NEXGEL Reports Full Year 2023 Revenue of $4.1 Million, an Increase of 99.7% Year-Over-Year
- Record year in 2023 with nearly 100% revenue growth driven by branded products and contract manufacturing
- Expanded operational infrastructure, secured key partnerships, and made strategic investments for future growth
- Revenue for 2023 was $4.1 million, a 99.7% increase from 2022
- Gross profit margin improved to 15.2%
- Cost of revenues and selling, general, and administrative expenses increased
- Net loss for 2023 was $3.2 million, but company had $2.7 million in cash
- First quarter revenue expected to be $1.25 million, excluding a deposit from AbbVie
- NEXGEL positioning itself for significant growth in 2024
- Increase in cost of revenues and selling, general, and administrative expenses
- Net loss of $3.2 million for 2023
- Dependence on strategic partnerships for growth
Insights
Examining the financial results of NEXGEL, Inc., the nearly double revenue growth is a strong indicator of the company's upward trajectory, particularly in the realms of contract manufacturing and branded products. The strategic partnerships with heavyweights like AbbVie and STADA Arzneimittel AG are promising for the company's expansion into new markets and product lines. The expansion of operational infrastructure and strategic investments suggest a proactive approach to scaling operations in anticipation of increased demand.
The gross profit margin improvement from 12.5% to 15.2% is modest but shows operational efficiency gains. However, it is vital to note that the gross margin remains relatively low, which could indicate high production costs or pricing pressures in the industry. The reduction in R&D expenses could be seen as positive in terms of cost-saving; however, it raises questions about the company's long-term innovation pipeline.
From an investment standpoint, the pay-off of convertible notes and the reduction in interest expenses are positive steps towards financial stability. Yet, the net loss, despite narrowing from the previous year, indicates that the company is still in a growth phase and has not reached profitability. Investors should weigh the potential for future growth against the current lack of profits and the risks associated with the company's operational expansion.
The healthcare and consumer applications market for hydrogel products is growing and NEXGEL's significant revenue growth reflects the increasing demand for such products. The acquisition of Kenkoderm and the partnerships for distribution and commercialization in North America are strategic moves that could open up new customer segments and increase market share.
It is also noteworthy that the company is making strides in retail distribution and marketing services, which could enhance brand visibility and drive sales. The increase in SG&A expenses, particularly for marketing and Amazon fees, suggests that NEXGEL is investing in brand awareness and online sales channels, which is important in today's digital marketplace.
The company's expansion of its Texas facility is an indication of its commitment to meeting anticipated demand, but it also represents a significant investment that will need to be monitored for return on investment. The registered direct offerings led by insiders could be seen as a vote of confidence in the company's direction, but it also dilutes existing shareholders' equity.
The supply agreement with AbbVie involving the Rapid Acoustic Pulse device is a notable development, due to the regulatory implications of supplying components for medical devices. Ensuring compliance with Food and Drug Administration (FDA) regulations and other legal requirements will be critical for NEXGEL's continued success in this area.
Furthermore, the joint venture with CG Converting and Packaging, LLC introduces complexities in terms of intellectual property (IP) rights and contractual obligations. The legal framework governing these partnerships must be robust to protect NEXGEL's interests and facilitate smooth operations.
Lastly, the company's international partnership with STADA Arzneimittel AG to commercialize OTC products in North America will require careful navigation of international trade laws and regulations. Ensuring regulatory compliance while operating across borders is an intricate task that can have significant legal and financial implications.
LANGHORNE, Pa., April 01, 2024 (GLOBE NEWSWIRE) -- 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 its financial results for the fourth quarter and full year ended December 31, 2023.
Adam Levy, NEXGEL’s Chief Executive Officer, commented, “2023 was a record year for NEXGEL and transformational in many respects. Our nearly
Operational Highlights for the Full Year 2023 to Date
- Acquired a
50% interest in a JV with CG Converting and Packaging, LLC for its converting and packaging business. - CG Converting and Packaging, executed a new supply agreement with AbbVie (NYSE: ABBV), a global biopharmaceutical company to be a supplier of gel pads with AbbVie’s Rapid Acoustic Pulse device being investigated for improvement in the appearance of cellulite.
- Announced a new strategic relationship with Enigma Health, a new joint venture company, for retail distribution and marketing services in North America.
- Acquired Kenkoderm, a privately-owned skincare produce company focused on treating the symptoms of Psoriasis, expanding the Company’s health and wellness consumer product portfolio.
- Announced a partnership with STADA Arzneimittel AG, a European leader in consumer health, to distribute and commercialize consumer health OTC products in North America in 2024.
