SQI Diagnostics Reports Second Quarter 2022 Results

Rhea-AI Summary

SQI Diagnostics Inc. (TSXV: SQD) (OTCQB: SQIDF) reported significant financial growth for Q2 2022, achieving $5.6M in sales, a substantial increase from $0.3M in Q2 2021, attributed to the acquisition of a COVID-19 human testing business. The gross profit also rose to $3.0M. However, SG&A expenses increased to $2.5M due to one-time costs associated with the acquisition. Cash and cash equivalents totaled $1.5M, with a working capital deficit of $(5.5M) primarily from a $7.5M short-term credit facility for the acquisition. Positive developments include NYSDOH approval for the COVID-19 Antibody test.

Positive

• Sales reached $5.6M in Q2 2022, a record for SQI Diagnostics.
• Gross profit increased to $3.0M due to high margins from the COVID-19 testing business.
• Positive feedback received for RALI-Dx™ IL-6 Severity Triage Test from ICU staff.

Negative

• SG&A expenses rose to $2.5M due to one-time acquisition costs.
• Working capital deficit of $(5.5M) as of March 31, 2022, attributed to a $7.5M short-term credit facility.

New Business Contributes $5.5M in Revenue

TORONTO, May 26, 2022 /PRNewswire/ - SQI Diagnostics Inc. (TSXV: SQD) (OTCQB: SQIDF), a leader in the science of lung health that develops and manufactures respiratory health and precision medicine tests today reported its financial and operational results for the first quarter for fiscal year ending September 30, 2022.

"We're extremely pleased with our revenue growth this quarter, which we see as a validation of our decision to grow our business through acquisition and new product lines," said Andrew Morris, President and CEO of SQI Diagnostics. "As we move forward, we hope to see continued growth fuelled by our core lung health products like our the RALI-Dx™ IL-6 Severity Triage Test, Exact COVID19 Antibody test and our TOR-Dx Lung products."  

Q2 2022 Financial Highlights

• Sales were significantly greater than any quarter in SQI's history, coming in at $5.6M in Q2 2022, compared to $0.3M in Q2 2021. The increase in sales is due to the COVID-19 human testing business acquired during the quarter.
• Gross profit was $3.0M in Q2 2022, compared to $0.3M in Q2 2021 driven by the highly profitable COVID-19 human testing business.
• SG&A expense was $2.5M in Q2 2022, compared to $1.6M in Q2 2021. The increase in SG&A expense is mainly due to one-time costs related to the acquisition including financing, legal and transition support.
• The R&D expense category, which includes Manufacturing, Quality and Engineering was $2.8M in Q2 2022, compared to $2.1M in Q2 2021. Higher costs are attributed to increased headcount as the Company gears up for commercialization. In addition, due to the increase in sales, the Company is no longer eligible to claim the Canada Emergency Wage Subsidy, the absence of which has eliminated the offset to costs in the current quarter, increasing the year-over-year change.
• Cash and cash equivalents were $1.5M as of March 31, 2022
• Net working capital was $(5.5M) as of March 31, 2022, compared to $0.7M on September 30, 2021; the working capital deficit is due to the $7.5M short term credit facility used to acquire the COVID-19 PCR business

Corporate Highlights during the Quarter:

• The New York State Department of Health (NYSDOH) gave approval for the EXACT COVID-19 Antibody test to SQI's diagnostics partner KSL Diagnostics Inc. Access to the EXACT COVID-19 Antibody Test will now be available to physicians and their patients in the United States. The Company further reports that its previously announced marketing agreement with Azova Inc for it's direct to consumer COVID-19 antibody test has been terminated. The Company is actively pursuing a number of potential customers for this product approved by NYSDOH under CLIA.
• To finance the acquisition of certain assets of Precision Biomonitoring Inc. , the company entered into a credit agreement with Pivot Financial, an arm's length third party and certain insiders of the company, for a short-term senior secured demand credit facility in the aggregate amount of $7,500,000 bearing interest at 15% per annum for a period of 2 months. Following the quarter, this credit facility was extended for another 2 months and is due on June 11, 2022.
• The Company is currently working with UHN to assess the applicability of the RALI-Dx™ IL-6 Severity Triage Test; initial feedback from ICU staff has been very positive and supports the utility of a 15-minute point of care test in the ICU

About SQI Diagnostics

SQI Diagnostics is a leader in the science of lung health. The Company develops and manufactures respiratory health and precision medicine tests that run on SQI's fully automated systems. The Company's tests simplify and improve COVID19 antibody monitoring, Rapid Acute Lung Injury testing, donor organ transplant informatics, and immunological protein and antibody testing. SQI Diagnostics is driven to create and market life-saving testing technologies that help more people in more places live longer, healthier lives. For more information, please visit www.sqidiagnostics.com.

FORWARD-LOOKING INFORMATION

This press release contains certain words and statements, which may constitute "forward-looking statements" within the meaning of applicable securities laws relating to future events or future performance and reflect the current expectations and assumptions of the Company regarding its growth, results of operations, performance, business prospects and opportunities. These statements generally can be identified by use of forward-looking words such as "may", "would", "could", "will", "should", "expect", "plan", "estimate", "anticipate", "intends", "believe", "potential", or "continue" or the negative thereof or similar variations. The Company's actual results and performance discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, the effect of the global pandemic and consequent economic disruption, and the factors detailed in the Company's ongoing filings with the securities regulatory authorities, available at www.sedar.com. Although the forward-looking statements contained herein are based on what we consider to be reasonable assumptions based on information currently available to us, there can be no assurance that actual events, performance or results will be consistent with these forward looking statements, and our assumptions may prove to be incorrect. Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements either as a result of new information, future events or otherwise, except as required by applicable law.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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SOURCE SQI Diagnostics Inc.

FAQ

What were SQI Diagnostics' sales figures for Q2 2022?

SQI Diagnostics reported sales of $5.6M for Q2 2022.

What contributed to SQI Diagnostics' revenue growth?

Revenue growth was primarily driven by the acquisition of a COVID-19 human testing business.

What is the current cash position of SQI Diagnostics?

As of March 31, 2022, SQI Diagnostics had cash and cash equivalents of $1.5M.

What are the recent financial highlights for SQI Diagnostics?

In Q2 2022, SQI Diagnostics achieved a gross profit of $3.0M, with an increase in SG&A expenses to $2.5M.

What is the working capital situation for SQI Diagnostics?

SQI Diagnostics reported a working capital deficit of $(5.5M) as of March 31, 2022.