- Ongoing cost optimization to achieve profitability in 2023
- Q1 2023 gross margin (non IFRS)1 up 1300 basis
points year over year
- Quarterly conference call scheduled for May 30, 2023 at 5 pm
ET
TORONTO, May 30, 2023
/CNW/ - Newtopia Inc. ("Newtopia" or the "Company")
(TSXV: NEWU) (OTCQB: NEWUF), a tech-enabled whole health platform
creating sustainable habits that prevent, slow, and reverse chronic
disease, today announced its first quarter financial results,
operational highlights and filing of quarterly financial
statements. These results pertain to the three months ended
March 31, 2023. All amounts are
expressed in Canadian dollars, unless otherwise noted.
First Quarter 2023 Financial
Highlights (vs. Q1 2022):
- Revenue of $2.65 million, as
compared to $2.87 million.
- Gross profit margin1 of 60%, as compared to
47%.
"We continued to see momentum in gross profit and
operating expense improvements in the first quarter as we implement
the strategic plan we laid out in 2022," said Jeff Ruby, Founder and CEO of Newtopia. "We are
actively managing our expenses to achieve profitability in 2023,
and our goal of reducing expenses is quickly coming to fruition.
For the first quarter, gross profit margins increased 1300 basis
points year-over-year. This ramp in expense cuts will continue
throughout the year as we make our way toward EBITDA and cash flow
positive."
Ruby continued, "We look forward to seeing the benefit of
several recent multi-year contract renewals with large clients that
will further enhance our revenue and profitability in the second
half of the year. As a result of implementing one of
these multi-year contract renewals for a large
client during the quarter, we identified hundreds of
participants who had made material health improvements using our
platform, providing further evidence that our solution is highly
engaging and effective. For this group, we made some important
value-based changes to our definition of engaged participants that
we intend to further improve their habits. While this change had a
declining impact on our first quarter revenue, we anticipate that
we will be able to adjust to this higher engagement level
commitment in successive quarters as we transition additional
participant engagement behaviors into habits.
In addition to organic growth, our pipeline of new business with
self-insured employers and innovative health plans remains robust.
Opportunities from leading macro drivers for our industry,
including the growing popularity of, and commercial interest in,
GLP-1 medications for diabetes and weight management, alongside
growth in advanced primary care are creating a vast new landscape
of possibilities for habit change platforms like Newtopia. I
continue to believe that there is no better time to invest in
primary prevention habit change, and Newtopia is at the forefront
of preventing, reversing and slowing chronic disease."
First Quarter 2023 Financial
Results
Revenue for the three months ended March
31, 2023 was $2.65 million,
compared to $2.87 million in the
prior-year period. Enrollment fee revenue, or revenue from Welcome
Kit sales, totaled 19% of revenue for the quarter.
Non-IFRS gross profit for the first quarter 2023 totaled
$1.6 million, as compared to
$1.3 million in the prior-year
period. This calculation is comprised of Newtopia's revenue less
direct expenses, which include the cost of Welcome Kits sold to new
participants and labor costs associated with hiring and training
the Company's coaching team of Inspirators. As a percentage of
revenue, gross profit totaled 60%, compared to 47% in the
prior-year period.
Operating expenses2 for the three months ended
March 31, 2023 totaled $2.3 million, compared to $2.6 million in the prior-year period. For the
first quarter, EBITDA3 totaled a loss of $0.7 million, compared with $1.2 million in the prior-year period.
The Company ended the first quarter 2023 with approximately
$0.3 million in cash, with additional
access to its revolving line of credit with a Canadian Schedule 1
bank.
2023 Outlook
Newtopia continues to anticipate top and bottom-line
year-over-year growth in 2023. In addition, due to continued
strategic expense management including additional cuts made in the
first quarter, Newtopia anticipates that the Company is currently
on a clear path to EBITDA and cash flow positive within 2023.
