Retractable Technologies, Inc. Reports Results for 2023

Rhea-AI Summary

Retractable Technologies, Inc. (RVP) reports a 54.0% decrease in revenues for 2023 due to lower COVID-19 vaccination sales. Domestic revenues dropped by 33.7% and international revenues by 78.9%. Cost of manufactured products decreased by 49.0%, and operating expenses decreased by 29.2%. The company faced challenges in comparing 2023 results to pre-pandemic years due to the surge in pandemic sales. Despite workforce reductions in 2022 and 2023, expenses remain high. The company holds $34.6 million in debt and equity securities.

Positive

• Revenue decreased by 54.0% in 2023 compared to the previous year.
• Domestic revenues fell by 33.7%, and international revenues by 78.9%.
• Cost of manufactured products decreased by 49.0%.
• Operating expenses decreased by 29.2%.
• Challenges in comparing 2023 results to pre-pandemic years due to pandemic sales surge.
• Workforce reductions in 2022 and 2023 did not significantly lower expenses.
• The company holds $34.6 million in debt and equity securities.

Negative

• Significant decrease in revenues due to lower COVID-19 vaccination sales.
• High expenses despite workforce reductions.
• Challenges in financial comparability due to pandemic sales surge.

Insights

Financial Analyst

The financial results presented by Retractable Technologies, Inc. indicate a significant revenue contraction of 54% year-over-year, which is a stark contrast to the pandemic-induced sales surge. This downturn is largely attributable to the decline in COVID-19 vaccination sales, both domestically and internationally. The company's efforts to reduce operating expenses by 29.2% and workforce reductions reflect a strategic response to the changing market conditions. However, it is important to note that despite these cost-cutting measures, the company's overhead remains elevated compared to pre-pandemic levels, suggesting that the firm's operational efficiency has not fully reverted to historical norms.

From a financial perspective, the unrealized loss of $10.5 million on securities indicates a potential overexposure to market volatility or a shift in investment strategy that may not have been fully optimized. The realized gain of $5.6 million, while positive, does not offset the unrealized losses, which could be a point of concern for investors evaluating the company's portfolio management effectiveness. The adequate liquidity position and ongoing sales and development efforts are positive signs, but the overall financial health of the company will likely depend on its ability to adapt to post-pandemic market dynamics and drive growth in non-COVID-19 related product segments.

Market Research Analyst

The data presented reveals a shifting landscape in the medical devices sector, particularly for companies like Retractable Technologies that experienced a temporary boost from pandemic-related sales. The 78.9% plummet in international revenues underscores the volatility of relying on emergency sales for growth. It is essential for the company to diversify its product portfolio and strengthen its core business to mitigate the risks associated with such volatility. The retention of inventory by customers suggests a potential overestimation of ongoing demand, which could have led to excess production and subsequent revenue declines.

Moreover, the absence of sales to the U.S. government in 2023 compared to the significant volume in 2021 raises questions about the company's reliance on government contracts and its ability to secure similar deals in the future. The market will be closely watching Retractable Technologies' ability to navigate the post-pandemic environment and the success of their new product development will be critical for future revenue streams and market positioning.

Investment Analyst

Analyzing the company's financials, the sharp decrease in gross profit from $95.4 million in 2021 to $9.1 million in 2023 suggests a significant reduction in profitability, reflecting the end of a pandemic-driven high-margin product cycle. The company's strategy to invest in securities has resulted in a sizable portfolio, but the unrealized loss raises questions about the alignment of this strategy with the company's core operations and risk profile.

Investors should consider the long-term sustainability of Retractable Technologies' revenues beyond the scope of pandemic-related products. The company's focus on new product development is a positive step, yet the execution and market acceptance of these products will be pivotal. The current financials may not be indicative of future performance, especially as the company attempts to stabilize its operations in a normalizing market. Careful scrutiny of the company's investment activities and the performance of new products will be essential for understanding its future growth potential and risk exposure.

LITTLE ELM, Texas--(BUSINESS WIRE)-- Retractable Technologies, Inc. (NYSE American: RVP) reports the following information relating to the year ended December 31, 2023. Further details concerning the results of operations as well as other matters are available in Retractable’s Form 10-K filed on March 29, 2024 with the U.S. Securities and Exchange Commission.

Our revenues for 2023 decreased 54.0% as domestic and international COVID-19 vaccination sales decreased. We had revenues of approximately $43.6 million as compared to approximately $94.8 million in the prior year. Domestic revenues decreased 33.7% and international revenues decreased 78.9%. In addition to the decline in demand for COVID-19 vaccination products, we experienced a decline in demand which may be due to customer retention of inventory from prior periods. Cost of manufactured product decreased 49.0% due to a decline in units sold and operating expenses decreased 29.2% primarily due to the lack of stock option expense in 2023.

