Delivered Strong Results with Third Quarter and Year-to-Date Adjusted EBITDA Improvements of 35% and 68% respectively; Year-Over-Year
Third Quarter Gross Profit and Revenue Increase of 8% and 5% respectively; Year-Over-Year
Eliminated $49.7M out of $54.3M of its Remaining Warrant Liability
HOLLYWOOD, Fla., Oct. 26, 2018 (GLOBE NEWSWIRE) -- Healthier Choices Management Corp. (OTC Pink: HCMC) today announced financial results for the three-month period ended September 30, 2018.
Third Quarter 2018 Results and Recent Highlights:
- Net sales from continuing operations for the three-month period ended September 30, 2018 amounted to $3.0 million, compared to $2.9 million during the same period last year; a 5% increase.
- Gross profit from continuing operations increased by approximately $108,000 for the three-month period ended September 30, 2018 amounting to $1.4 million, compared to $1.3 million for the same period last year.
- Operating loss for the three-months ended September 30, 2018 was approximately $800,000 a reduction of roughly $2.2M for the same period in 2017; a 74% improvement.
- Net loss from continuing operations amounted to approximately $11.3 million; due to the non-cash elimination of the Series A warrants which amounted to $10.7 million.
- $2.0 million deposit from the MJ Holdings, Inc. (OTC Pink: MJNE) distribution agreement will not be recognized as revenue until the Fourth Quarter of 2018.
Jeffrey Holman, Chairman and Chief Executive Officer of Healthier Choices Management Corp., said, “We are very pleased with our third quarter results. We continue to make forward strides as we maintain our commitment to improving the fundamentals of the business.”
Mr. Holman went on to comment; “Additionally, it is important to note that our third quarter operating results do not reflect the $2,000,000 in sales proceeds from the distribution agreement with MJ Holdings, Inc. for our Patented Quartz “Q-Cup” Technology. We are looking forward to beginning to realize the benefit of the sales proceeds from this distribution agreement in the fourth quarter.” In closing Mr. Holman noted that, “The exchange agreement we executed in the third quarter has successfully eliminated almost $50,000,000 of liability, in exchange for approximately $21,000,000 of preferred stock, exchangeable for $21,000,000 of HCMC common stock without any additional warrants or cash payment obligations. We believe that this transaction, which has saved HCMC and its shareholders approximately $29,000,000 of potential dilution, will lead to the re-creation of shareholder value.”
Results of Operations
The following table sets forth our Condensed Consolidated Statements of Continuing Operations for the three and nine-months ended September 30, 2018 and 2017:
HEALTHIER CHOICES MANAGEMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Total sales, net | $ | 3,030,474 | $ | 2,882,207 | $ | 9,915,801 | $ | 9,761,021 | ||||||||
| Total cost of sales | 1,643,681 | 1,603,283 | 5,453,361 | 4,996,249 | ||||||||||||
| GROSS PROFIT | 1,386,793 | 1,278,924 | 4,462,440 | 4,764,772 | ||||||||||||
| Total operating expenses | 2,179,492 | 4,272,323 | 7,334,165 | 12,282,932 | ||||||||||||
| LOSS FROM OPERATIONS | (792,699 | ) | (2,993,399 | ) | (2,871,725 | ) | (7,518,160 | ) | ||||||||
| Total other income (expense), net | (10,502,057 | ) | (6,451 | ) | (10,151,796 | ) | (51,940 | ) | ||||||||
| NET LOSS FROM CONTINUING OPERATIONS | $ | (11,294,756 | ) | $ | (2,999,850 | ) | $ | (13,023,521 | ) | $ | (7,570,100 | ) | ||||
See non-GAAP financial measure discussion
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| Adjusted EBITDA | ||||||||||||||||
| Loss from operations | $ | (792,699 | ) | $ | (2,993,399 | ) | $ | (2,871,725 | ) | $ | (7,518,160 | ) | ||||
| Depreciation and amortization | 92,258 | 91,016 | 269,730 | 170,440 | ||||||||||||
| Stock compensation | 140,356 | 2,037,976 | 1,298,862 | 3,300,532 | ||||||||||||
| Adjusted EBITDA | $ | (560,085 | ) | $ | (864,407 | ) | $ | (1,303,133 | ) | $ | (4,047,188 | ) | ||||
Consolidated Balance Sheets
The following table sets forth our Condensed Consolidated Balance Sheets for the periods ended September 30, 2018 and December 31, 2017:
HEALTHIER CHOICES MANAGEMENT CORP.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, 2018 | December 31, 2017 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 8,271,376 | $ | 7,883,191 | ||||
| Other current assets | 1,818,240 | 1,070,619 | ||||||
| TOTAL CURRENT ASSETS | 10,089,616 | 8,953,810 | ||||||
| Other assets | 3,129,795 | 2,747,595 | ||||||
| TOTAL ASSETS | $ | 13,219,411 | $ | 11,701,405 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Other current liabilities | $ | 3,334,722 | $ | 1,014,951 | ||||
