NEXGEL Reports First Quarter 2023 Financial Results

2023 first quarter revenue increased 56.6% year-over-year to $620 thousand

Approximately $5.8 million in cash and securities at March 31, 2023

Provides second quarter 2023 revenue guidance of $1.0 million, an increase of 78.2% year-over-year

LANGHORNE, Pa., May 15, 2023 (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 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 our 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 our 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.

NEXGEL First Quarter 2023 Financial Results Conference Call
Management will host a conference call and webcast today at 4:30 p.m. Eastern Time to discuss its operational and financial results for the first quarter 2023.

Date: May 15, 2023
Time: 4:30 P.M. ET
Live Call: +1-888-886-7786 or +1-416-764-8658
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1609433&tp_key=21ca2e040e

For interested individuals unable to join the conference call, a replay will be available through May 22, 2023, at +1-844-512-2921 or +1-412-317-6671. Participants must use the following code to access the replay of the call: 37834998. An archived version of the webcast will also be available on NEXGEL’s Investor Relations site: https://ir.nexgel.com/.

About NEXGEL, INC.
NEXGEL is a leading provider of ultra-gentle, high-water-content hydrogels for healthcare and consumer applications. Based in Langhorne, Pa., the Company has developed and manufactured electron-beam, cross-linked hydrogels for over two decades. NEXGEL has formulated more than 200 different combinations to bring natural ingredients to gentle skin patches that can be worn for long periods of time with little to no irritation.

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 including the impact of the COVID-19 pandemic. 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, 2021, 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

Media Contacts:
Kelly Knobeck
Director of Consumer Products
info@nexgel.com


NEXGEL, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2023 AND DECEMBER 31, 2022
(Unaudited)
(in thousands, except share and per share data)

    March 31,
2023
    December 31,
2022
 
ASSETS:                
Current Assets:                
Cash   $ 787     $ 1,101  
Marketable securities     5,016       5,508  
Accounts receivable, net     380       222  
Inventory     968       502  
Prepaid expenses and other current assets     129       172  
Total current assets     7,280       7,505  
Goodwill     311       311  
Intangibles, net     16       20  
Property and equipment, net     1,282       721  
Operating lease - right of use asset     2,022       1,737  
Other assets     95       63  
Total assets   $ 11,006     $ 10,357  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current Liabilities:                
Accounts payable   $ 987     $ 265  
Accrued expenses and other current liabilities     112       130  
Notes payable, current portion     15       15  
Warrant liability     176       242  
Operating lease liability, current portion     232       207  
Total current liabilities     1,522       859  
Operating lease liability, net of current portion     1,864       1,593  
Notes payable, net of current portion     266       268  
Total liabilities     3,652       2,720  
                 
Commitments and Contingencies (Note 15)                
                 
Preferred stock, par value $0.001 per share, 5,000,000 shares authorized, no shares issued and outstanding     -       -  
Common stock, par value $0.001 per share, 25,000,000 shares authorized; 5,614,028 and 5,577,916 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively     6       6  
Additional paid-in capital     19,213       19,189  
Accumulated deficit     (12,372 )     (11,558 )
Total NexGel stockholders’ equity     6,847       7,637  
Non-controlling interest in joint venture     507       -  
Total stockholders’ equity     7,354       7,637  
Total liabilities and stockholders’ equity   $ 11,006     $ 10,357  


NEXGEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)
(in thousands, except share and per share data)


    Three months ended  
    March 31,  
    2023     2022  
Revenues, net   $ 620     $ 396  
                 
Cost of revenues     677       418  
                 
Gross loss     (57 )     (22 )
                 
Operating expenses                
Research and development     29       24  
Selling, general and administrative     797       766  
Total operating expenses     826       790  
                 
Loss from operations     (883 )     (812 )
                 
Other income (expense)                
Interest income (expense), net     (1 )     (744 )
Loss on debt extinguishment     -       (150 )
Changes in fair value of warrant liability and warrant modification expense     66       (130 )
Gain on investment in marketable securities     7          
Other income     4       -  
Total other income (expense), net     76       (1,024 )
Loss before income taxes     (807 )     (1,836 )
Income tax expense            
Net loss     (807 )     (1,836 )
Less: Income attributable to non-controlling interest in joint venture     7        
Net loss attributable to NexGel stockholders   $ (814 )   $ (1,836 )
Net loss per common share - basic   $ (0.15 )   $ (0.33 )
Net loss per common share - diluted   $ (0.15 )   $ (0.33 )
Weighted average shares used in computing net loss per common share - basic     5,586,326       5,572,234  

NEXGEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)
(in thousands)

    Three Months Ended March 31,  
    2023     2022  
Operating Activities                
Net loss   $ (814 )   $ (1,836 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Income attributable to non-controlling interest in joint venture     7       -  
Depreciation and amortization     31       28  
Changes in ROU asset and operating lease liability     11       10  
Share-based compensation     24       55  
Gain on investment in marketable securities     7       -  
Changes in fair value of warrant liability and warrant modification     (66 )     130  
Amortization of deferred financing costs     -       741  
Loss on extinguishment of debt     -       150  
                 
Changes in operating assets and liabilities:                
Accounts receivable     (158 )     77  
Inventory     (466 )     11  
Prepaid expenses and other assets     11       (90 )
Accounts payable     722       (71 )
Accrued expenses and other current liabilities     (18 )     (2 )
Net Cash Used in Operating Activities     (709 )     (797 )
                 
Investing Activities                
Proceeds from sales of marketable securities     485        
Capital expenditures     (88 )      
Net Cash Provided by Investing Activities     397        
                 
Financing Activities                
Principle payment of notes payable     (2 )     (2,033 )
Net Cash Used in Financing Activities     (2 )     (2,033 )
Net Decrease in Cash     (314 )     (2,830 )
Cash – Beginning of period     1,101       13,350  
Cash – End of period   $ 787     $ 10,520  
Supplemental Disclosure of Cash Flows Information                
Cash paid during the year for:                
Interest   $     $  
Taxes   $     $  
                 
Supplemental Non-cash Investing and Financing activities                
Property and equipment contributed as capital investment to JV   $ 500     $  
ROU asset and operating lease liabilities recognized upon consolidation of JV   $ 334     $  


Primary Logo

Source: NEXGEL, INC.