INNV - Earnings call transcript Q1 2019

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Operator

Good afternoon, and thank you everyone for joining us today. My name is Andrea, and I am assisting the company with its Investor Relations call. With me today from Innovus are, President and Chief Executive Officer, Dr. Bassam Damaj; Executive Vice President, Corporate Development and General Counsel, Mr. Randy Berholtz; and Vice President and Chief Financial Officer, Mr. Selhorn. Ryan

corporate management the brief XX, XXXX. First well provide call, company's of XXXX, Management provide roadmap as in brief an progress Quarter a will will also today's remainder overview overview a the as of provide During the and the of of update for information Ended statements to under remind like and pipeline. Harbor discussed the is I'd today's Safe the financial call We'll then the Litigation that certain of questions. products discuss open in conference the Private lineup Act. Reform provision everyone covered Securities March

During the financial the on XX-Q today's release website Forms financial approval statements performance risks will product launch and timing the commercial Commission, also on around relating the of making Damaj, innovuspharma.com. future regarding company, go filed Pharmaceuticals' will Pharma other call candidates, found the business certain quarter the expectations including statements S-I be of XX, The trial Form affect regulatory candidates, business. products, products to cash the conference Damaj. forward-looking XX-K today current the and call, outcomes additional materially. these source I Exchange the Dr. actual and Dr. press reports objectives, Pharma's statements use Innovus at and Securities acquiring documents was including company's of of company launches, results filings and reserves management first on and over the the and ahead. of and to XXXX earlier process first the of company's such now based or predictions for refer please can may are future differ accessed future released XXXX clinical Innovus by Such Innovus recent timing events of expected results With with expectations of and the turn the company's the the annual be discussions the product Please outlicensing company's plans today. be development most development, that, results to could as revenues, and that amount was pipeline. and products upon company's product March quarterly These and for Bassam for XX-Q website. with SEC can quarter ended the for the regarding and

Bassam Damaj

and you, everyone XXXX. thank us first you the the joining of as of Thank we today and good our business Andrea for performance discuss during afternoon quarter

from announcements was first seen have for we numerous us. the our quarter As busy one a

a reverse to additional split financing raised stock plans we and uplift public with a conducted First to national exchange.

our pipeline Second, of markets. we allow may ANDA it profitability FlutiCare our second expand the us through secured certain and OTC to increase overseas for which

additional foam women. in for from driving And growing we to the channels ANDA revenues we base. business. have including from to increase our post and Canada settle business seeing begun direct business direct consumer rights added the focused products reliance men our in on Third, e-commerce by U.S. shampoo Minoxidil our international X% obtaining subscription platform the through to we decreased revenues on expanding our six, Fourth, our an our higher profit distributors. Five, our consumer and

turn on corporate discussion above Officer business the of we our to our I'll benefit the each Ryan company later to on and followed financial Chief a call these well our detailed results items. situated details from is items With the believe in Financial Ryan? call. As result, by to the discuss performance. I'll over a And discuss that,

Ryan Selhorn

Bassam. you, Thank

XX.X% increase increase quarter from quarter. previously XXXX year and our million revenue prior As for XX, XX% the prior three an the was $X.X months first announced ended from March the a

of XX% came and channels the had platforms and on including to quarter intended discussed Savings during previous diversify revenue we approximately Hunt Club. entities, our from acquired Prime our newly revenue Supplement we our the e-commerce call, As first

diversification well into base, management expanding increase as the quarter focus on additional consumer XX.X% average continue geographies. subscription in continue compared well stream Supplement as Hunt to to first direct marketing the reduce its steady on direct sole spend to grow while to reliance to of previous during ownership. the monthly revenues performed our to We establishing consumer with a experiencing under full a marketing under revenues

transfer that growth we complete, continue to is tech the the Now to expect increase.

Prime the expect expect complementing third-party of continue reach will affiliate and and and new X, platform generating with strong also a Amazon the products direct awareness Savings and to This revenue in us to QX which sells which started quarter consumer in tends build existing an to growth. our with lower growth have the to recently while XXXX. revenues compared market for well for our add generate QX provide January holidays. tends we goods from channel on quarters third XX% significant million acquired to track experience Club second to the first also $X avenue we due to sales close customers to products. be XXXX is more We site seasonal platforms slightly to which consumer attract platform brand through QX and to on was therefore additional primarily another This

and relationship an may which questions or as with allowed quite us have other service to working subscription-based product recurring first service full complements reach are we quarter established to cross-sell sell outbound our well they any quarter appropriately, purchasing, a ensure which being well. products. to This which for are concierge products of the individuals, XXXX the provide first additional taken our answer that customers as The consumers opportunity out for proactively was we better our

