Crescita Reports First Quarter 2025 Results

National Post

14-05-2025

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LAVAL, Quebec — Crescita Therapeutics Inc. (TSX: CTX and OTC US: CRRTF) ('Crescita' or the 'Company'), a growth-oriented, innovation-driven Canadian commercial dermatology company, today reported its financial results for the first quarter ended March 31, 2025 ('Q1-2025'). All amounts presented are in thousands of Canadian dollars ('CAD') unless otherwise noted and in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board.
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Q1-2025 vs. Q1-2024
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Revenue was $3,537, compared to $4,996, a decrease of $1,459;
Gross profit was $1,747, compared to $2,411, a decrease of $664;
Operating expenses were $2,809, compared to $3,142, a decrease of $333;
Net loss was $(932), compared to $(626), an increase of $306;
Adjusted EBITDA 1 was $(679), compared to $(325), an increased loss of $354;
Ending cash of $8,538, compared to $9,273, a decrease of $735 for the quarter.
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'As anticipated, our Q1 results were less than the prior year, mainly due to the timing of order fulfillment in our Manufacturing segment. A large purchase order was fulfilled in Q1-2024 whereas some deliveries originally scheduled for Q1-2025 were advanced into Q4-2024. We do, however, expect topline improvement in the coming quarters as we begin delivering on larger scheduled orders,' said Serge Verreault, President and Chief Executive Officer of Crescita.
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'We continue to implement a disciplined approach to capital deployment, carefully balancing investments in organic and inorganic growth, with the prudent preservation of our financial strength,' concluded Mr. Verreault.
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For the three months ended March 31, 2025 and up to the date of this press release:
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Note: Select financial information is outlined below and should be read in conjunction with Crescita's Condensed Consolidated Interim Financial Statements and related Management's Discussion and Analysis ('MD&A') for the three months ended March 31, 2025, which are available on Crescita's profile on SEDAR+ at www.sedarplus.ca and on Crescita's website at www.crescitatherapeutics.com.
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In thousands of CAD, except per share data and number of shares
Three months ended March 31,
2025
2024
Change
$
$
$
Commercial Skincare
2,457
2,535
(78
)
Licensing and Royalties
250
–
250
Manufacturing and Services
830
2,461
(1,631
)
Revenues
3,537
4,996
(1,459
)
Cost of goods sold
1,790
2,585
(795
)
Gross profit
1,747
2,411
(664
)
Gross margin (%)
49.4
%
48.3
%
1.1
%
Research and development ('R&D')
131
170
(39
)
Selling, general and administrative ('SG&A')
2,325
2,587
(262
)
Depreciation and amortization
353
385
(32
)
Total operating expenses
2,809
3,142
(333
)
Operating loss
(1,062
)
(731
)
(331
)
Interest income, net
(88
)
(116
)
28
Foreign exchange (gain) loss
(55
)
2
(57
)
Share of loss of an associate
14
9
5
Fair value gain on convertible note measured at
fair value through profit or loss
(1
)
–
(1
)
Net loss
(932
)
(626
)
(306
)
Adjusted EBITDA 1
(679
)
(325
)
(354
)
Weighted average number of common shares outstanding
Basic and diluted
19,028,110
19,591,906
(563,796
)
Loss per share
Basic and diluted
$
(0.05
)
$
(0.03
)
$
(0.02
)
Selected Balance Sheet Information
Cash and cash equivalents, end of period
8,538
9,531
(993
)
Selected Cash Flow Information
Cash (used in) provided by operating activities
(513
)
378
(891
)
Cash used in investing activities
(66
)
–
(66
)
Cash used in financing activities
(159
)
(236
)
77
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Revenue
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We have three reportable segments: 1) Commercial Skincare ('Skincare'), which generates revenue from the commercialization of our branded non-prescription skincare products, manufactured in-house, in Canada and in certain international markets, as well as other brands under exclusive distribution agreements; 2) Licensing and Royalties ('Licensing'), which currently derives revenue from licensing our intellectual property related to Pliaglis ®; and 3) Manufacturing and Services ('Manufacturing'), which generates revenue from contract manufacturing and product development services.
