Covalon Announces Fourth Quarter and Year End Results for Fiscal 2022 and Highlights Company Transformation Changes
Covalon Technologies Ltd. (CVALF) announced its fiscal 2022 Q4 and year-end results, reporting a 7% decline in revenue to $18.1M from $19.6M in the prior year. The company experienced a net loss of $9.7M, or $0.38 per share, compared to a profit of $23.5M in fiscal 2021. Operating expenses surged to $16.6M, driven by investments in marketing and leadership. Despite challenges, Covalon is optimistic about future revenue growth, especially in the U.S. market, where it secured its products in over 70 hospitals. The management commits to enhancing margins and profitability through operational improvements.
- Covalon is focusing on the U.S. market to enhance sales and market share.
- The company established its products in over 70 major U.S. hospitals, including six of the top 10 children's hospitals.
- Management anticipates strong revenue growth and margin improvement in 2023 due to strategic investments.
- Revenue decreased by 7% year-over-year to $18.1M, driven by declines in both U.S. and international sales.
- Net loss for the year was $9.7M, compared to a net income of $23.5M in the prior year.
- Operating expenses increased significantly to $16.6M, impacting profitability.
"Fiscal 2022 was a year of strengthening and transforming our Company," states
As part of
"We also expanded our digital marketing efforts which have helped us grow our brand presence both in
As part of the Company's customer focus initiatives,
Management anticipates strong revenue growth going forward as the Company works to improve its margins and further align its operating expenses to growth prospects. Strategic priorities for this fiscal year included a focus on strengthening core business areas with respect to people and processes. The Company's
"We are in a much stronger position in our key markets compared to last year and look forward to seeing the results of these investments positively impacting us in 2023 and beyond. In 2022, our investments in leadership, sales, marketing and operations, along with our focused approach to our key revenue markets have strengthened
(1) See "Non-IFRS Measures" below, including for a reconciliation of the non-IFRS measures used in this release to the most comparable IFRS measures.
Fiscal 2022 Q4 and Year-End Financial Results
Revenue for the year ended
Development and consulting services revenue for the year ended
Gross margin for the year ended
Operating expenses for the year ended
General and administrative expenses for the three months ended
Net loss for continuing operations for the year ended
Adjusted EBITDA for the year ended
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Statement of Operations
The following unaudited table presents
Three months ended | Year ended | |||||
2022 | 2021 | 2022 | 2021 | |||
Revenue | ||||||
Product | 6,027,755 | 17,650,865 | ||||
Development and consulting services | 498,017 | 522,383 | 1,484,441 | 1,691,380 | ||
Licensing and royalty fees | 62,277 | 60,442 | 232,898 | 219,056 | ||
Total revenue | 5,390,205 | 6,610,580 | 18,146,390 | 19,561,301 | ||
Cost of sales | 4,078,867 | 3,545,483 | 10,652,885 | 9,864,970 | ||
Gross profit before operating expenses | 1,311,338 | 3,065,097 | 7,493,505 | 9,696,331 | ||
Operating expenses | ||||||
Operations | 592,558 | 190,515 | 2,064,808 | 995,158 | ||
Research and development activities | 248,565 | 299,625 | 1,095,095 | 1,140,517 | ||
Sales, marketing and agency fees | 2,200,727 | 305,293 | 6,517,242 | 1,927,181 | ||
General and administrative | 2,315,316 | 1,126,516 | 6,958,688 | 4,795,132 | ||
5,357,166 | 1,921,949 | 16,635,833 | 8,857,988 | |||
Finance expenses | 29,973 | 117,904 | 111,590 | 419,379 |
Net income (loss) from continuing | (4,075,801) | 1,025,244 | (9,253,918) | 418,964 | |
Net income (loss) from discontinued | - | 21,344,351 | (409,295) | 23,057,942 | |
Net income (loss) |
Income (loss) per common share of continuing operations | |||||||||||||
Basic earnings (loss) per share | |||||||||||||
Diluted earnings (loss) per share | |||||||||||||
Income per common share of discontinued operations | |||||||||||||
Basic earnings (loss) per share | |||||||||||||
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Income (loss) per common share | |||||||||||||
Basic earnings (loss) per share | |||||||||||||
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Non-IFRS Financial Measures
This press release makes reference to certain non-IFRS measures. These measures are not recognized or defined measures under IFRS, do not have standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional financial information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. The non-IFRS financial measures, adjustments, and reasons for adjustments should be carefully evaluated as these measures have limitations as analytical tools and should not be used in substitution for an analysis of the Company's results under IFRS. We use non-IFRS measures including "Adjusted Gross Margin" and "Adjusted EBITDA" to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. The following non-IFRS financial measures are presented in this news release, and a description of the calculation for each measure is included below:
- Adjusted Gross Margin is defined as gross profit before operating expenses, plus depreciation and amortization included in cost of sales, plus inventory provision amounts.
- Adjusted EBITDA is defined as net loss, plus interest expense, plus depreciation and amortization, plus stock-based compensation, less government subsidies, plus inventory provisions, plus accounts receivable write-off expenses.
You should also be aware that the Company may recognize income or incur expenses in the future that are the same as, or similar to some of the adjustments in these non-IFRS financial measures. Because these non-IFRS financial measures may be defined differently by other companies in our industry, our definitions of these non-IFRS financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The table below provides a reconciliation of gross profit before operating expenses under IFRS in the consolidated financial statements to Adjusted Gross Margin for the three months, and year ended
Three months ended | Year ended | |||
2022 | 2021 | 2022 | 2021 | |
Gross profit before operating expenses | 1,311,338 | 3,065,097 | 7,493,505 | 9,696,331 |
Add: Depreciation and amortization | 99,882 | 49,470 | 251,656 | 282,843 |
Add: Inventory provisions | 1,255,081 | 231,618 | 2,264,853 | 361,556 |
Adjusted Gross Margin | 2,666,301 | 3,346,185 | 10,010,014 | 10,340,730 |
Adjusted Gross Margin (%) | 49 % | 51 % | 55 % | 53 % |
The table below provides a reconciliation of net loss under IFRS in the consolidated financial statements to Adjusted EBITDA for the three months, and year ended
Three months ended | Year ended | |||
2022 | 2021 | 2022 | 2021 | |
Net income (loss) | (4,075,801) | 1,025,244 | (9,253,918) | 418,964 |
Add: Interest expense | 29,973 | 117,904 | 111,590 | 419,379 |
Add: Depreciation and amortization | 544,744 | 399,527 | 1,032,807 | 700,466 |
Add: Share based compensation | 84,450 | 9,698 | 211,438 | 163,769 |
Less: Government subsidies | - | (8,668) | - | (801,821) |
Add: Inventory provisions | 1,255,081 | 231,618 | 2,264,853 | 361,556 |
Adjusted EBITDA | (2,161,553) | 1,775,323 | (5,633,230) | 1,262,313 |
Website: https://covalon.com/
Twitter: @covalon
Neither the
This news release may contain forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan, "estimate", "expect", "intend" or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", "will" or "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts, but instead represent management's expectations, estimates and projections regarding future events. Forward-looking statements involve risks and uncertainties, including, but not limited to, the factors described in greater detail in the "Risks and Uncertainties" section of our management's discussion and analysis of financial condition and results of operations for the year ended
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