each and increase quarter subsequent to spend concierge subscription revenue consistently improvement in or increase plan concierge our XXX,XXX our totaled to During service prior the the quarter. services, With marketing these our million to increase. first XX.X% X.X compared in combined expect and year the now we revenues the

prior XX.X% Our with in the gross margin quarter the first was for XX% year. as compared

e-commerce thus experienced drive efforts to less higher Prime high margin to sell from including XX% addition closer channels margins the focusing gross sales well lower margins and but as week cost we our platform higher The increases last on demand as they of with ahead sales platforms, prices also our Supplement decline goods lower even entities, gross factors, the we which Hunt of sales to overall marketing place efforts. is overall products with gross compared margin percentage the impacting XX% on as increase spend direct-to-consumer Savings to top of of margins. due and several a due net in took incur to tariff that We our the are if due

be Assuming breakdown quarter net and a the the with net percentage XX.X% in continued prior higher, first maintained margin Sales channel continued goods decreased a revenue in gross quarter as expenses future to similar the to the of revenue be to in we first the quarters improve. to while level margin of to in supply expect XX.X% quarter our the a and consistent at we quarter. comparable XX.X% compared marketing in and XXXX prices

expected of spend than sales revenue As marketing direct-to-consumer channels, e-commerce required the e-commerce sales - the diversification channel. is is less of with the

in in X.X. to It Recently the compared with X.X we're has concentration new growth channel each return similar nine. depending from and previous to as revenues ranging help to already the to of more at optimistic driven in move consistent will We seeing but short, second which began is agency direct-to-consumer $X we lines compared quarters dollar drive we intend with four regarding quarter focus the Along timeframe every was are a quarters circulations profitability. we MERs are to direct-to-consumer sales. to This Canada. primarily means in working X grow previous very to on print ratios spend MERs efficiency the on continue to more in experience pace we adjusted closer campaigns or closer our resulted marketing, the on and in this type Canada that in with marketing of advertisements quarter focused us us spend which as our strategically been $X allowed for media that the mail X.X of the to to place our Additionally, direct that although seeing product. to to

and devoting to this spend of to inconsistent XX% XX% our marketing monitor continue results in consider in will We we region. may direct-to-consumer these

the Canada first XX% the due are occurring primarily States. quarter, the which sales represented e-commerce to approximately sales within more During to shift United towards

However, if should we that percentage agency, results would anticipate continue this the with quarters. increase future new in

million. May cash XX, of processor was inclusive our $X.X approximately of As holdback balance XXXX,

first flow used XXXX will of from in that back I in compared With XXX,XXX quarter. the and with cash XXX,XXX the turn to quarter was in call prior the operations the quarter first Our Bassam. XXX,XXX

Bassam Damaj

Thank you, Ryan.

and our that producing talk now about It sustainable the if XXXX the my touched of to net quarter second will channels the the entering important are and margins growing each gross continuous focusing most highest our growing profitable in I I we a is margins accomplishments note introduction. of on even is upon focus major that lower six So channels the manner. and are

is important. think I which First,

public reverse uplist stock plan from and the We to split are financing that exchange. additional institutions well-known very would to from national an

to per uplist major raised price of a attain higher from approval stock capital January share which receiving we quarter the designed approval, that and a then in this to is we was million to reverse split institutional So after in need exchange. the announced $X.XX later us the shareholder had year, your we entity that help

Now us occurred, split that the has which that enable reverse we stockholders are mainly additional equity. on to satisfying requirements uplist will the the stock working is

the overseas this to overseas point ANDA in actually as product and the us quarter this to FlutiCare and ACON the Spray sizes opportunity where where announced secured acquires will smaller a the of market product the of price, for that help batch we partner for that our our the expand this Second, second company, that specifically now increase sales to with version received at Fluticasone of product less the sell us the long-awaited OTC now flagship the partner can an American are has its very we greater and North region. markets profitability should markets. and extensive Nasal FlutiCare the we is to provide allow important We expanded us working for expand to to manufacture a Propionate ANDA our or will certain diligently

with our to one to sell announced additional an product is we Rogaine to and shampoo X% and approved under quarter, obtaining we the XXXX.We focus right will sold two so to we the for second Third, swag in with added women. men relationship States in Minoxidil of this Taro the in woman a product pronounced on Regoxidine. the competitor channels brand in provide ANDA This Pharmaceuticals including driving versions higher our of product foam we with seen OTC, produce far. States. us to the FlutiCare will that man direct-to-consumer have product product that the that and sell And United the profit be half subscription approved sales Canada, own the growing the Fourth, our this in first expect our we then and business revenues United our and And currently base.

