LAS VEGAS, May 15, 2023 — Healthy Extracts Inc. (OTCQB: HYEX), a leading developer and distributor of plant-based nutraceutical products for heart and brain health, reported results for the first quarter ended March 31, 2023. All comparisons are to the year-ago period unless otherwise noted.
First Quarter Financial Highlights
⦁ Net revenue totaled $615,000, up 11%, driven by product line and distribution channel expansion.
⦁ Increased manufacturing and freight costs resulted in gross margin declining to 45.2% from 58.9% in the year-ago quarter. Gross margins are expected to return to normal levels in the second half of 2023 with the anticipated lowering of these costs.
⦁ Net loss for the quarter, which was primarily due to costs related to increased manufacturing and freight costs, costs associated with the company’s previously announced corporate acquisition, and interest expense, totaled $579,000 or $(0.00) per basic and diluted share. Excluding costs related to the company’s planned acquisition and public offering expenses, regulatory expense, change in fair value on derivative expense and interest expense, net loss totaled $135,000. This compares to net income of $3,011 or $0.00 per basic and diluted share in the same year-ago quarter.
⦁ Cash totaled $213,000 as of March 31, 2023, compared to $66,000 on December 31, 2022, with the increase resulting from financing activity in the first quarter.
First Quarter Operational Highlights
⦁ Subscription customers at March 31, 2023 increased 64% over the previous year. Growth in subscribers helps lower customer acquisition costs and the recurring revenue stream provides greater visibility into future potential revenue.
⦁ The product line of the company’s brand influencer, Whitney Johns, was featured on Amazon Buy with Prime in celebration of Women’s History Month. Amazon’s selected Whitney Johns for her entrepreneurial spirit, dedication to innovation, being a thought leader in nutrition and fitness, and for launching one of the nation’s premier nutritional product lines for superior health and optimal fitness. These Whitney Johns products are based on Healthy Extracts plant-based proprietary and patented formulations that are supported by numerous independently published studies.
⦁ Entered agreement to acquire nutraceutical manufacturer Hyperion and its digital marketing affiliate, Online Publishing & Marketing. The closing of this acquisition is subject to certain closing conditions and no assurances can be provided that it will be completed as contemplated.
“In Q1, our top-line growth was driven by a continued ramp up in sales, especially through our direct-to-consumer channels, which included continued growth in recurring revenue from product subscriptions,” commented Healthy Extracts president, Duke Pitts. “These results demonstrate how we have established a solid foundation for addressing the fast-growing heart health supplement market with published studies that support our brain health claims.
“In preparation for completing our plans to acquire Hyperion and Online Publishing & Marketing, our EVP of sales and marketing, Scott Landers, has begun the initial phase of integrating our companies. We believe these steps will help ensure optimal synergies and efficiencies upon the closing of the transaction, with this driving a substantial increase in revenue from additional product sales.
“We are currently preparing for some major new product launches later this year, including the anticipated Whitney Johns ‘gut health’ gel pack. This product will enable us to address the very large and growing global gut health market that is projected to grow at a 7.9% CAGR to reach nearly $72 billion by 2027 according to data published by Fortune Business Insights.
“Our other new products under development include natural solutions for optimal sleep breathing, weight loss and glucose management. We expect these to be quickly adopted by our extensive existing customer base who value plant-based products that support their health without negative side effects.
“Our new gel pack format for brain and gut health makes their formulations easier and more convenient to consume, with the added benefits of easier digestion and greater absorption. We see our exclusive access to this patented gel technology creating many higher-margin, multi-million-dollar market opportunities and an added competitive advantage.
“As we continue to focus on increasing our recurring revenue stream from subscriptions and maintaining our traditional high gross margin, we anticipate both our top and bottom-line to expand over the coming quarters.
“We will also continue to pursue strategic acquisitions that would complement our portfolio of plant-based products and leverage our broad distribution channels. Such potential transactions would build upon our acquisitions of BergametNA™ for heart health in 2019 and Ultimate Brain Nutrients™ for brain health in 2020. We believe these acquisitions have laid the foundation for continued growth and broadening market reach.”
First Quarter Financial Summary
Net revenue in the first quarter of 2023 increased 11% to $615,000 from $552,000 in the same year-ago quarter, primarily due to product line and distribution channel expansion.
Gross profit totaled $278,000 or 45.2% of net revenue as compared to $325,000 or 58.9% of net revenue in the same year-ago quarter. The decrease in gross margin was a result of the increase in manufacturing and freight costs. Gross margins are expected to return to normal levels in the second half of 2023.
Operating expenses increased $313,000 to $683,000 compared to the same year-ago quarter. The increase in operating expenses was due to increased general and administrative expenses.
Net loss totaled $579,000 or $(0.00) per basic and diluted share compared to a net income of $3,011 or $0.00 per basic and diluted share in the same year-ago quarter. Excluding costs related to the company’s planned acquisition and public offering expenses, regulatory expense, change in fair value on derivative expense and interest expense, net loss totaled $135,000.
Cash totaled $213,000 as of March 31, 2023, as compared to $66,000 on December 31, 2022.
About Healthy Extracts “Live Life Young Again”
Healthy Extracts Inc. is a platform for developing or acquiring science-forward, clinically proven, plant-based proprietary products in select high-growth categories within the multibillion-dollar nutraceuticals market.
The company’s subsidiaries, BergametNA™ and Ultimate Brain Nutrients™ (UBN), offer nutraceutical natural heart and brain health supplements. This includes the only heart health supplement containing Citrus Bergamot SuperFruit™. This superfruit is known to have the highest quality and concentration of polyphenols and flavonoids, and with healthy heart benefits backed by more than 17 clinical studies.
UBN KETONOMICS® proprietary formulations have been clinically shown to support brain health, including memory, cognition, focus and neuro-energy. UBN is pursuing intellectual property license opportunities for monetizing its IP portfolio of multiple issued and pending patents.
Forward-Looking Statements and Safe Harbor Notice
All statements other than statements of historical facts included in this press release are “forward-looking statements” (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include our expectations and those statements that use forward-looking words such as “projected,” “expect,” “possibility” and “anticipate.” The achievement or success of the matters covered by such forward-looking statements involve significant risks, uncertainties and assumptions. Actual results could differ materially from current projections or implied results. Investors should read the risk factors set forth in the Company’s Annual Report on Form 10-K filed with the SEC on April 1, 2022, and future periodic reports filed with the SEC. All of the Company’s forward-looking statements are expressly qualified by all such risk factors and other cautionary statements.
The Company cautions that statements and assumptions made in this news release constitute forward-looking statements and make no guarantee of future performance. Forward-looking statements are based on estimates and opinions of management at the time statements are made. The information set forth herein speaks only as of the date hereof. The Company and its management undertake no obligation to revise these statements following the date of this news release.
Food and Drug Administration Disclosure
The product and formulation featured in this release is not for use by or sale to persons under the age of 12. This product should be used only as directed on the label. Consult with a physician before use if you have a serious medical condition or use prescription medications. A doctor’s advice should be sought before using this and any supplemental dietary product. These statements have not been evaluated by the FDA. This product is not intended to diagnose, treat, cure or prevent any disease.
BergametNA™, Ultimate Brain Nutrients™, UBN™, Citrus Bergamot SuperFruit™ and F4T® are registered trademarks of Healthy Extracts Inc.™