Crescita Announces Q1 2024 Results

Crescita Therapeutics Inc., a Canadian commercial dermatology company, has announced its financial results for Q1-2024, which ended on March 31, 2024. The results are reported in thousands of Canadian dollars (CAD) and follow International Financial Reporting Standards (IFRS).

Financial Performance Overview

The company’s revenue for Q1-2024 was $4,996 compared to $4,602 in Q1-2023, marking an increase of $394. However, the gross profit decreased to $2,411 from $2,736, a drop of $325. Operating expenses also saw an increase, rising from $2,972 to $3,142. Consequently, the adjusted EBITDA was $(325), down from $161, reflecting a decrease of $486. Crescita ended the quarter with a cash balance of $9,531, an increase of $146 from the previous quarter.

According to Serge Verreault, Crescita's President and CEO, the company's Skincare segment remains a major commercial focus, bolstered by the launch of ART FILLER and growth in online sales. He highlighted that the fulfillment of a previously deferred order in the Manufacturing segment significantly contributed to the company's 8.6% year-over-year revenue growth. Discussions are ongoing for a new commercial partnership for Pliaglis in the U.S., and Crescita is supporting its international licensees with recent and upcoming launches in Poland and the Middle East.

Operational and Corporate Updates

In April 2024, the National Medical Products Administration (NMPA) in China confirmed the requirement for a local clinical trial to support the registration of Pliaglis in the country. Crescita's licensing partner, Juyou Bio-Technology Co. Ltd., is finalizing the clinical trial protocol and manufacturing the necessary test articles. Juyou is also evaluating timelines for the clinical trial and subsequent registration stages. Under the terms of their 2020 agreement, Juyou is responsible for all expenses related to obtaining regulatory approval and conducting clinical trials in China. Crescita will supply Pliaglis at a pre-determined transfer price and is eligible for potential milestones exceeding US$2.2 million, as well as tiered double-digit royalties based on retail price thresholds.

During Q1-2024, Crescita repurchased 166,508 common shares through its Normal Course Issuer Bid (NCIB) at an average price of $0.47 per share, totaling $78.

Segment Performance

Crescita operates through three main segments: 
1. Commercial Skincare, which encompasses the sale of non-prescription skincare products in Canada and international markets, and includes products like Pliaglis, NCTF Boost 135 HA, ART FILLER, and Obagi Medical.
2. Licensing and Royalties, which earns revenue from licensing intellectual property related to Pliaglis.
3. Manufacturing and Services, which includes contract manufacturing and product development services.

For Q1-2024, revenue was driven primarily by the Manufacturing segment, which saw an increase of $372 due to a deferred purchase order from 2023. The Skincare segment remained relatively stable with a slight increase of $43, while the Licensing segment reported no revenue.

Margin and Expense Analysis

The gross profit for Q1-2024 was $2,411, with a gross margin of 48.3%, down from the previous year's margin of 59.5%. The decrease was mainly due to pricing concessions in the Manufacturing segment. Operating expenses rose to $3,142, largely due to increased selling, general, and administrative (SG&A) costs driven by higher headcount and commercial partnership fees, offset partially by reduced advertising and promotion expenses.

Cash Flow and Financial Measures

Cash and cash equivalents at the end of Q1-2024 were $9,531, representing a net increase of $146. The increase was primarily due to favorable changes in non-cash working capital. 

Crescita uses non-IFRS financial measures like EBITDA and Adjusted EBITDA to assess performance. For Q1-2024, EBITDA was $(357), and Adjusted EBITDA was $(325), down from $170 and $161 respectively in Q1-2023. These measures are intended to provide additional insights into Crescita’s operating performance and cash flow.

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