Profitability is anticipated to build throughout the year, with the
bottom line improving incrementally each quarter.
Conference Call
The Company will host a conference call today at 5 p.m. Eastern Time to discuss the first quarter
2023 results in further detail. To access the conference call,
please dial (877) 407-3982 (U.S.) or (201) 493-6780 (International)
10 minutes prior to the start time and reference Conference ID
number . The call will also be available via live webcast on the
investor relations portion of the Company's website located at
investor.newtopia.com.
A replay of the conference call will be available through
June 13, 2023 which can be accessed
by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International)
and entering the passcode 13738818. The webcast will also be
archived on the Company's website.
About Newtopia
Newtopia is a tech-enabled habit change provider focused on
disease prevention and reducing the cost of care for health
insurers. As a provider of whole person care,
we prevent, reverse and slow the
progression of chronic disease while enriching mental health,
resilience and overall human performance. Newtopia's programs
leverage genetic, social and behavioral insights to create
individualized prevention programs with a focus on type 2 diabetes,
heart disease, stroke and weight. With a person-centered approach
that combines virtual care, digital tools, connected devices and
actionable data science, Newtopia delivers sustainable clinical and
financial outcomes. To learn more,
visit newtopia.com , LinkedIn or Twitter.
Forward Looking
Statements
This news release contains forward-looking information and
forward-looking statements, within the meaning of applicable
Canadian securities legislation, and forward looking statements,
within the meaning of applicable United
States securities legislation (collectively,
"forward-looking statements"), which reflects management's
expectations regarding Newtopia's future growth, results from
operations (including, without limitation, future production and
capital expenditures), performance (both operational and financial)
and business prospects and opportunities. Wherever possible, words
such as "predicts", "projects", "targets", "plans", "expects",
"does not expect", "budget", "scheduled", "estimates", "forecasts",
"anticipate" or "does not anticipate", "believe", "intend" and
similar expressions or statements that certain actions, events or
results "may", "could", "would", "might" or "will" be taken, occur
or be achieved, or the negative or grammatical variation thereof or
other variations thereof, or comparable terminology have been used
to identify forward-looking statements. All statements other than
statements of historical fact may be forward- looking information.
Such statements reflect Newtopia's current views and intentions
with respect to future events, based on information available to
Newtopia, and are subject to certain risks, uncertainties, and
assumptions. Material factors or assumptions were applied in
providing forward-looking information. While forward-looking
statements are based on data, assumptions and analyses that
Newtopia believes are reasonable under the circumstances, whether
actual results, performance or developments will meet Newtopia's
expectations and predictions depends on a number of risks and
uncertainties that could cause the actual results, performance and
financial condition of Newtopia to differ materially from its
expectations. Forward-looking statements are not a guarantee and
are based on a number of estimates and assumptions management
believes to be relevant and reasonable, whether actual results,
performance or developments will meet Newtopia's expectations and
predictions depends on a number of risks and uncertainties that
could cause the actual results, performance and financial condition
of Newtopia to differ materially from its expectations. Certain of
the "risk factors" that could cause actual results to differ
materially from Newtopia's forward-looking statements in this press
release include, without limitation: the termination of contracts
by clients, risks related to COVID-19 including various
recommendations, orders and measures of governmental authorities to
try to limit the pandemic, including travel restrictions,
border closures, non-essential business closures, quarantines,
self-isolations, shelters- in-place and social distancing,
disruptions to markets, economic activity, financing, supply chains
and sales channels, and a deterioration of general economic
conditions including a possible national or global recession; and
other general economic, market and business conditions and factors,
including the risk factors discussed or referred to in Newtopia's
disclosure documents, filed with the securities regulatory
authorities in certain provinces of Canada and available at www.sedar.com
including Newtopia's final long form prospectus dated March 30, 2020.
