demand in contract manufacturing during the second half of 2023.
of June 30, 2023, NEXGEL had 5,696,064 shares of common stock outstanding.
Second Quarter 2023 Financial Results Conference Call
will host a conference call and webcast today at 4:30 p.m. Eastern Time to discuss its operational and financial results for the second
Call: +1-877-300-8521 (U.S. Toll Free) or +1-412-317-6026 (International)
interested individuals unable to join the conference call, a replay will be available through August 28, 2023, at +1-844-512-2921 (U.S.
Toll Free) or +1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 10181557. An
archived version of the webcast will also be available on NEXGEL's Investor Relations site: https://ir.nexgel.com/.
NEXGEL is a leading provider of ultra-gentle, high-water-content hydrogels for healthcare and consumer applications. Based in Langhorne,
Pa., the Company has developed and manufactured electron-beam, cross-linked hydrogels for over two decades. NEXGEL has formulated more
than 200 different combinations to bring natural ingredients to gentle skin patches that can be worn for long periods of time with little
press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part
of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words "believe,"
"anticipate," "estimate," "expect," "intend," "plan," "project,"
"prospects," "outlook," and similar words or expressions, or future or conditional verbs, such as "will,"
"should," "would," "may," and "could," are generally forward-looking in nature and not
historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the
Company's actual results, performance, or achievements to be materially different from any anticipated results, performance, or
achievements for many reasons. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements,
whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company's
forward-looking statements, please see the Company's Annual Report on Form 10-K for the year ended December 31, 2022, including
but not limited to the discussion under "Risk Factors" therein, which the Company filed with the SEC and which may be viewed
Pinto, Managing Director
Strategic Communications
Director of Consumer Products
CONSOLIDATED BALANCE SHEETS
OF JUNE 30, 2023 AND DECEMBER 31, 2022
thousands, except share and per share data)
| June 30, 2023 | December 31, 2022 | |||||||
| ASSETS: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 3,691 | $ | 1,101 | ||||
| Marketable securities | 612 | 5,508 | ||||||
| Accounts receivable, net | 950 | 222 | ||||||
| Inventory | 1,079 | 502 | ||||||
| Prepaid expenses and other current assets | 366 | 172 | ||||||
| Total current assets | 6,698 | 7,505 | ||||||
| Goodwill | 311 | 311 | ||||||
| Intangibles, net | 13 | 20 | ||||||
| Property and equipment, net | 1,413 | 721 | ||||||
| Operating lease - right of use asset | 1,967 | 1,737 | ||||||
| Other assets | 95 | 63 | ||||||
| Total assets | $ | 10,497 | $ | 10,357 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,058 | $ | 265 | ||||
| Accrued expenses and other current liabilities | 202 | 130 | ||||||
| Current portion of note payable | 15 | 15 | ||||||
| Warrant liability | 165 | 242 | ||||||
| Operating lease liability, current portion | 232 | 207 | ||||||
| Total current liabilities | 1,672 | 859 | ||||||
| Operating lease liability, net of current portion | 1,819 | 1,593 | ||||||
| Notes payable, net of current portion | 265 | 268 | ||||||
| Total liabilities | 3,756 | 2,720 | ||||||
| Commitments and Contingencies (Note 15) | ||||||||
| STOCKHOLDERS' EQUITY | ||||||||
| Preferred stock, par value $0.001 per share, 5,000,000 shares authorized, no shares issued and outstanding | - | - | ||||||
| Common stock, par value $0.001 per share, 25,000,000 shares authorized; 5,696,064 and 5,577,916 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively | 6 | 6 | ||||||
| Additional paid-in capital | 19,242 | 19,189 | ||||||
| Accumulated deficit | (13,067 | ) | (11,558 | ) | ||||
| Total NexGel stockholders' equity | 6,181 | 7,637 | ||||||
| Non-controlling interest in joint venture | 560 | - | ||||||
| Total stockholders' equity | 6,741 | 7,637 | ||||||
| Total liabilities and stockholders' equity | $ | 10,497 | $ | 10,357 |
