Q3 FY23 Quarterly Report and Appendix 4c: Material YoY Reduction in Cash Burn and Ongoing Revenue Growth

Hydration solutions company The Hydration Pharmaceuticals Company Limited (ASX: HPC) (“Hydralyte North America” or “the Company”) is pleased to provide the following update on its operational and financial performance for the three-month period ended 30 September 2023 (the “quarter”).

KEY HIGHLIGHTS

• Net sales of US$2.60m achieved in Q3 FY23 – 7% increase on PCP (Q3 FY2022: US$2.43m) and tenth straight quarter of sales growth on a trailing 12-month basis
• Q3 FY23 is the second highest ever quarterly sales result and consolidates summer month momentum from strong Q2 FY23 net sales
• Gross margin increased 8ppt to 58% on prior quarter (Q2 FY23: 50%) – YoY Gross profit dollars up 23% to a record US$1.51m from Q3 FY22 (US$1.23m)
• Net cash used in operating activities down 47% on PCP to US$1.46m (Q3 FY22: US$2.78m) and in line with previous quarter – initiatives in place expected to reduce this further
• Marketing costs as a percentage of net revenue down for a third straight quarter to 30% - record low since IPO date, down from 36% in Q2 FY23 and down from 78% in Q4 FY22
• Transition to new broker, LeBeau Excel, expands addressable market for product in Canada and expected to generate 2-3% improvement in customer net margin
• Partnership secured with RooLife Group to market, sell and distribute Hydralyte products in China –expands Company’s global footprint and unlocks additional potential revenue stream
• Amazon Canada subscribers grew from zero to 1,383 during the quarter while Amazon US YoY subscription growth is up 4% from 4,026 same time last year to 4,180 subscribers at end of Q3 FY23, despite a heavy reduction in advertising spend
• Continued execution of stated strategy to reduce expenditure and extend cash reserves through reduced marketing spend following investments in 2022

Financial overview:

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