continuously we associated with The this? net the this What therefore As channels mentioned, moving are our basis do channels this returns. as the and Ryan for In and less on acquire cost cost of us margin something important the profit to margins is us to no shipping.' away that means channel have moving United we sale. us based to magazines that subscription increase still some It other the revenue. the States, higher do we is and and in are cost on channels spend into there is be newspapers only of which us is cost quarter-per-quarter to able allowing that on higher focusing the goods subscription from our customer a higher of by a marketing the mean have

increasing we into efforts Canada. our sell In to are addition,

is to a here of which new we that are numbers discussed, MERs. very readdress a $X our returns depending have pipeline we're we this And I the product strong important the selling to that important we and every a Ryan we're margins think that us higher large is because are is are goes return partner As products like to recently much I we seeing and is would bought point as the dollar flow an each move spent there in that number on covering for G&As, that dollar situation. have and approved increase And spending on we seeing, have a profitable net the and our how very this this between seeing we're towards higher really cash and in Canada on product. expenses $X us

One our of where business. realize our direct-to-consumer Fifth, returns. reliance can Canada, mimic expand States such countries such MERs expanding decrease by ae-commerce we long our form United outside term we revenues goals also into and and additional is the and to business on platform the

As our you recall able on company the direct-to-consumer, the revenue to was keen not now by last on that. source our derisking so do call, from investor were we heavily relying and

This will start filings will do did. the to significant quarter our of very actually that we business we it continue e-commerce see the our from now revenues. and We proportion of is

So as XXXX of fourth acquired the we in first has and the Ryan club quarter said, this of Prime Hunt in Saving's Supplement year. quarter

next to we profitability. or quarters both work increase issues to we transfer the while their in with well-positioned increase the So along now that e-commerce channels, of their to through are usual continue sec three believe both revenues

our that by expand that currently those business to we complement e-commerce looking acquiring continually will are finding channels and maintain. We

the see our distributors mentioned last expect platform goes they to our near and great Lavasta is for bottom us we our in flow received and the establishing that net profitability the ready actually and projecting our this have purchase in the is cash our can on from growing increase economic no flow revenues because profitable with are not doing to regulatory and our believe forth net the products increase be a and a recently to putting our that not million XXXX. auto the partner company why million to $XX we daily increase we an product happy countries. of for on that to revenues the determination profitable will at channels to most because this including are we in we G&As This we towards we increase situation of thus positive number important order approval associated we for international to our cash which company in And come other to progress call, the are the we to we have by from the revenues, announced. in, partners that and that our those that revenues most increase been moving profitable to our everything revenues begun strong in that the just and into commercialization the so have achieve is the And political we have of ships still just situation for and this in as move but cover for manner, are results spend revenues to only future. will able the growing are As based distributors inventory seeing in Sixth, for the Overall, expenses very those profitable to is for us profitable but projection and a the Asian increasing of happening XXXX and add continue in a increasing $XX revenues we situation. tariffs remainder on revenues work channels international in and balance large year cash similar And - we you continue situation. the between currently there line to are only reach And the this. with revenues current marketing the as and keeping hand when we the on and especially XXXX, basis.

of reach to see with positive and until And So continue With over would profitability. we steady I revenues should you call that, flow the analysts. will the our increase a again. our I your in the thank Andrea? goal market continued from like cash with to look questions forward company for turn speaking interest all that you to and to I in quarter-over-quarter

Operator

will [Operator Instructions] Zacks. come And ahead. Please question first of Beth from Senko go our

Beth Senko

done out think or Couple quick if that headed Prime strip Prime is which questions, willing to is think direction. the Supplement guys confusing overall one, out the I to be like, we're be mean right we strip I the revenues the and quarter something what seems Hunt Savings but out be would I in sales it us? you'd of are of quarter is you Questions is to and needs were for what like great little doing

Bassam Damaj

because am I do disclose at we time we we to sure that not this have would to continue if would strip that that. actually

So revenue we are all so. our combining one online under section

Beth Senko

gradual I how marketing but it's that was that's trying no Okay, the see okay. of I how sort realized basis a to just affecting in same-store on but change

Bassam Damaj

your goal gives that a and spend do in, really on slight shown we marketing did and bring as of to on going. actually said marketing we that think scalable so. Ryan we you to right the is whole percent And our to have now We do able every half are less company disclose spend the of dollar level I so that it