- Began 12,000 square foot expansion of its CG Converting and Packaging facility in Texas to support the expected growth in product demand from its strategic partnerships as well as continued growth of branded products.
- Closed on a little over
$1 million registered direct offering led by insiders.
Full Year and Fourth Quarter 2023 Financial Highlights
For the year ended December 31, 2023, revenue totaled
For the fourth quarter of 2023, revenue totaled
Gross profit totaled
Gross profit for the fourth quarter of 2023 was
Cost of revenues increased by
Cost of revenues was
Selling, general and administrative expenses increased by
Research and development expenses decreased by
In 2022 the Company paid off approximately
Net loss for the year ended December 31, 2023, was
The Company, after paying
As of December 31, 2023, NEXGEL had 5,741,088 shares of common stock outstanding.
Outlook for 2023 First Quarter
The Company expects first quarter revenue of
Fourth Quarter and Full Year 2023 Financial Results Conference Call
Management will host a conference call and webcast today at 8:30 a.m. Eastern Time to discuss its operational and financial results for the fourth quarter and full year 2023.
Date: Monday, April 1, 2024
Time: 8:30 a.m. ET
Live Call: + 1-800-274-8461 (U.S. Toll Free) or + 1-203-518-9814 (International)
Webcast: Events and Presentations
For interested individuals unable to join the conference call, a replay will be available through April 15, 2024, by dialing + 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: 1155204. An archived version of the webcast will also be available for 90 days.
About NEXGEL, INC.
NEXGEL is a leading provider of healthcare, beauty, and over-the-counter (OTC) products including ultra-gentle, high-water-content hydrogels. Based in Langhorne, Pa., the Company has developed and manufactured electron-beam, cross-linked hydrogels for over two decades. NEXGEL brands include Silverseal, Hexagels, Turfguard, Kenkoderm, and Dermablock. Additionally, NEXGEL has strategic contract manufacturing relationships with leading consumer healthcare companies.
Forward-Looking Statement
This 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 at http://www.sec.gov/.
Investor Contacts:
Valter Pinto, Managing Director
KCSA Strategic Communications
212.896.1254
valter@kcsa.com
NEXGEL, INC
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| December 31, 2023 | December 31, 2022 | |||||||
| ASSETS: | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 2,700 | $ | 1,101 | ||||
| Marketable securities | - | 5,508 | ||||||
| Accounts receivable, net | 633 | 222 | ||||||
| Inventory | 1,319 | 502 | ||||||
| Prepaid expenses and other current assets | 400 | 172 | ||||||
| Total current assets | 5,052 | 7,505 | ||||||
| Goodwill | 1,128 | 311 | ||||||
| Intangibles, net | 326 | 20 | ||||||
| Property and equipment, net | 1,499 | 721 | ||||||
| Operating lease - right of use asset | 1,855 | 1,737 | ||||||
| Other assets | 95 | 63 | ||||||
| Total assets | $ | 9,955 | $ | 10,357 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 1,233 | $ | 265 | ||||
| Accrued expenses and other current liabilities | 398 | 130 | ||||||
| Deferred revenue | 20 | - | ||||||
| Current portion of note payable | 80 | 15 | ||||||
| Warrant liability | 146 | 242 | ||||||
| Contingent consideration liability | 439 | - | ||||||
| Operating lease liability, current portion | 233 | 207 | ||||||
| Total current liabilities | 2,549 | 859 | ||||||
| Operating lease liability, net of current portion | 1,727 | 1,593 | ||||||
| Notes payable, net of current portion | 513 | 268 | ||||||
| Total liabilities | 4,789 | 2,720 | ||||||
| Commitments and Contingencies (Note 15) | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, par value | - | - | ||||||
| Common stock, par value | 6 | 6 | ||||||
| Additional paid-in capital | 19,406 | 19,189 | ||||||
| Accumulated deficit | (14,715 | ) | (11,558 | ) | ||||
| Total NexGel stockholders’ equity | 4,697 | 7,637 | ||||||
| Non-controlling interest in joint venture | 469 | - | ||||||
| Total stockholders’ equity | 5,166 | 7,637 | ||||||
| Total liabilities and stockholders’ equity | $ | 9,955 | $ | 10,357 | ||||
NEXGEL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenues, net | $ | 4,089 | $ | 2,048 | ||||