| Derivative liabilities – warrants | 1,833,158 | 10,231,697 | ||||||
| TOTAL CURRENT LIABILITIES | 5,167,880 | 11,246,648 | ||||||
| Other liabilities | 8,801 | 10,459 | ||||||
| TOTAL LIABILITIES | 5,176,681 | 11,257,107 | ||||||
| - | - | |||||||
| TOTAL STOCKHOLDERS’ EQUITY | 8,042,730 | 444,298 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 13,219,411 | $ | 11,701,405 | ||||
Non-GAAP – Financial Measure
The following discussion and analysis contains a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternative to, net income, operating income, and cash flow from operating activities, liquidity or any other financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future financial results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.
Management believes stockholders benefit from referring to the Adjusted EBITDA in planning, forecasting, and analyzing future periods. Management uses this non-GAAP financial measure in evaluating its financial and operational decision making and as a means of evaluating period to period comparison.
We define Adjusted EBITDA as loss from operations adjusted for non-cash charges from depreciation and amortization and stock compensation. Management believes Adjusted EBITDA is an important measure of our operating performance because it allows management, investor and analysts to evaluate and assess our core operating results from period to period after removing the impact of significant non-cash charges that effect comparability between reporting periods. Our management recognizes that Adjusted EBITDA has inherent limitations because of the excluded items.
We have included a reconciliation of our non-GAAP financial measure to loss from operations as calculated in accordance with GAAP. We believe that providing the non-GAAP financial measure, together with the reconciliation to GAAP, helps investors make comparisons between the Company and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to specific definition being used and to the reconciliation between such measures and the corresponding GAAP measure provided by each company under applicable rules of the Securities and Exchange Commission (“SEC”). The table above presents a reconciliation of Adjusted EBITDA to loss from operations, a GAAP financial measure:
About Healthier Choices Management Corp.
Healthier Choices Management Corp. is a holding company focused on providing consumers with healthier daily choices with respect to nutrition and other lifestyle alternatives. One segment of our business is our natural and organic grocery operations in Ft. Myers, Florida. Another segment is a U.S. based retailer of vaporizers and e-liquids. HCMC sells direct to consumer via company-owned brick-and-mortar retail locations operating under "Ada's Natural Market" and "The Vape Store" brands. The newest emerging source of revenue for HCMC is our technology and IP to the cannabis and CBD market.
Healthier Choices Management Corp. Inc. (www.healthiercmc.com).
Forward Looking Statements.
This press release contains forward looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Additional written or oral forward-looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise. Statements contained in this press release that are not historical facts are forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are based on management's estimates, assumptions and projections and are not guarantees of future performance. The Company assumes no obligation to update these statements. Forward looking statements may include, but are not limited to, projections or estimates of revenue, income or loss, exit costs, cash flow needs and capital expenditures, statements regarding future operations, expansion or restructuring plans, including our recent exit from and winding down of our wholesale distribution operations. In addition, when used in this release, the words "anticipates," "believes," "estimates," "expects," "intends," and "plans" and variations thereof and similar expressions are intended to identify forward looking statements.
Factors that may affect our future results of operations and financial condition include, but are not limited to, fluctuations in demand for our products, the introduction of new products, our ability to maintain customer and strategic business relationships, the impact of competitive products and pricing, growth in targeted markets, the adequacy of our liquidity and financial strength to support its growth, and other information that may be detailed from time-to-time in our filings with the United States Securities and Exchange Commission.
Contact Information:
Healthier Choices Management Corp.
3800 North 28TH Way, #1
Hollywood, FL 33020
Office: 305-600-5004 / Fax: 954-272-7773