Beth Senko

what absolutely basis, on if is was no it's do but apples-to-apples I to as I trying close rolling to no look try a could to Sure, fine.

will the hadn't China on question, a coming all. second little of how much The items considered from I tariffs? the in Can are us issue key any the product explain effected of it you for be the by or bit ATI tariff you or

Bassam Damaj

anticipation to the because ahead tariffs tariffs. of So of everybody started the products actually cost the of ordering increase the - right in was

comes that our tariffs, mean of So the there it so ingredients are - affects of but products that from have of products way do an that under the is XX% us are the we the cost in And now the increase was again China. I we we tariffs. tariffs kicked the in - actually type have ahead actually certain

our from product bottles - China. most of from China, comes [indiscernible] lens We actually our for from have several that come our bottles the China, our of our comes

headed that's of ordering reasons start actually us and tariffs do and XX% to the even So the of as higher lower ahead the tariffs in that industry gross every demand a actually but increase one of resulted ahead affect the why we the price high is with actually had margins a the everybody is the save tariffs. to

going with in be much would have is will to but actually I in tariffs. we have - by And order do can the orders we company as or to affected So, affected that less for kicking transit that right will we increases so XX% discounts be not have so difficult products. be the give on the tariffs some now is now a anything to price again as that absorb we going into

Beth Senko

that Yes, was you will tax the bit customers? on higher from you this or think the a into that question something a - was can, to has point be the state, sales of of when bit it we push ahead were started every as they you like can is question costs sales collecting these

Bassam Damaj

the So cost we we'll able customers. the don't to all push believe to

of we where and have pharma forth absorbed we reality across why going place in the we unfortunately. some industries in the would specific and actually world, And this when prices As same is to good unique tariffs we sales long common in industry seen this is this the discounts to people is the gross it's the actually actually all has and we high, that to larger absorb will the there business so started to sales taken is of the Ryan had of guidance see This when a less States tax that a order give you quantities are world the margins have have that to order our absorb have this chunk right and that or we as are OTC stay tariffs. it's United in gave not but lose collecting in in as tax the quarter. in not order the now sales

Beth Senko

Last retail updates agree. question any spoken you I a absolutely in calls previous placement about looking into there? had Yes, bit shop

Bassam Damaj

their without basically October/November space all in retailers into decisions taken the giving much the right Yes take this most specifics products. I are of around decisions the is more adding have time mean do - the so place retail frame, we where

people results as first will as but and have believe soon there those we something to have don't until attend So we out much to there. tell have report, we to put be the we it

we before with review have have retail mainly reviews to success the due with wait And we but programs now. the that So right multiple stores and until to are the know the had in we we was are under we this some completed earlier. multiple actually private answer products announced

Beth Senko

until next year a their take the will year? it planograms but release stores Exactly, for

Bassam Damaj

then first as the as Yes, then decide not be into until November them and decisions visible quarter you have and two October, planograms most planogram of which and year on will they of XXXX planogram will this the know categories

Operator

like any This to Dr. question-and-answer closing I session. would remarks. Damaj back the concludes our to conference for turn Bassam over

Bassam Damaj

Andrea. we Actually from have questions you, receive Thank we our shareholders. several did usual as

we questions them go answer through will the we can. as So and

of mentioned niche ANDA additional OTC I OTC the company So goal and be on increase we've is ANDAs pipeline allow tell is to received competitor therapeutic including there we us are status to really less us our before, our ANDAs, our areas will several OTC has the with and questions in add as more that where competition. is the strategy executing the OTC sales on to once So ANDAs ANDA, OTC can mentioned that negotiation? what you

the expect the OTC them coming won't So details in future. something the OTC new now. definitely additional market be market ANDA to ANDAs hearing us from we this in near out us I our hear But the pipeline. in on that from is will discuss on

by utilize the are Novalere price exactly have utilize this to to other our a on question, really mean are with for the is selling product. approved though price lower mean, The we margins. I Amazon, better profit probably FlutiCare goal lowest you our ANDA we again, I our advantage product that partner? recently the how partner, seen going to

second behind there the are We Flonase. competitor out

and a ranked exceedingly world extensive are units We ship day. we an of number

those we to smaller increase and continue allow us FlutiCare our geographically pushing more us competitive for Flonase ranking to payment FlutiCare. of in there batch can markets, to pricing is expand and that's sizes and really better continue and sales a of hopefully on what where having a big with additional better channels. be So help Also will us will terms into

hopefully, on too. news So for look should that the will good from market front potentially

is are other anticipated track The question we discussed that still in date? uplift we the that what our think is I to on NASDAQ to call.

have the for to We satisfy all requirements NASDAQ uplifting.