Should any factor affect Newtopia's in an unexpected manner, or
should assumptions underlying the forward-looking information prove
incorrect, the actual results or events may differ materially from
the results or events predicted. Any such forward-looking
information is expressly qualified in its entirety by this
cautionary statement. Moreover, Newtopia does not assume
responsibility for the accuracy or completeness of such
forward-looking information. The forward-looking information
included in this press release is made as of the date of this press
release, and Newtopia undertakes no obligation to publicly update
or revise any forward-looking information, other than as required
by applicable law.
Non-IFRS Financial
Measures
The Company's financial statements are prepared in accordance
with International Financial Reporting Standards ("IFRS").
Management uses certain non-IFRS measures, which are defined in the
appropriate sections of this press release, to better assess the
Company's underlying performance. These measures are reviewed
regularly by management and the Company's Board of Directors in
assessing the Company's performance and in making decisions about
ongoing operations. In addition, we use certain non-IFRS measures
to determine the components of management compensation. We believe
that these measures are also used by investors as an indicator of
the Company's operating performance. Readers are cautioned that
these terms are not recognized IFRS measures and do not have a
standardized meaning under IFRS and should not be construed as
alternatives to IFRS terms, such as net income.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Key Financial Measures and Schedule of Non-GAAP
Reconciliations
Gross Profit Information [1]
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
$
|
|
$
|
Revenue
|
2,648,657
|
|
2,866,714
|
Cost of
revenue
|
(1,275,682)
|
|
(1,517,836)
|
Gross profit
|
1,372,975
|
|
1,348,878
|
Add amortization of
intangible asset
|
206,514
|
|
-
|
Non-IFRS adjusted gross
profit
|
1,579,489
|
|
1,348,878
|
|
|
|
|
Gross profit
margin
|
52 %
|
|
47 %
|
Non-IFRS adjusted
gross profit margin
|
60 %
|
|
47 %
|
Reconciliation of Total Operating Expenses to Adjusted
Operating Expenses [2]
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
$
|
|
$
|
Total
expenses
|
2,745,802
|
|
2,976,571
|
Add
(Subtract)
|
|
|
|
Share-based
compensation
|
(93,290)
|
|
(132,508)
|
Depreciation of
property and equipment
|
(1,549)
|
|
(14,380)
|
Depreciation of
right-of-use asset
|
-
|
|
(46,195)
|
Interest on lease
obligations
|
(12,590)
|
|
(22,979)
|
Interest and accretion
expense
|
(169,695)
|
|
(97,290)
|
Finance
charges
|
(109,648)
|
|
(37,110)
|
Capitalized borrowing
costs
|
-
|
|
29,000
|
Foreign exchange
loss
|
(18,272)
|
|
(15,033)
|
Amortization of
deferred finance charges
|
(33,815)
|
|
(58,800)
|
|
|
|
|
Adjusted operating
expenses
|
2,306,943
|
|
2,581,276
|
EBITDA [3]
|
Three Months Ended
March 31,
|
|
2023
|
|
2022
|
|
$
|
|
$
|
Non-IFRS gross
profit
|
1,579,489
|
|
1,348,878
|
Adjusted operating
expenses
|
(2,306,943)
|
|
(2,581,276)
|
|
|
|
|
EBITDA
|
(727,454)
|
|
(1,232,398)
|
NEWTOPIA INC.
