The Hydration Pharmaceuticals Company Limited

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:

Revenue for the quarter increased 7% on PCP (Q3 FY2022: US$2.43m) to US$2.60m, highlighting strong growth and resulting in the second highest quarterly sales result to date.

Quarter on quarter revenue was down slightly, primarily due to the Company’s strategic decision to transition to a new sales broker in Canada. This transition was completed during Q3 FY23 and will result in an expected net customer margin improvement of two to three percentage points.

The transition also led to a slight lag in revenue receipts during Q3 FY23. Q3 FY23’s strong result takes 12-month trailing revenue to US$10.43m.

The Q3 FY2023 revenue result was underpinned by continued strong growth through e- commerce channels, highlighted by Amazon Canada quarterly net sales increasing 60% on the PCP to CAD$0.67m (Q3 FY2022: CAD$0.42m).


Click here for the full ASX Release

This article includes content from The Hydration Pharmaceuticals Company Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.

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