| Cost of revenues | 3,470 | 1,792 | ||||||
| Gross profit | 619 | 256 | ||||||
| Operating expenses | ||||||||
| Research and development | 103 | 367 | ||||||
| Selling, general and administrative | 3,993 | 3,237 | ||||||
| Total operating expenses | 4,096 | 3,604 | ||||||
| Loss from operations | (3,477 | ) | (3,348 | ) | ||||
| Other income (expense) | ||||||||
| Change in fair value of warrant liability and warrant modification expense | 96 | 76 | ||||||
| Realized gain on investments in marketable securities | 191 | 9 | ||||||
| Loss on debt extinguishment | - | (150 | ) | |||||
| Interest expense, net | (15 | ) | (1,336 | ) | ||||
| Other expense | (2 | ) | - | |||||
| Other income | 19 | 3 | ||||||
| Total other income (expense) | 289 | (1,398 | ) | |||||
| Loss before income taxes | $ | (3,188 | ) | $ | (4,746 | ) | ||
| Income tax expense | - | - | ||||||
| Net loss | (3,188 | ) | (4,746 | ) | ||||
| Less: (Income) loss attributable to non-controlling interest in joint ventures | 31 | - | ||||||
| Net loss attributable to NexGel stockholders | $ | (3,157 | ) | $ | (4,746 | ) | ||
| Net loss per common share – basic and diluted | $ | (0.56 | ) | $ | (0.85 | ) | ||
| Weighted average shares used in computing net loss per common share – basic and diluted | 5,671,842 | 5,574,818 | ||||||
NEXGEL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Year Ended December 31, | ||||||||||||
| 2023 | 2022 | |||||||||||
| Operating Activities | ||||||||||||
| Net loss | $ | (3,157 | ) | $ | (4,746 | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Loss attributable to non-controlling interest in joint venture | (31 | ) | - | |||||||||
| Depreciation and amortization | 226 | 112 | ||||||||||
| Share-based compensation | 217 | 298 | ||||||||||
| Gain on investment in marketable securities | (191 | ) | (9 | ) | ||||||||
| Changes in fair value of warrant liability | (125 | ) | (133 | ) | ||||||||
| Amortization of right of use asset | 217 | 189 | ||||||||||
| Warrant modification expense | 29 | 57 | ||||||||||
| Loss of extinguishment of debt | - | 150 | ||||||||||
| Amortization of deferred financing costs | - | 1,324 | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable, net | (411 | ) | (13 | ) | ||||||||
| Inventory | (760 | ) | (211 | ) | ||||||||
| Prepaid expenses and other current assets | (260 | ) | (95 | ) | ||||||||
| Accounts payable | 968 | 11 | ||||||||||
| Accrued expenses and other current liabilities | 22 | 74 | ||||||||||
| Deferred revenue | 20 | - | ||||||||||
| Net Cash Used in Operating Activities | (3,236 | ) | (2,992 | ) | ||||||||
| Investing Activities | ||||||||||||
| Purchases of equipment | (696 | ) | (96 | ) | ||||||||
| Investment in subsidiary | (547 | ) | - | |||||||||
| Proceeds from sales of marketable securities | 5,699 | 1,500 | ||||||||||
| Investments in or Purchases of marketable securities | - | (6,999 | ) | |||||||||
| Net Cash Provided by (Used in) Investing Activities | 4,456 | (5,595 | ) | |||||||||
| Financing Activities | ||||||||||||
| Principal payments on operating lease liability | (175 | ) | (151 | ) | ||||||||
| Proceeds from notes payable | 315 | - | ||||||||||
| Principal payments of notes payable | (6 | ) | - | |||||||||
| Principal payments on convertible notes | - | (3,511 | ) | |||||||||
| Proceeds from margin line of credit | 245 | - | ||||||||||
| Net Cash Provided by (Used in) Financing Activities | 379 | (3,662 | ) | |||||||||
| Net Increase (Decrease) in Cash | 1,599 | (12,249 | ) | |||||||||
| Cash – Beginning of year | 1,101 | 13,350 | ||||||||||
| Cash – End of year | $ | 2,700 | $ | 1,101 | ||||||||
| Supplemental Non-cash Investing and Financing Activities | ||||||||||||
| Property and equipment and intangibles contributed as capital investment to JV | $ | 500 | $ | - | ||||||||
| Net assets acquired in the acquisition of Kenkoderm | $ | 986 | $ | - | ||||||||
| Contingent consideration liability in Kenkoderm acquisition | $ | 439 | $ | - | ||||||||
| ROU asset and operating lease liabilities recognized upon consolidation of JV | $ | 334 | $ | - | ||||||||
FAQ
What was NEXGEL's revenue for the year ended December 31, 2023?
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