Full Press Release Details
Pharmaceuticals Reports Financial Results for Fourth Quarter and Fiscal Year 2017
Conference Call Begins at 4:30pm
PETALUMA, Calif.-(June 5, 2017)-Sonoma Pharmaceuticals,
Inc. (NASDAQ: SNOA, warrants SNOAW), a specialty pharmaceutical company that develops and markets unique and effective solutions
for the treatment of dermatological conditions and advanced tissue care, today announced financial results for the fourth quarter
and the fiscal year 2017, ended March 31, 2017 and provided a corporate update.
Total revenue was $4 million for the fourth quarter as compared
to $2.6 million for the same period last year. Product revenues of $3.8 million were up 60%, or $1.4 million, when compared to
the same period last year, driven by strong growth in the U.S. and international markets. The numbers in this press release reflect
the reclassification of the financial components of the Latin American operations as a discontinued business due to the sale of
this business. (See the section below on "Sale of Latin American Business and Impact on Accounting Treatment" for more
"We are pleased with the progress we have made this
year in executing on our corporate strategy of growing dermatology revenue with our expanding direct sales force," said
Jim Schutz, Sonoma Pharmaceuticals CEO. "This progress is evidenced by our current robust product portfolio and 86%
growth in prescriptions filled for FY 2017, compared to last year. Our growing sales force coupled with planned product
launches provide a high level of confidence in our future growth. Looking forward, with our strong cash position of $17.5
million, we believe we have more than sufficient cash to fully fund our high sales growth plan and achieve breakeven without
diluting shareholders."
Business Highlights:
Financial Highlights:
Product revenues in the United States for the quarter ended
March 31, 2017, of $1.8 million, increased by $451,000, or 32%, when compared to the same period in the prior year. This increase
was the result of higher sales of the company's dermatology and animal healthcare products. In addition, sales to a new animal
health care partner increased during the quarter compared to last year, partially offset by a decline in U.S. wound care revenue.
Product revenue in Latin America for the quarter ended March
31, 2017, was $834,000. This amount reflects the sale of products to Invekra, at reduced or previously agreed to prices, since
completion of Sonoma's asset sale to Invekra in October 2016. Sonoma will continue to supply Invekra until its manufacturing
facility is operational.
Product revenue in Europe and the rest of the world for the
quarter ended March 31, 2017, of $1.1 million, increased by $145,000 or 15%, as compared to the same period in the prior year,
with increases in Asia, partially offset by decreases in the Middle East and Europe.
Sonoma reported gross profit of $1.9 million, or 48% of total
revenue, during the three months ended March 31, 2017, compared to a gross profit of $971,000, or 38% of total revenue when compared
to the same period in the prior year. The gross profit percentage increased as compared to last year, primarily due to the reclassification
of gross margin between the continuing and discontinued operations.
Total operating expenses of $4.9 million for the three months
ended March 31, 2017, increased by $273,000, or 6%, as compared to the same period in the prior year. Operating expenses minus
non-cash expenses during the fourth quarter of fiscal year 2017 were $4.5 million, up $361,000, or 9%, as compared to the same
period in the prior year. This increase in operating expenses was mostly due to higher sales, marketing and administrative expenses
in the United States related to the growth of a direct sales force in dermatology, partly offset by a decline in European expenses.
A key driver to the growth in operating expenses was the increase in the number of sales representatives, compared to the same
Net loss from continuing operations for the quarter ended March
31, 2017, was $2.9 million, a decrease of $737,000 as compared to net loss from continuing operations of $3.7 million for the same
period in the prior year. The operating loss minus non-cash expenses was $2.4 million, down $750,000, compared to $3.2 million
for the same period last year.
As of March 31, 2017, Sonoma had cash and cash equivalents of
$17.5 million, as compared with $7.5 million as of March 31, 2016.
Results for the Twelve Months Ended March 31, 2017
Total revenues of $12.8 million increased by $3.4 million, or
37%, for the twelve months ended March 31, 2017, as compared to $9.4 million for the twelve months ended March 31, 2016. Product
revenue of $12 million increased $3.9 million, or 48%, as compared to $8.1 million for the twelve months ended March 31, 2016.