CONSOLIDATED STATEMENTS OF OPERATIONS
THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022
thousands, except share and per share data)
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues, net | $ | 1,167 | $ | 561 | $ | 1,786 | $ | 956 | ||||||||
| Cost of revenues | 992 | 460 | 1,669 | 884 | ||||||||||||
| Gross profit | 175 | 101 | 117 | 72 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | 55 | 111 | 84 | 135 | ||||||||||||
| Selling, general and administrative | 882 | 708 | 1,679 | 1,467 | ||||||||||||
| Total operating expenses | 937 | 819 | 1,763 | 1,602 | ||||||||||||
| Loss from operations | (762 | ) | (718 | ) | (1,646 | ) | (1,530 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | (9 | ) | (348 | ) | (10 | ) | (1,092 | ) | ||||||||
| Interest income | 2 | - | 2 | - | ||||||||||||
| Loss on debt extinguishment | - | - | - | (150 | ) | |||||||||||
| Other income | - | 2 | 4 | 2 | ||||||||||||
| Gain on investments | 116 | - | 124 | - | ||||||||||||
| Changes in fair value of warrant liability | 11 | 29 | 77 | (101 | ) | |||||||||||
| Total other income (expense), net | 120 | (317 | ) | 197 | (1,341 | ) | ||||||||||
| Loss before income taxes | (642 | ) | (1,035 | ) | (1,449 | ) | (2,871 | ) | ||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net loss | $ | (642 | ) | $ | (1,035 | ) | (1,449 | ) | (2,871 | ) | ||||||
| Less: Income attributable to non-controlling interest in joint venture | 53 | - | 60 | - | ||||||||||||
| Net loss attributable to NexGel stockholders | (695 | ) | (1,035 | ) | (1,509 | ) | (2,871 | ) | ||||||||
| Net loss per common share - basic | $ | (0.12 | ) | $ | (0.19 | ) | (0.27 | ) | (0.52 | ) | ||||||
| Net loss per common share - diluted | $ | (0.12 | ) | $ | (0.19 | ) | (0.27 | ) | (0.52 | ) | ||||||
| Weighted average shares used in computing net loss per common share - basic | 5,662,338 | 5,572,234 | 5,624,275 | 5,572,234 | ||||||||||||
| Weighted average shares used in computing net loss per common share - diluted | 5,662,338 | 5,572,234 | 5,624,275 | 5,572,234 |
CONSOLIDATED STATEMENTS OF CASH FLOWS
THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating Activities | ||||||||
| Net loss | $ | (1,509 | ) | $ | (2,871 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Income attributable to non-controlling interest in joint venture | 60 | - | ||||||
| Depreciation and amortization | 68 | 57 | ||||||
| Changes in ROU asset and operating lease liability | 21 | 19 | ||||||
| Share-based compensation and restricted stock vesting | 53 | 134 | ||||||
| Gain on investment in marketable securities | 124 | - | ||||||
| Changes in fair value of warrant liability and warrant modification | (77 | ) | 101 | |||||
| Amortization of deferred financing costs | - | 1,086 | ||||||
| Loss on extinguishment of debt | - | 150 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (728 | ) | (91 | ) | ||||
| Inventory | (577 | ) | (90 | ) | ||||
| Prepaid expenses and other assets | (226 | ) | (286 | ) | ||||
| Accounts payable | 793 | 268 | ||||||
| Accrued expenses and other current liabilities | 72 | 28 | ||||||
| Net Cash Used in Operating Activities | (1,926 | ) | (1,495 | ) | ||||
| Investing Activities | ||||||||
| Proceeds from sales of marketable securities | 4,772 | - | ||||||
| Investment in marketable securities | - | (5,371 | ) | |||||
| Capital expenditures | (253 | ) | (31 | ) | ||||
| Net Cash Provided by Investing Activities | 4,519 | (5,402 | ) | |||||
| Financing Activities | ||||||||
| Principle payments of notes payable | (3 | ) | (2,033 | ) | ||||
| Net Cash Used in Financing Activities | (3 | ) | (2,033 | ) | ||||
| Net Decrease in Cash | 2,590 | (8,930 | ) | |||||
| Cash - Beginning of period | 1,101 | 13,350 | ||||||
| Cash - End of period | $ | 3,691 | $ | 4,420 | ||||
| Supplemental Disclosure of Cash Flows Information | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | - | $ | - | ||||
| Taxes | $ | - | $ | - | ||||
| Supplemental Non-cash Investing and Financing activities | ||||||||
| Property and equipment contributed as capital investment to JV | $ | 500 | $ | - | ||||
| ROU asset and operating lease liabilities recognized upon consolidation of JV | $ | 334 | $ | - |