NEXGEL Reports First Quarter 2024 Revenue of $1.27 Million, an Increase of 104% Year-Over-Year

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LANGHORNE, Pa., May 13, 2024 (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 its financial results for the first quarter ended March 31, 2024.

Adam Levy, NEXGEL’s Chief Executive Officer, commented, “Following a record year of growth in 2023, I am pleased to report our first quarter financial results that demonstrate steady growth year-over-year and preparedness for significant growth levers we expect in 2024. Revenue for the quarter grew 104% year-over-year driven by growth in both contract manufacturing and consumer branded product business segments of approximately 58% and 178%, respectively. In the first quarter and into the second quarter of this year we are investing for the growth we expect in the back half of this year. We are nearly complete with the capacity expansion of our facility in Texas along with installation of state-of-the art equipment in preparation for product launches with Abbvie and others. Additionally, we expect to launch our first batch of consumer branded products in Europe and are in the final stages of receiving the proper certifications to do so. We have a lot to be excited about regarding our future growth opportunities at NEXGEL.”

First Quarter 2024 Financial Highlights

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For the quarter ended March 31, 2024, revenue totaled $1.27 million, an increase of $646,000, or 104%, as compared to $620,000 for the quarter ended March 31, 2023. The increase in revenue was driven by sales growth in contract manufacturing of approximately 58% and branded products of 178%.

Gross profit totaled $277,000 for the three months ended March 31, 2024, compared to a gross profit loss of $57,000 for the three months ended March 31, 2023. The increase of $334,000 in gross profit year-over-year was primarily due to the increase in consumer branded products.

Gross profit margin for the first quarter of 2024 was 21.9% compared to a negative gross margin for the first quarter of 2023 of 9.2% and a gross profit margin of 14.6% in the fourth quarter of 2023.

Cost of revenues increased by $312,000, or 46.1%, to $989,000 for the three months ended March 31, 2024, as compared to $677,000 for the three months ended March 31, 2023. The increase in cost of revenues is primarily aligned with the new product line growth and an increase in compensation and benefits with the increase in revenue growth.

Selling, general and administrative expenses increased by $349,000 or 43.8%, to $1.1 million for the three months ended March 31, 2024, as compared to $797,000 for the three months ended March 31, 2023. The increase in selling, general and administrative expenses is primarily attributable to an increase in advertising, marketing and Amazon fees, professional and consulting fees, and of compensation and benefits expense.

Research and development expenses decreased by $27,000 to $2,000 for the three months ended March 31, 2024, from $29,000 for the three months ended March 31, 2023.

Net loss for the three months ended March 31, 2024, was $905,000 as compared to a net loss of 807,000 in the three months ended March 31, 2023.

As of March 31, 2024, the Company had a cash balance of $2.4 million, which includes an approximate $1 million registered direct offering led by insiders. During the quarter, there was a net usage of cash for investment due to several non-recurring key strategic investments and acquisition costs.

As of March 31, 2024, NEXGEL had 6,227,624 shares of common stock outstanding.

First Quarter 2024 Financial Results Conference Call
Date: May 13, 2024
Time: 4:30 P.M. ET
Live Call: + 1-800-343-5419 (U.S. Toll Free) or + 1-203-518-9731 (International)
Webcast: Events and Presentations

For interested individuals unable to join the conference call, a replay will be available through May 27, 2024, by dialing + 1-844-512-2921 (U.S. Toll Free) or + 1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 11155952. An archived version of the webcast will also be available for 90 days.

About NEXGEL, INC.

NEXGEL is a leading provider of healthcare, beauty, and over-the-counter (OTC) products including ultra-gentle, high-water-content hydrogels. Based in Langhorne, Pa., the Company has developed and manufactured electron-beam, cross-linked hydrogels for over two decades. NEXGEL brands include Silverseal, Hexagels, Turfguard, Kenkoderm, and Dermablock. Additionally, NEXGEL has strategic contract manufacturing relationships with leading consumer healthcare companies.