Comparability of 2023 to 2020-2022 financial results is challenging due to the unusual volume of pandemic sales. Below is a table which details our revenues as well as gross profit, total operating expenses, and income or loss from operations since 2018. As previously reported, a 2020 agreement with the U.S. government enabled us to significantly expand our facilities but increased our overhead costs in recent years. In 2022 and 2023, we reduced our workforce in an effort to reduce our expenses, but expenses remain higher than prior to 2020.

(Amounts in Millions)			2023			2022			2021			2020			2019			2018
U.S. sales (excluding U.S. government)			$	34.6		$	36.5		$	53.9		$	42.2		$	31.9		$	28.7
Sales to U.S. government				—			15.7			113.7			31.6			—			—
North and South America sales (excluding U.S.)				6.1			29.1			14.5			6.9			8.2			3.6
Other international sales				2.9			13.5			6.3			1.2			1.7			1.0
Total sales			$	43.6		$	94.8		$	188.4		$	81.9		$	41.8		$	33.3
Gross profit			$	9.1		$	28.3		$	95.4		$	37.0		$	14.1		$	10.2
Total operating expenses			$	20.6		$	29.1		$	22.8		$	12.9		$	11.2		$	11.8
Income (loss) from operations			$	(11.5)		$	(0.9)		$	72.6		$	24.1		$	3.0		$	(1.3)

The Company has adequate liquidity and is focused on sales efforts and new product development. In addition, the Company has continued investing in securities. We purchased a net amount of $9.9 million in securities during 2023, resulting in ownership of $34.6 million in debt and equity securities by year-end. Our income statement reflects an unrealized loss of $10.5 million and a realized gain of $5.6 million on our debt and equity securities.

ABOUT RETRACTABLE

Retractable manufactures and markets VanishPoint^® and Patient Safe^® safety medical products and the EasyPoint^® needle. The VanishPoint^® syringe, blood collection, and IV catheter products are designed to prevent needlestick injuries and product reuse by retracting the needle directly from the patient, effectively reducing exposure to the contaminated needle. Patient Safe^® syringes are uniquely designed to reduce the risk of bloodstream infections resulting from catheter hub contamination. The EasyPoint^® is a retractable needle that can be used with luer lock syringes, luer slip syringes, and prefilled syringes to give injections. The EasyPoint^® needle also can be used to aspirate fluids and for blood collection. Retractable's products are distributed by various specialty and general line distributors.

For more information on Retractable, visit its website at www.retractable.com.

Forward-looking statements in this press release are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 and reflect Retractable's current views with respect to future events. Retractable believes that the expectations reflected in such forward-looking statements are accurate. However, Retractable cannot assure you that such expectations will materialize. Actual future performance could differ materially from such statements.

Factors that could cause or contribute to such differences include, but are not limited to: supply chain disruptions, Retractable’s ability to scale up production volumes in response to an increase in demand, potential tariffs, Retractable's ability to maintain liquidity; Retractable's maintenance of patent protection; Retractable's ability to maintain favorable third party manufacturing and supplier arrangements and relationships; foreign trade risk; Retractable's ability to access the market; production costs; the impact of larger market players in providing devices to the safety market; and other risks and uncertainties that are detailed from time to time in Retractable's periodic reports filed with the U.S. Securities and Exchange Commission.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240329173695/en/

Retractable Technologies, Inc.

John W. Fort III, 888-806-2626 or 972-294-1010

Vice President, Chief Financial Officer, and Chief Accounting Officer

Source: Retractable Technologies, Inc.

FAQ

Why did Retractable Technologies, Inc. (RVP) report a 54.0% decrease in revenues for 2023?

The decrease in revenues was due to lower COVID-19 vaccination sales.

What caused the decline in domestic revenues for Retractable Technologies, Inc. (RVP) in 2023?

Domestic revenues fell due to a decrease in demand for COVID-19 vaccination products.

How much did the cost of manufactured products decrease in 2023 for Retractable Technologies, Inc. (RVP)?

The cost of manufactured products decreased by 49.0% in 2023.

What were the total operating expenses for Retractable Technologies, Inc. (RVP) in 2023?

Total operating expenses amounted to $20.6 million in 2023.

Why did Retractable Technologies, Inc. (RVP) face challenges in comparing 2023 results to pre-pandemic years?

The company faced challenges due to the unusual volume of pandemic sales.

How much does Retractable Technologies, Inc. (RVP) hold in debt and equity securities?

The company holds $34.6 million in debt and equity securities.