So which equity have achieve to diligently that and the to towards towards we when satisfy, still we stockholders it addressed needed that. will it be working are hopefully

The supplements? are future, we drugs more other sell very and believe question, sell is really you disease market to have OTC the with on in clear clear much the pricing beginning that from to well-established shift better focus indication with you as is ANDA after from a and easier and after market less brand FDA, products branding compete we a very and go the goal to that we go our originators can or OTC a Yes, the that a market name.

that fast to working we're as So as goal can. we

the our was market. mean, how I where in I look there look in are mean, looking vision more The is add I X% into the niche predict or There drugs hard from portfolio Women, our to we there. out add it's current bring in to three first for second and on your competitor of the bring would question end think what Men and really what for drugs less in an the example net think years is evaluate margin a there in. compete where areas Foam us I go good to years? be and what two to to very players of we how of Minoxidil we're product but is with in portfolio is three that

in know, example out only market in there but are the foam. they Rogaine the and men's only for are for two foam go you the dominates you players additional Amazon if into As there

some us to women's actually price, directly able market to Rogaine up So actually player be penetration at we'll that second in compete the with with area. serious we coming the as be we'll do foam believe X% that lower

the of our East, sixth which competition the potential with I from we Africa? to we have are East is type market, these country market for received the order in for speak drug to So things pipeline. product the before the we a that Middle in the North products have a very announced Zestra the order market. big African think and that is market decision for we we would in bring The is the recently and not the of knowing So Middle making look MENA our little and OTC Algeria a size good for new is products example, that is the North our Algeria potential a we product purchase East market believe and the that there, biggest Middle market $XXX,XXX but market North what to like or our the Africa to Saudi in from of Arabia question,

product expect to product first can that receive that that received $XXX,XXX Saudi have you Arabia and like we for see other order So to the Zestra order magnitude of we close and the countries. the in sold country, when

of market, but the to believe the move we to source and and significant do potential the be will cash a really us up of revenue the that to regions flow profitable actually cover G&A more the that will bottom how add is expenses our more this MENA see situation. we line very and to So the and

extreme I China are I related some the of question the are think the on can address in with we the knowing answers manufactured a increasing actually that situation of is sales the best GlucoGorx that sales on took tariffs how really that's but people the the my the to the how is few product, and tariff GlucoGorx of the if that the see is call on are that ranking to week? The especially Amazon Glucometer going the product by have other increasing So affected that to effect track doing last product. actually

is and our those. I see steadily and next are to those how that think products the a second pricing to to that going tell day. is after day onto that products you is performance selling the four be As to positioning, and is product GlucoGorx third in the We piece extremely of ranked between fact important I and we is those is note I retailer versus large we actually Canada? suite the partner to Canada. not FlutiCare doing can doing to marketing order pause in see I of up out ACON another close think products, team branding, be FlutiCare market our Amazon, the just how in placed our position more to going that really marketing towards really the [indiscernible] specifics now of I certain What product where sales actually this of is well channels, increasing product are there. in we have the on how for And for go of the that, in on us We question and Canada. be on especially sales following them here with And performance and actually well. am the are reinstalling a matter it in product think is expert sales showcase know and peace reviews an

on those actually category towards products will its product. doing moving quarter doing And in once results, in the basis are out good We we're the put think, see extensively are actually how from think being we of I daily market the in that Canada. number second units seller I our Canada top a for

questions questions-and-answers for IR agency? that using as the actually retail basis. IR the dedicated why for the aren't we decisions a taken a We have to have but those actually answer do The I one-to-one order an we all in shareholders have half on actually shareholder directly and agency other questions

to and have and information the continue will directly product. do been have have providing for not with conclude seen be as day on doing as how I updating you a your to and your And to the would as our QX, been to and the that I really to we and retail our And this forward think on we and I the quarter think through public XXXX. want shareholder shareholders of you call think to look we great strategy talking question much you understand and direct the best best to if market from of the towards first mouth sentiment Thank questions you need to and their know we directly our your company, thank you be will I we for able for to to as I believe properly listen next questions directly support I this answer their concerns, you answers shareholders answering the agencies I have those like much we - quarter XXXX. can that, a answer is and way. directly very in

Operator

The you presentation. conference now concluded. for Thank attending today's is

You now disconnect. may

InnovAge Holding (INNV) 16 May 192019 Q1 Earnings call transcript