The company returns to double-digit growth after declining revenues in the second quarter that were affected by the sale of distribution and logistics activities; Shows a 37% increase in revenue in the first nine months of the year, which amounted to NIS 59.8 million, compared with last year.
Return to gross profit and reduction of operating loss as a result of the implementation of the strategy of leaving low-profit activities in Israel and focusing on the production and export of premium products to Europe.
The company is advancing in the merger of the controlling activity, Panaxia Pharmaceutical Industries, into the company, through an independent committee appointed to formulate the conditions for this purpose.
Panaxia Israel Laboratories Ltd. (“Panaxia Israel”, Tel Aviv: PNAX PNAX) A global pharma company that develops, manufactures and markets advanced medical cannabis products of pharmaceutical quality, today announced its financial results for the third quarter and the first nine months of 2021.
Dedi Segal, CEO of Panaxia Israel, said: “We conclude a strong third quarter with a return to double-digit revenue growth, following a decline in revenue in the second quarter due to sales of logistics and distribution activities. We have obtained the long-awaited export permit from Israel of medical cannabis extracts for inhalation, the only innovative product of its kind approved for marketing in Germany and throughout Europe, and we have exported their first commercial shipment to Germany. Is a significant line for patients who refrain from smoking medical cannabis for medical and other reasons and is a strong engine of growth and profitability for us, with the potential to capture significant market share in Europe in the coming years, similar to mature North American markets. And Denmark, alongside expanding to additional markets with a medical cannabis regime, taking advantage of our regulatory and commercial benefits. “
Results for the third quarter and the first nine months of 2021:
The Company’s revenues in the third quarter of 2021 amounted to NIS 22.5 million, an increase of 33.9% compared to revenues of NIS 16.8 million in the corresponding quarter last year, and an increase of 27.8% compared to revenues of NIS 17.6 million. NIS in the previous quarter. The company’s revenues in the first nine months of 2021 amounted to NIS 37.3 million, an increase of 38.4%, compared with revenues of NIS 26.9 million in the corresponding period last year. The increase in revenues compared to the corresponding periods Last year stems from the company’s focus on selling products it owns, as opposed to a reduction in the scope of providing manufacturing services to third parties and retail sales to patients.
Return to gross profit in the third quarter of 2021, which amounted to NIS 2.2 million (gross profit rate of 9.7%), compared to gross profit of NIS 1.9 million (gross profit rate of 11.1%) in the quarter The corresponding figure last year, and a gross loss of approximately NIS 2.2 million in the previous quarter. The gross profit in the first nine months of 2021 amounted to approximately NIS 746,000, compared with a gross profit of approximately NIS 3.5 million in the corresponding period last year, and was affected From the gross loss recorded by the company in the second quarter and first half of 2021. Return to gross profit in the quarter and period is due to the increase in sales of products owned by the company in accordance with its strategic focus, compared to a decrease in retail sales in Israel.
Reduction of the operating loss in the third quarter of 2021, which amounted to NIS 6.0 million, compared with an operating loss of NIS 8.3 million in the corresponding quarter last year, and an operating profit of NIS 3.7 million in the previous quarter (which was affected). Capital margin of approximately NIS 14.8 million in respect of the sale of the Company’s distribution and logistics activities in Israel in the second quarter of 2021). The operating loss in the first nine months of 2021 amounted to NIS 10.3 million, compared with an operating loss of NIS 26.2 million in the corresponding period last year.
Focusing on self-production and exports to Europe and the sale of the company’s distribution and logistics activities in Israel – this move is expected to contribute to the improvement of Panaxia’s operating profitability and expense structure, along with the expected growth in the following quarters.
Reduction of the net loss in the third quarter of 2021, which amounted to NIS 6.4 million, compared with a net loss of NIS 8.4 million in the corresponding quarter last year, and to a net profit of NIS 3.6 million in the previous quarter. The net loss In the first nine months of 2021, it decreased and amounted to approximately NIS 11.1 million, compared with a net loss of approximately NIS 26.6 million in the corresponding period last year.
Net cash flow used in operating activities in the third quarter of 2021 amounted to NIS 11.9 million, compared with cash flow used in operating activities in the amount of NIS 12.8 million in the corresponding quarter last year and NIS 7.8 million in the previous quarter. Net cash used in current operations in the first nine of 2021 amounted to NIS 24.7 million, compared with net cash flow used in current operations in the amount of NIS 23.4 million in the corresponding period last year. Most of the changes are due to gaps in net profit (loss). Capital gain from the sale of distribution and logistics activities and other non-cash expenses), as well as changes in working capital components, mainly an increase of NIS 18 million in inventory during the third quarter compared to an increase of NIS 5 million in the corresponding quarter last year, which was partially offset by changes In other working capital items.
Total cash and cash equivalents as of September 30, 2021 amounted to approximately NIS 1.6 million, compared to cash and cash equivalents of approximately NIS 16.6 million as of December 31, 2020, including the realization of the obligation of Dedi Segal, the Company’s CEO and Jonathan Kolber , Chairman of the Board of Directors for the investment of NIS 8 million in the company.
After the balance sheet date, the Company was paid an additional NIS 5 million for the completion of the first phase of the transaction for the sale of Panaxia’s distribution and logistics activities in Israel to IMC. A total of NIS 13.7 million was paid to it in cash out of a total of NIS 18.7 million.
As of the date of publication of this report, the Company finances and will finance its activities, in addition to the cash balance at its disposal, mainly through: 1) Working capital – receipts from sales of the Company’s products, the cost of which was paid before the financial report; 2) Extension of an irrevocable commitment given by Mr. Dedi Segal, the Company’s CEO, who is one of the controlling shareholders in the Company, and Mr. Yonatan Kolber, Chairman of the Company’s Board of Directors and interested party, to provide a credit facility of NIS 10 million, up to February 28, 2023. The credit facility will be used for the purposes of the Company’s operations;