Condensed Interim Statements of
Financial Position (Unaudited)
As at March 31, 2023 and December 31, 2022
(Expressed in Canadian Dollars)
|
March
31,
|
December 31,
|
|
2023
|
2022
|
|
(Unaudited)
|
(Audited)
|
|
$
|
$
|
Assets
|
|
|
Current assets
|
|
|
Cash
|
338,370
|
345,950
|
Trade and other
receivables
|
1,469,887
|
1,557,640
|
Contract
asset
|
55,400
|
190,000
|
Prepaid expenses and
deposits
|
183,731
|
205,843
|
Inventories
|
214,976
|
325,571
|
Deferred
costs
|
56,954
|
76,269
|
|
2,319,318
|
2,701,273
|
Property and
equipment
|
7,602
|
8,052
|
Intangible
asset
|
3,028,849
|
3,235,363
|
|
5,355,769
|
5,944,688
|
Liabilities
|
|
|
Current liabilities
|
|
|
Trade and other
payables
|
2,320,039
|
2,584,039
|
Credit
facility
|
4,434,191
|
4,823,545
|
Lease
obligations
|
307,915
|
544,700
|
Deferred
revenue
|
48,185
|
48,185
|
Debentures
|
2,456,046
|
2,409,103
|
|
|
|
|
9,566,376
|
10,409,572
|
|
|
|
Debentures
|
1,096,749
|
1,068,772
|
|
10,663,125
|
11,478,344
|
Equity/Deficit
|
|
|
Common
shares
|
48,882,767
|
47,978,992
|
Contributed
surplus
|
13,556,801
|
12,861,449
|
Deficit
|
(67,746,924)
|
(66,374,097)
|
|
(5,307,356)
|
(5,533,656)
|
|
5,355,769
|
5,944,688
|
NEWTOPIA INC.
Condensed Interim Statements of Loss and
Comprehensive Loss (Unaudited)
Three Months Ended March 31, 2023 and
2022
(Expressed in Canadian Dollars)
|
2023
|
2022
|
|
|
|
|
$
|
$
|
|
|
|
Revenue
|
2,648,657
|
2,866,714
|
Cost of
revenue
|
1,275,682
|
1,517,836
|
Gross
profit
|
1,372,975
|
1,348,878
|
|
|
|
Operating
expenses
|
|
|
Technology and
development
|
922,065
|
806,295
|
Sales and
marketing
|
426,170
|
644,211
|
General and
administrative
|
958,708
|
1,130,770
|
Share–based
compensation
|
93,290
|
132,508
|
Depreciation of
property and equipment
|
1,549
|
14,380
|
Depreciation of
right–of–use asset
|
–
|
46,195
|
|
2,401,782
|
2,774,359
|
Other expenses
(income)
|
|
|
Interest on lease
obligations
|
12,590
|
22,979
|
Interest and accretion
expense
|
169,695
|
97,290
|
Finance
charges
|
109,648
|
37,110
|
Capitalized borrowing
costs
|
–
|
(29,000)
|
Foreign exchange
loss
|
18,272
|
15,033
|
Amortization of
deferred finance charges
|
33,815
|
58,800
|
|
344,020
|
202,212
|
|
|
|
Net loss and
comprehensive loss
|
(1,372,827)
|
(1,627,693)
|
NEWTOPIA INC.
Condensed Interim Statements of Changes
in Equity (Unaudited)
Three Months Ended March 31, 2023 and
2022
(Expressed in Canadian Dollars)
|
Common
Shares
|
Contributed
Surplus
|
Deficit
|
Total
|
|
$
|
$
|
$
|
$
|
Balance, December
31, 2022
|
47,978,992
|
12,861,449
|
(66,374,097)
|
(5,533,656)
|
Net loss and
comprehensive loss
|
–
|
–
|
(1,372,827)
|
(1,372,827)
|
Share–based
compensation
|
–
|
93,290
|
–
|
93,290
|
Settlement of related
party payable
|
–
|
38,542
|
–
|
38,542
|
Private placement
offering of Units, net of
issuance
costs
|
930,218
|
537,077
|
–
|
1,467,295
|
Compensation
options
|
(26,443)
|
26,443
|
–
|
-
|
Balance, March 31,
2023
|
48,882,767
|
13,556,801
|
(67,746,924)
|
(5,307,356)
|
|
|
|
|
|
Balance, December
31, 2021
|
45,177,120
|
11,652,200
|
(58,673,634)
|
(1,844,314)
|
Net loss and
comprehensive loss
|
–
|
–
|
(1,627,693)
|
(1,627,693)
|
Share–based
compensation
|
–
|
132,508
|
–
|
132,508
|
Settlement of related
party payable
|
–
|
23,485
|
–
|
23,485
|
Balance, March 31,
2022
|
45,177,120
|
11,808,193
|
(60,301,327)
|
(3,316,014)
|