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. 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, 2022, 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
[email protected]

NEXGEL, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2024 AND DECEMBER 31, 2023
(Unaudited)
(in thousands, except share and per share data)

    March 31,
2024
    December 31,
2023
 
ASSETS:                
Current Assets:                
Cash   $ 2,419     $ 2,700  
Accounts receivable, net     739       633  
Inventory     1,369       1,319  
Prepaid expenses and other current assets     336       400  
Total current assets     4,863       5,052  
Goodwill     1,128       1,128  
Intangibles, net     302       326  
Property and equipment, net     2,194       1,499  
Operating lease – right of use asset     1,803       1,855  
Other assets     95       95  
Total assets   $ 10,385     $ 9,955  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current Liabilities:                
Accounts payable   $ 1,053     $ 1,233  
Accrued expenses and other current liabilities     111       398  
Deferred revenue     250       20  
Current portion of note payable     87       80  
Warrant liability     255       146  
Contingent consideration liability     439       439  
Financing lease liability, current portion     55        
Operating lease liabilities, current portion     233       233  
Total current liabilities     2,483       2,549  
Operating lease liabilities, net of current portion     1,682       1,727  
Financing lease liability, net of current portion     352        
Notes payable, net of current portion     663       513  
Total liabilities     5,180       4,789  
                 
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; 6,227,624 and 5,741,838 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively     6       6  
Additional paid-in capital     20,350       19,406  
Accumulated deficit     (15,568 )     (14,715 )
Total NexGel stockholders’ equity     4,788       4,697  
Non-controlling interest in joint venture     417       469  
Total stockholders’ equity     5,205       5,166  
Total liabilities and stockholders’ equity   $ 10,385     $ 9,955  


NEXGEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(Unaudited)
(in thousands, except share and per share data)

             
    Three months ended  
    March 31,  
    2024     2023  
Revenues, net   $ 1,266     $ 620  
                 
Cost of revenues     989       677  
                 
Gross margin (loss)     277       (57 )
                 
Operating expenses                
Research and development     2       29  
Selling, general and administrative     1,146       797  
Total operating expenses     1,148       826  
                 
Loss from operations     (871 )     (883 )
                 
Other income (expense)                
Interest income (expense), net     (15 )     (1 )
Changes in fair value of warrant liability and warrant modification expense     (53 )     66  
Gain on investment in marketable securities     34       7  
Other income           4  
Total other income (expense), net     (34 )     76  
Loss before income taxes     (905 )     (807 )
Income tax expense            
Net loss     (905 )     (807 )
Less: Income (loss) attributable to non-controlling interest in joint venture     (52 )     7  
Net loss attributable to NexGel stockholders   $ (853 )   $ (814 )
Net loss per common share – basic   $ (0.14 )   $ (0.15 )
Net loss per common share – diluted   $ (0.14 )   $ (0.15 )
Weighted average shares used in computing net loss per common share – basic     5,982,062       5,586,326  
Weighted average shares used in computing net loss per common share – diluted     5,982,062       5,586,326  


NEXGEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023
(Unaudited)
(in thousands)

             
    Three Months Ended
March 31,
 
    2024     2023  
Operating Activities                
Net loss   $ (853 )   $ (814 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Income (loss) attributable to non-controlling interest in joint venture     (52 )     7  
Depreciation and amortization     62       31  
Share-based compensation and restricted stock vesting     54       24  
Gain on investment in marketable securities     (34 )     7  
Changes in fair value of warrant liability     53       (66 )
Amortization of right of use asset     52       49  
                 
Changes in operating assets and liabilities:                
Accounts receivable     (106 )     (158 )
Inventory     (50 )     (466 )
Prepaid expenses and other assets     64       11  
Accounts payable     (180 )     722  
Accrued expenses and other current liabilities     (287 )     (18 )
Deferred revenue     230        
Operating lease liability     (45 )     (38 )
Net Cash Used in Operating Activities     (1,092 )     (709 )
                 
Investing Activities                
Proceeds from sales of marketable securities     34       485  
Capital expenditures     (152 )     (88 )
Net Cash Provided by (Used in) Investing Activities     (118 )     397  
                 
Financing Activities                
Proceeds from rights offering, net of expenses     946        
Principal payment on financing lease liability     (9 )      
Principal payments of notes payable     (8 )     (2 )
Net Cash Provided by (Used in) Financing Activities     929       (2 )
Net Decrease in Cash     (281 )     (314 )
Cash – Beginning of period     2,700       1,101  
Cash – End of period   $ 2,419     $ 787  
Supplemental Disclosure of Cash Flows Information                
Cash paid during the year for:                
Interest   $ 10     $  
Taxes   $     $  
                 
Supplemental Non-cash Investing and Financing activities                
Property and equipment financed under notes payable   $ 165     $  
Property and equipment financed under financing leases   $ 416     $  
Property and equipment contributed as capital investment to JV   $     $ 500  
ROU asset and operating lease liabilities recognized upon consolidation of JV   $     $ 334  

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