The increase in product revenue was driven by strong growth in the United States, up $2.2 million, or 51%, and in international
Sonoma reported gross profit of $5.7 million, or 44% of total
revenue, for the twelve months ended March 31, 2017, compared to a gross profit of $2.6 million, or 28% of total revenue when compared
to the same period in the prior year. The gross profit percentage increased, compared to last year primarily due to the reclassification
of gross margin between the continuing and discontinued operations.
Total operating expenses of $18.6 million for the twelve months
ended March 31, 2017, increased by $1.3 million, or 7%, as compared to the same period in the prior year. Total operating expenses
minus non-cash expenses of $16.6 million increased $1.2 million, or 8%, for the twelve months ended March 31, 2017, compared to
the same period in the prior year. This increase was primarily due to higher costs of the direct sales force for dermatology. Operating
loss minus non-cash expenses (EBITDA) for the twelve months ended March 31, 2017, was $10.5 million, compared to $12.4 million
for the same period last year.
Sonoma's management will hold a conference call today
to discuss fourth quarter fiscal year 2017 results and answer questions, beginning at 4:30 p.m. EDT. Individuals interested in
participating in the conference call may do so by dialing 877-303-7607 for domestic callers or 973-638-3203 for international callers.
Those interested in listening to the conference call live via the Internet may do so at http://ir.sonomapharma.com/events.cfm.
Please log on approximately 30 minutes prior to the presentation in order to register and download the appropriate software.
replay will be available for seven days following the conclusion of the call by dialing 855-859-2056 for domestic callers, or 404-537-3406
for international callers, and entering conference code 15350781. A webcast replay will be available on the site at http://ir.sonomapharma.com/events.cfm
for one year following the call.
Sale of Latin American Business and Impact on Accounting
With the sale of the Latin American business during the third
quarter, ended December 31, 2016, the components of the financial statements related to this transaction have been classified as
a discontinued business for accounting purposes and in accordance with this accounting treatment, the income statement and balance
sheet have been retroactively revised to reflect the revenue, expenses and balance sheet items of the continuing businesses for
this fiscal year and last fiscal year. All of the income statement categories related to Latin America have been condensed to a
one line item on the income statement as "Income from discontinued operations." Also, the discontinued balance sheets
items have been listed separately from the continuing operations. As a result, the comparison of results discussed in this press
release relate primarily to the continuing businesses in accordance with generally accepted accounting principles.
About Sonoma Pharmaceuticals, Inc.
Sonoma is a specialty pharmaceutical company that develops and
markets unique and effective solutions for the treatment of dermatological conditions and advanced tissue care. The company's
products, which are sold throughout the United States and internationally, have improved outcomes for more than five million
patients globally by reducing infections, itch, pain, scarring and harmful inflammatory responses. The company's headquarters
are in Petaluma, California, with manufacturing operations in the United States and Latin America. European marketing and
sales are headquartered in Roermond, Netherlands. More information can be found at www.sonomapharma.com.
Forward-Looking Statements
Except for historical information herein, matters set forth
in this press release are forward-looking within the meaning of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, including statements about the commercial and technology progress and future financial performance
of Sonoma Pharmaceuticals, Inc. and its subsidiaries (the "Company"). These forward-looking statements are identified
by the use of words such as "believe," "achieve," and "strive," among others. Forward-looking
statements in this press release are subject to certain risks and uncertainties inherent in the Company's business that could
cause actual results to vary, including such risks that regulatory clinical and guideline developments may change, scientific
data may not be sufficient to meet regulatory standards or receipt of required regulatory clearances or approvals, clinical
results may not be replicated in actual patient settings, protection offered by the Company's patents and
patent applications may be challenged, invalidated or circumvented by its competitors, the available market for the Company's products
will not be as large as expected, the Company's products will not be able to penetrate one or more targeted markets, revenues
will not be sufficient to fund further development and clinical studies, as well as uncertainties relative to varying product formulations
and a multitude of diverse regulatory and marketing requirements in different countries and municipalities, and other risks detailed