Condensed Interim Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 2023 and
2022
(Expressed in Canadian Dollars)
|
2023
|
2022
|
|
$
|
$
|
Cash flows used in
operating activities
|
|
|
Net loss and
comprehensive loss
|
(1,372,827)
|
(1,627,693)
|
Items not involving
cash:
|
|
|
Depreciation of
property and equipment
|
1,549
|
14,380
|
Depreciation of
right–of–use asset
|
–
|
46,195
|
Amortization of
intangible asset
|
206,514
|
–
|
Capitalized borrowing
costs
|
–
|
(29,000)
|
Amortization of
deferred finance charges
|
33,815
|
58,800
|
Accretion
expense
|
74,920
|
46,390
|
Interest on lease
obligations
|
12,590
|
22,979
|
Stock–based
compensation
|
93,290
|
132,508
|
|
(950,149)
|
(1,335,441)
|
Change in non–cash
working capital
|
|
|
Trade and other
receivables
|
87,753
|
(190,564)
|
Prepaid expenses and
deposits
|
22,112
|
74,638
|
Inventories
|
110,595
|
(68,233)
|
Trade and other
payables
|
(225,458)
|
668,722
|
Contract
asset/liability
|
134,600
|
137,554
|
Deferred
revenue
|
–
|
(4,582)
|
|
(820,547)
|
(717,906)
|
Cash flows used in
investing activities
|
|
|
Purchase of property and equipment
|
(1,099)
|
(1,788)
|
Intangible asset development costs
|
–
|
(448,099)
|
|
(1,099)
|
(449,887)
|
Cash flows provided
by financing activities:
|
|
|
Credit facility withdrawals
|
1,415,546
|
2,318,568
|
Credit facility repayments
|
(1,804,900)
|
(804,580)
|
Credit facility financing costs
|
(14,500)
|
(15,381)
|
Repayment of lease obligations
|
(249,375)
|
(93,971)
|
Proceeds from private placement offering of Units, net
of
cash issuance
costs
|
1,467,295
|
–
|
|
814,066
|
1,404,636
|
Net change in cash
during the period
|
(7,580)
|
236,843
|
Cash, beginning of
period
|
345,950
|
811,584
|
Cash, end of
period
|
338,370
|
1,048,427
|
|
|
|
1
|
Gross profit is defined
as revenue, which is comprised of onboarding Welcome Kit revenue,
ongoing engagement fees and success fees, less cost of sales, which
is comprised of Welcome Kit costs, compensation expense for
Inspirators and care specialists, genetic testing costs and the
amortization of intangible assets. Gross margin percentage is
calculated by dividing gross profit by total revenue for the
defined period. Gross profit is considered by management to be an
integral measure of financial performance and represents the amount
of revenues retained by the Company after incurring direct costs.
However, gross profit is not a recognized measure of profitability
under IFRS. The Company defines Non-IFRS gross profit as gross
profit plus amortization of intangible assets, for a true revenue
less direct cost calculation and an "apples to apples" comparison
vs. prior periods.
|
2
|
Adjusted operating
expenses consist of all cash-based technology, sales and marketing
and administrative expenses. Adjusted operating expense is not a
measure of financial performance under IFRS and should not be
considered a substitute for total operating expenses, which we
believe to be the most directly comparable IFRS measure.
|
3
|
EBITDA stands for
"earnings before interest, tax, depreciation and amortization".
Although a commonly used financial metric, EBITDA is not a measure
of financial performance under IFRS and should not be considered a
substitute for loss from operations which we believe to be the most
directly comparable IFRS measure.
|
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SOURCE Newtopia Inc.