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For the three months ended March 31, 2025, total revenue was $3,537 compared to $4,996 for the three months ended March 31, 2024. The year-over-year decrease of $1,459 was primarily driven by lower Manufacturing segment revenue of $1,631, mainly due to the fulfilment of a purchase order from our largest Manufacturing client in Q1-2024, and by a slight decrease of $78 in Skincare sales, primarily due to the decreases in e-commerce and export sales versus Q1-2024, partly offset by incremental revenue from Aquafolia ®, acquired in June 2024. The decreases were also partly offset by Licensing revenue of $250 for the quarter, reflecting product sales from supplying Pliaglis under licensing agreements.
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Gross Profit and Gross Margin
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For the three months ended March 31, 2025, gross profit was $1,747, representing a gross margin of 49.4%, compared to $2,411 and 48.3%, respectively, for the three months ended March 31, 2024. The net decrease of $664 was mainly due to lower Manufacturing revenue, as described above, which was at a higher margin, while the net increase of 1.1% in gross margin was mainly driven by favorable revenue mix, as Skincare sales represented a larger proportion of total revenue in Q1-2025 compared to Q1-2024.
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Operating Expenses
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For the three months ended March 31, 2025, total operating expenses were $2,809 compared to $3,142 for the three months ended March 31, 2024. The year-over-year decrease of $333 was mainly driven by lower headcount-related expenses as a result of position vacancies, as well as lower commercial partnership fees in connection with our ecommerce sales.
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Cash and Cash Equivalents
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Cash and cash equivalents were $8,538 at March 31, 2025, reflecting a decrease of $735 for the quarter, mainly due to the net loss incurred in Q1-2025.
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We report our financial results in accordance with IFRS. However, we use certain non-IFRS financial measures to assess our Company's performance. We believe these to be useful to management, investors, and other financial stakeholders in assessing Crescita's performance. The non-IFRS measures used in this press release do not have any standardized meaning prescribed by IFRS and are therefore not comparable to similar measures presented by other issuers. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS. The following are the Company's non-IFRS measures along with their respective definitions:
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EBITDA is defined as earnings before interest, income taxes, depreciation of property, plant and equipment, and amortization of right-of-use asset and intangible assets.
Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation of property, plant and equipment and amortization of right-of-use asset and intangible assets, share of (profit) loss of associates, fair value (gains) losses, share-based compensation, restructuring, acquisition-related and integration costs, and goodwill and intangible asset impairment, as applicable.
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Management believes that Adjusted EBITDA is an important measure of operating performance and cash flow and provides useful information to investors as it highlights trends in the underlying business that may not otherwise be apparent when relying solely on IFRS measures. Below is a reconciliation of EBITDA and Adjusted EBITDA to their closest IFRS measures.
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Caution Concerning Limitations of Summary Financial Results Press Release
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This summary earnings press release contains limited information meant to assist the reader in assessing Crescita's performance, but it is not a suitable source of information for readers who are unfamiliar with Crescita and is not in any way a substitute for the Company's Consolidated Audited Financial Statements and notes thereto, MD&A and latest Annual Information Form ('AIF'), all of which can be found on the Company's profile on SEDAR+ at www.sedarplus.ca.
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Crescita (TSX: CTX and OTC US: CRRTF) is a growth-oriented, innovation-driven Canadian commercial dermatology company with in-house R&D and manufacturing capabilities. The Company offers a portfolio of high-quality, science-based non-prescription skincare products and early to commercial stage prescription products. We also own multiple proprietary transdermal delivery platforms that support the development of patented formulations to facilitate the delivery of active ingredients into or through the skin. For more information visit, www.crescitatherapeutics.com.
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Certain statements in this press release constitute forward-looking statements and/or forward-looking information (collectively 'forward-looking information') within the meaning of applicable securities laws. All information in this press release, other than statements of current and historical fact, represents forward-looking information and is qualified by this cautionary note.
