Release Date: November 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- BioHarvest Sciences Inc (CNVCF, Financial) achieved a significant milestone by uplisting to the Nasdaq global market, enhancing its credibility and market reach.
- The company reported a 101% year-over-year revenue growth in the third quarter of 2024, driven by strong sales of its VINIA product.
- Gross margins improved significantly by 1,200 basis points to 57% in Q3 2024, reflecting successful margin optimization efforts.
- The VINIA product has high customer satisfaction with a 4.8 out of 5 average rating from nearly 7,000 verified reviews, indicating strong consumer acceptance.
- BioHarvest Sciences Inc (CNVCF) has a robust pipeline for its CDMO business, with expectations of significant bookings in 2025, indicating strong future revenue potential.
Negative Points
- The company reported a net loss of $2.7 million for Q3 2024, an increase from the $1.7 million loss in the same quarter of the previous year.
- Operating expenses increased by 67% year-over-year, driven by higher marketing and new product initiative costs, impacting profitability.
- Cash and cash equivalents decreased to $2.8 million as of September 30, 2024, from $5.4 million at the end of 2023, indicating a potential liquidity concern.
- High air freight expenses and delays in cost-saving measures impacted the aggressive margin growth efforts.
- The company is still in the early stages of its CDMO business, with full-scale commercial production expected to take 20 to 24 months, indicating a longer timeline for significant revenue contributions from this segment.
Q & A Highlights
Q: With VINIA.com revenue growing quickly from subscriptions and retention rates high, what's the strategy to continue increasing retention rates going forward?
A: Ilan Sobel, CEO: We focus on two growth forces: VINIA.com and Amazon, with 80% of revenue from VINIA.com. Our website and pricing structure incentivize subscriptions, ensuring continuity due to VINIA's efficacy. We've expanded delivery mechanisms, like Superfood coffee and tea, to provide multiple consumer choices, enhancing retention. Education on VINIA's benefits and technology also boosts retention, driving double-digit subscription growth.
Q: What are the long-term goals for the CDMO business, and which industries or segments are the initial targets?
A: Zaki Rakib, Chairman and CDMO President: We're pleased with CDMO progress since its launch. Despite delays, we're advancing from stage 1 to stage 2 in projects, demonstrating our technology's success. We've built infrastructure, including robotics, for future projects. The pipeline is strong across pharma, cosmeceuticals, and nutrition, with expected bookings of over $10 million in 2025.
Q: Regarding the hydration project, what initial revenue uplift do you expect, and will distribution expand to different end users?
A: Ilan Sobel, CEO: The hydration category is a $13 billion market. Our VINIA Pro trademark targets active consumers seeking hydration and performance benefits. We'll conduct clinical trials for strong claims. Distribution will be direct-to-consumer and strategic, targeting high-margin channels like gyms.
Q: How important is entering Canada and other international markets for long-term strategy?
A: Ilan Sobel, CEO: We have Health Canada approval, but the US market is our primary focus due to its size. International shipping could add 5-7% revenue growth. We're preparing for regulatory approvals in Europe and Japan, but the US remains our main target for efficient scaling and profitability.
Q: Is maintaining $10-20 million in CDMO bookings ideal for the next 12-18 months, and what's the plan for capacity?
A: Zaki Rakib, Chairman and CDMO President: Manufacturing capacity will be available in two years, with a new US factory planned for 2027. We aim for development capacity to exceed $20 million in bookings over the next 24 months, supporting future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
