LANGHORNE, PA — NEXGEL, Inc. (NASDAQ: “NXGL”) announced financial results for the first quarter ended March 31, 2023.
Adam Levy, NEXGEL’s Chief Executive Officer, commented, “For the first quarter we delivered 56.6% revenue growth year-over-year, driven by increased sales in contract manufacturing and branded consumer products. We also started to see contribution in March from our new joint venture with CG Labs. During the quarter, we launched several new products and invested strategically in sales and marketing to support those launches. We are already starting to see the financial returns from these investments in the second quarter, as well as from our new JV.”
Mr. Levy continued, “Based on the dynamic changes to our business, which include the March 1 joint venture, I feel it’s important to provide a one-time exception to our policy of not providing guidance. Based on these developments and our progress to date, we are projecting $1.0 million in revenue for the second quarter of 2023, an increase of 78.2% year-over-year. Complementing this, we had approximately $5.8 million in cash and cash equivalents at quarter-end, which gives us sufficient runway to operate and the ability to be opportunistic about further potential investments to accelerate our growth.”
First Quarter 2023 Operational Highlights
- Acquired a 50% interest in a newly formed joint venture (“JV”), CG Converting and Packaging, LLC, with C.G. Laboratories Inc. (“CG Labs”) for its converting and packaging business.
- Executed a supply agreement with a large new customer relating to a new consumer product.
- Launched advertising and marketing initiative, which has increased branded product sales.
First Quarter 2023 Financial Highlights
For the first quarter of 2023, revenue totaled $620 thousand and increased by $224 thousand, or 56.6%, compared to $396 thousand for the same period the year prior. The increase in overall revenues was primarily due to sales growth in both contract manufacturing and branded products. Revenue during the first quarter of 2023 includes one full month of revenue contribution from the Company’s newly formed joint venture with C.G. Laboratories.
Gross loss for the first quarter of 2023 was $57 thousand, compared to a gross loss of $22 thousand for the same prior year period. The increase in the loss was mainly due to the increased manufacturing of promotional materials and customer product samples to support the Company’s new product line growth. Gross margin loss was approximately 9.2% for the three months ended March 31, 2023, compared to a gross margin loss of 5.6% for the three months ended March 31, 2022.
Cost of revenues was $677 thousand for the quarter ended March 31, 2023, compared to $418 thousand for the quarter ended March 31, 2022.
Total operating expenses, including R&D and SG&A expenses, increased to $826 thousand for the three months ended March 31, 2023, compared to $790 thousand for the prior year period. The increase in the current year was attributable to new product line growth as well as an increase in compensation and benefits, Advertising and Marketing, and professional fees. This was partially offset by lower investor and shareholder services expenses, related to the Company’s 2021 uplisting to the Nasdaq.
Net loss for the quarter ended March 31, 2023, improved to $814 thousand or $0.15 per basic and diluted share, compared to net loss of $1.8 million or $0.33 per basic and diluted share for the same period in 2022.
As of March 31, 2023, NEXGEL had approximately $5.8 million of cash and cash equivalents and marketable securities, which includes an investment in U.S. treasuries of $5 million.
As of March 31, 2023, NEXGEL had 5,614,028 shares of common stock outstanding.
2023 Second Quarter Outlook
NEXGEL currently expects to report second quarter 2023 revenue of $1.0 million, driven by organic growth of existing direct-to-consumer products, the first full quarter of sales from its recent new product launches and a full quarter benefit from its new joint venture with CG Labs.
The Company’s reporting may be viewed at http://www.sec.gov/.
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