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Forward-looking information may relate to the Company's future financial outlook and anticipated events or results and may include information regarding the Company's financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans, objectives, and expectations. Such information is provided for the purpose of presenting information about management's current expectations and plans relating to the future and allowing investors and others to get a better understanding of the Company's anticipated financial position, results of operations and operating environment. Readers are cautioned that such information may not be appropriate for other purposes.
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Often, but not always, forward-looking information can be identified by the use of forward-looking terminology such as: 'outlook', 'objective', 'anticipate', 'intend', 'plan', 'goal', 'seek', 'believe', 'aim', 'project', 'estimate', 'expect', 'strategy', 'future', 'likely', 'may', 'should', 'will', 'growth strategy', 'future', 'prospects', 'continue', and similar references to future periods or suggesting future outcomes or events. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information.
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Examples of forward-looking information include, but are not limited to, statements made in this press release under the heading 'Financial Highlights', including statements regarding the Company's objectives, plans, goals, strategies, growth, performance, operating results, financial condition, business prospects, opportunities and industry trends, and similar statements concerning anticipated future events, results, circumstances, performance or expectations.
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Forward-looking information is neither historical fact nor assurance of future performance. Instead, it reflects management's current beliefs, expectations and assumptions and is based only on information currently available to us. Forward-looking information is necessarily based on a number of estimates and assumptions that, while considered reasonable by the management of the Company as of the date of this press release, are inherently subject to significant business, economic, and competitive uncertainties and contingencies that are difficult to predict and many of which are outside of our control.
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The Company's estimates, beliefs and assumptions, which may prove to be incorrect, include various assumptions regarding, among other things: the Company's future growth potential, results of operations, future prospects and opportunities; the Company's ability to retain and recruit, as applicable, customers, members of management and key personnel; industry trends; legislative or regulatory matters, including expected changes to laws and regulations and the effects of such changes; future levels of indebtedness; availability of capital; the Company's ability to secure additional capital and source and complete acquisitions; the Company's ability to maintain and expand its market presence and geographic scope; economic and market conditions, including the imposition of and adverse changes to tariffs and other trade protection measures; the impact of currency exchange and interest rates; the Company's ability to maintain existing financing and insurance on acceptable terms; the Company's ability to execute on, and the impact of, its environmental, social and governance initiatives; the impact of competition; and the Company's ability to respond to changes to its industry and the global economy.
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Forward-looking information involves risks and uncertainties that could cause Crescita's actual results and financial condition to differ materially from those contemplated by such forward-looking information. Important factors that could cause such differences include, among others:
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economic and market conditions, including factors impacting global supply chains such as pandemics, geopolitical conflicts and tensions, and trade protection measures, like the imposition of tariffs and retaliatory tariffs by the United States and Canada;
the impact of inflation and fluctuating interest rates;
the Company's ability to execute its growth strategies;
the degree or lack of market acceptance of the Company's products;
reliance on third parties for marketing, distribution and commercialization, and clinical trials;
the impact of variations in the values of the Canadian dollar in relation to the U.S. dollar and Euro;
the impact of the volatility in financial markets;
the Company's ability to retain members of its management team and key personnel;
the impact of changing conditions in the regulatory environment and product development processes;
manufacturing and supply risks;
increasing competition in the industries in which the Company operates;
the Company's ability to meet its contractual obligations;
the impact of product liability matters;
the impact of litigation involving the Company and/or its products;
the impact of changes in relationships with customers and suppliers;
the degree of intellectual property protection of the Company's products;
developments and changes in applicable laws and regulations, and;
other risk factors described from time to time in the reports and disclosure documents filed by Crescita with Canadian securities regulatory agencies and commissions, including the sections entitled 'Risk Factors' in the Company's most recent annual MD&A and AIF.
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If any risks or uncertainties with respect to the above materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. This list is not exhaustive of the factors that may impact the Company's forward-looking information. Although management has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known or that management believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, investors should not place undue reliance on forward-looking information, which speaks only as of the date provided, and is subject to change after such date. Except as required by applicable securities laws, the Company undertakes no obligation to publicly update any forward-looking information, whether written or oral, that may be provided from time to time, whether as a result of new information, future developments or otherwise.
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