Full Press Release Details
Sonoma Pharmaceuticals Reports Fiscal
Year and Fourth Quarter 2018 Financial Results
Strong Annual Year-Over-Year Growth in
$10 Million in Cash as of March
Conference Call Begins at 4:30pm
PETALUMA, Calif.-(June 13, 2018)-Sonoma Pharmaceuticals,
Inc. (Nasdaq: SNOA), 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 fiscal year 2018 and fourth quarter
ended March 31, 2018.
Total revenues of $16.7 million for fiscal year 2018 increased
by $3.8 million, or 30%, as compared to $12.8 million for fiscal year 2017. Product revenue of $15.7 million for fiscal year 2018,
increased $3.7 million, or 31%, compared to the same period last year. This increase in product revenue was driven by strong growth
in the United States, up $1.8 million, or 27%, and by higher international sales, up $1.9 million, or 36%.
Total revenue of $3.7 million for the fourth quarter ended March
31, 2018, was down slightly when compared to $4.0 million for the same period last year. Product revenues of $3.3 million for the
fourth quarter ended March 31, 2018, were down 14%, or $530,000, when compared to the same period last year, largely as the result
of lower sales in the United States and rest of world, partly offset by increases in Europe and Latin America.
are pleased to report strong year-over-year revenue growth for all our product categories. During the last 12 months, we continued
to expand our business with a new set of FDA approvals for our dermatology and eye care product lines along with additional market
approvals and partnerships for our products internationally," said Jim Schutz, Sonoma Pharmceuticals CEO. "The
fourth quarter dermatology market was challenging for us as we experienced a decline in product revenues due to the impact of health
insurance deductible resets at the beginning of the calendar year and the impact of increased product rebates. To manage
an ever-changing health insurance reimbursement marketplace, we are taking steps to reduce the impact on our revenue growth by
working with a home delivery pharmacy program and advancing relationships with managed care organizations. In addition, as announced
last week, we're excited to be partnering in Brazil with NC Group/ U.SK, Brazil's largest pharmaceutical company."
Results for the Three months Ended March 31, 2018
Product revenues in the United States of $1.4 million, for the
three months ended March 31, 2018, decreased by $477,000, or 26%, as compared to $1.8 million for the three months ended March
31, 2017. This decrease was mostly the result of lower sales of the company's dermatology and animal health care products,
partly offset by an increase in sales of our acute care products. The decline in the dermatology revenue for the fourth quarter
compared to the same period in prior year was largely due to lower units shipped as wholesalers reduced their inventory, higher
rebate costs due to impact of health care plan deductibles and the reset of those deductibles for most plans in January, along
with the growth of high deductible health care programs.
Product revenue in Latin America for the quarter ended March
31, 2018, was $912,000, up 9% from the same period last year. This amount reflects the sale of products to Invekra following the
completion of Sonoma's asset sale to Invekra in October 2016. Sonoma will continue to supply products to Invekra until Invekra's
manufacturing facility is operational.
Product revenue in Europe and the rest of the world of $995,000,
for the three months ended March 31, 2018, decreased by $131,000, or 12%, as compared to $1.1 million for the three months ended
March 31, 2017. This decrease was the result of lower sales in China and the Middle East, partly offset by higher sales in Europe,
Singapore, Hong Kong and India.
Sonoma reported gross profit of $1.3 million, or 36% of total
revenue, during the three months ended March 31, 2018, compared to a gross profit of $1.9 million, or 48% of total revenue in the
same period in the prior year. The decrease in gross profit, as a percentage of revenue, was primarily due to Latin America as
a result of higher sales to Invekra at a very low profit margin and the decline in the higher margin dermatology revenue in the
Operating expenses minus non-cash expenses during the fourth
quarter of fiscal year 2018 were $5.1 million, up $664,000, or 15%, as compared to the same period in the prior year. This increase
in operating expenses was mostly due to higher sales, marketing, legal and administrative expenses in the United States, partly
offset by a decline in Latin American expenses. A key driver to the growth in operating expenses is the increase in the number
of dermatology sales representatives, compared to the same period last year.
Loss from operations was $4.7 million, up $1.8 million, compared
to $2.9 million for the same period last year. Operating loss less non-cash expenses (EBITDA) for the three months ended March
31, 2018, was $3.7 million, compared to $2.4 million for the same period last year.
As of March 31, 2018, Sonoma had cash and cash equivalents of
$10.1 million, as compared to $8.6 million as of December 31, 2017.
Results for the Twelve Months Ended March 31, 2018
The company reported gross profit of $7.3 million, and $5.7
million, for the twelve months ended March 31, 2018 and 2017, respectively. The gross profit as a percentage of total revenues
was 44% for both periods. Total operating expenses less non-cash expenses of $19 million increased $2.4 million, or 14%, for the
twelve months ended March 31, 2018, as 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 less non-cash expenses (EBITDA) of $11.2 million, for the twelve
months ended March 31, 2018, was up $716,000, compared to $10.5 million for the same period last year.
Sonoma's management will hold a conference call today
to discuss fourth quarter fiscal year 2018 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 https://edge.media-server.com/m6/p/ufhciggt.
Please log on approximately 10 minutes prior to the presentation in order to register and download the appropriate
software, if any. Also, participants can download a graphical presentation of the quarterly results at this same site, which provides
greater granular detail in conjunction with the call.
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 3495907. A webcast replay will be available on the site at http://ir.sonomapharma.com/events.cfm
for one year following the call.
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 "continue," "reduce," and "expand," 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 meet the Company's cash needs, 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 from time to time in the Company's filings with the Securities and Exchange
Commission. The Company disclaims any obligation to update these forward-looking statements, except as required by law.
Sonoma Pharmaceuticals is a trademark or registered trademark
of Sonoma Pharmaceuticals, Inc. All other trademarks and service marks are the property of their respective owners.
Media and Investor Contact:
Sonoma Pharmaceuticals, Inc.
SONOMA PHARMACEUTICALS, INC. AND SUBSIDIARIES