Procaps (US:PROC)2023-05-12 21:23Financial Performance - Net revenues for Q4 2022 totaled $101.5 million, a decrease of 19.8% year-over-year, while full-year 2022 net revenues were $409.9 million, showing a 7% increase on a constant currency basis[3][4][19]. - The gross profit for Q4 2022 was $52.3 million, resulting in a gross margin of 51.5%, compared to a gross margin of 59.8% in Q4 2021[3][4]. - The company expects FY 2023 net revenues to grow by approximately 10% on a constant currency basis, with adjusted EBITDA projected to be between $90 million and $100 million[5][6]. - In Q1 2023, preliminary net revenues are estimated to be between $82 million and $85 million, with a constant currency adjustment bringing it to approximately $89 million to $92 million[6]. - Total revenue for the year ended December 31, 2022, was $409.920 million, a slight increase from $409.742 million in 2021[90]. - Gross profit for 2022 was $239.569 million, compared to $235.713 million in 2021, reflecting a gross margin of 58.4%[90]. - Adjusted EBITDA totaled $10.6 million in Q4 2022, with a margin of 10.4%; for 2022, adjusted EBITDA was $70.1 million, with a margin of 17.1%[50]. - Adjusted EBITDA for 2022 was $70.1 million, down from $99.7 million in 2021, with an adjusted EBITDA margin of 17.1%[81]. - The company reported a net income of $10.4 million for Q4 2022 and $42.5 million for the full year 2022, a significant recovery from a net loss of $100.9 million in 2021[54][55]. - The company reported an income of $42.540 million for the year 2022, a significant recovery from a loss of $100.863 million in 2021[90]. - Total comprehensive income for the year was $36,459, a recovery from a loss of $104,220 in the previous year[92]. Revenue Breakdown - The RX product line experienced a year-over-year growth of approximately 21%, contributing to the overall revenue growth despite challenges[7][18]. - The CASAND business segment reported a 20.9% increase in net revenues for Q4 2022, driven by new product launches and existing portfolio sales[24]. - Diabetrics net revenues decreased by 37.8% in 4Q22 compared to 4Q21, primarily due to currency devaluation; on a constant currency basis, the decrease was 22.9%[27]. - Nextgel's net revenues totaled $125.1 million in 2022, an increase of 3.5%, driven by product development services and sales of gummy products[31]. - Procaps Colombia's net revenues decreased by 25.8% in 4Q22 compared to 4Q21, impacted by currency devaluation of approximately $9 million; on a constant currency basis, the decrease was 2.2%[33]. Cost Management and Savings Initiatives - The company has implemented multiple value-creation initiatives aimed at achieving up to $15 million in targeted recurring savings over the next 18 months, with a current savings capture rate of approximately 20%[10]. - Operating expenses totaled $62.1 million in 4Q22, influenced by higher administrative expenses; total operating expenses for 2022 were $224.8 million, a decrease of 8.0% compared to 2021[40]. - Sales and marketing expenses increased to $93.566 million in 2022 from $83.057 million in 2021[90]. - The company is focused on achieving cost-saving goals and addressing material weaknesses in its operations[96]. Research and Development - Total R&D expenses for 2022 were $26.8 million, representing 7% of net revenues, with a renewal rate of 27% from new products launched in the last 36 months, generating approximately $111 million in net revenues[14][15]. - The company has over 170 products pending approval for launch in the coming years, indicating a strong pipeline for future growth[9][16]. Debt and Cash Management - Total gross debt increased to $285.9 million as of December 31, 2022, up from $253.4 million in 2021, with an average cost of 8.5%[56][59]. - Total net debt as of December 31, 2022, was $257.5 million, with approximately 90.1% classified as short-term obligations due to covenant breaches[58][59]. - Cash totaled $43.0 million as of December 31, 2022, impacted by increased working capital and expenses related to being a public company[57]. - Cash reserves decreased to $43,003 in 2022 from $72,112 in 2021, reflecting changes in liquidity management[94]. Future Plans and Market Expansion - The company plans to launch new technologies and products, including novel fixed dosage combinations and a glucose monitoring system, while expanding into new markets like Mexico[29]. - The company plans to expand its Diabetrics health solution into Central America and Mexico starting in 2023[75]. - The company is pursuing acquisitions of Grupo Somar, which includes multiple entities, to enhance growth and market presence[96]. - The company anticipates challenges in recognizing the benefits of acquisitions due to competition and integration risks[96]. Financial Health Indicators - The accumulated deficit improved to $(391,513) in 2022 from $(431,059) in 2021, indicating better financial health[94]. - Current assets decreased slightly to $297,443 in 2022 from $298,059 in 2021, while total assets remained stable at $460,187[94]. - Non-current liabilities significantly decreased from $312,511 in 2021 to $93,691 in 2022, primarily due to a reduction in borrowings[94]. - The cash flow from operating activities during 2022 was $22.7 million, primarily affected by changes in working capital and increased CAPEX[63]. - The cash conversion cycle increased to 120 days as of Q4 2022, indicating a longer time to convert investments into cash[64].