MISSISSAUGA, Ontario - Covalon Technologies Ltd. (the 'Company' or 'Covalon') (TSXV: COV; OTCQX: CVALF), an advanced medical technologies company, today announced its fiscal 2023 fourth quarter and year end results for the period ended September 30, 2023.

'I am pleased to announce that in the fourth quarter of 2023, the Company achieved a significant increase in revenue and demonstrated a continued commitment to improve profitability. I am very proud of the team's strong efforts in delivering these results,' said Brent Ashton, Covalon's Chief Executive Officer.

Revenue for the three months ended September 30, 2023 increased 28% to $6.9M compared to $5.4M for the same period of the prior year. Product revenue for the three-month period ended September 30, 2023 increased by $1.7M, or 35%, to $6.5M compared to $4.8M for the same period of the prior year, due substantially to increased customer demand for the Company's collagen dressing product line in the US market.

Revenue for the year ended September 30, 2023 increased 47% to $26.6M compared to $18.1M for the same period of the prior year. Product revenue for the year ended September 30, 2023 increased 46% to $23.9M compared to $16.4M for the same period of the prior year. Product revenue increased $7.5M over the prior year due substantially to increased customer demand for collagen dressings in the US market and silicone-based dressings internationally.

Gross margin for the three-month period ended September 30, 2023 increased to 42% compared to 24% in the same period for the prior year. During the three months ended September 30, 2023, the Company booked inventory provision expense of $0.7M, as compared to $1.3M during the three months ended September 30, 2022.

Gross margin for the year ended September 30, 2023 increased to 54% compared to 41% in the same period for the prior year. During the year ended September 30, 2023, the Company recorded an inventory provision expense of $0.3M as a result of changes in obsolescence estimates, as compared to an inventory provision expense of $2.3M being recorded during the year ended September 30, 2022. The gross margin is significantly influenced by source of revenue and by the relative mix of products sold in any given financial period.

Operating expenses for the three months ended September 30, 2023 increased $0.4M to $5.8M, compared to $5.4M for the prior year's comparative period, substantially due to termination benefits to a former senior management team member.

Operating expenses for the year ended September 30, 2023 increased $2.3M to $18.9M, compared to $16.6M for the prior year's comparative period. Approximately $1.7M of this increase relates to increased sales and marketing staffing and activities.

Both net loss and net loss from continuing operations for the three months ended September 30, 2023 was $2.9M or $0.12 per share, compared to a net loss of $4.1M or $0.16 per share for the three months ended September 30, 2022.

Net loss from continuing operations for the year ended September 30, 2023 was $4.5M or $0.18 per share, compared to a net loss of $9.3M or $0.36 per share for the year ended September 30, 2022. Net loss from discontinued operations for the year ended September 30, 2023 was $nil, compared to a net loss of $0.4M or $0.02 per share for the year ended September 30, 2022. Net loss for the year ended September 30, 2023 was $4.5M or $0.18 per share, compared to a net loss of $9.7M or $0.38 per share for the year ended September 30, 2022.

Adjusted Gross Margin for the three-month period ended September 30, 2023 was 53% compared to 49% for the same period of the prior year. Adjusted Gross Margin for the year ended September 30, 2023 was 56% compared to 55% for the same period of the prior year. Gross margin is highly influenced by the mix of collagen-based dressings, silicone-based dressings, medical coating services, passive dressings, and related service revenues generated in the periods. Gross margin fluctuates as a result of the mix of products sold in any given quarter, or year, by product type and geography. For further information about Adjusted Gross Margin, see 'Definitions and Reconciliations of Non-IFRS Financial Measures' below.

Adjusted EBITDA loss for the three months ended September 30, 2023 was $1.8M, compared to an Adjusted EBITDA loss of $2.2M for the three months ended September 30, 2022. Adjusted EBITDA loss for the year ended September 30, 2023, was $2.7M, compared to an Adjusted EBITDA loss of $5.6M for the year ended September 30, 2022.

About Covalon

Covalon Technologies Ltd. is a patient-driven medical device company, built on the relentless pursuit to help the most vulnerable patients have a better chance at healing. Through a strong portfolio of patented technologies and solutions for advanced wound care, infection prevention, and medical device coatings, we offer innovative, gentler, and more compassionate options for patients to heal with less infections, less pain, and better outcomes. Our solutions are designed for patients and made for care providers. Covalon leverages its patented medical technology platforms and expertise in two ways: (i) by developing products that are sold under Covalon's name and (ii) by developing and commercializing medical products for other medical companies under development and license contracts. The Company is listed on the TSX Venture Exchange, having the symbol COV and trades on the OTCQX Market under the symbol CVALF. To learn more about Covalon, visit our website at www.covalon.com.

This news release may contain forward-looking statements which reflect the Company's current expectations regarding future events. The forward-looking statements are often, but not always, identified by the use of words such as 'seek', 'anticipate', 'plan, 'estimate', 'expect', 'intend', or variations of such words and phrases or state that certain actions, events, or results 'may', 'could', 'would', 'might', 'will' or 'will be taken', 'occur', or 'be achieved'. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts, but instead represent management's expectations, estimates, and projections regarding future events. Forward-looking statements involve risks and uncertainties, including, but not limited to, the factors described in greater detail in the 'Risks and Uncertainties' section of our management's discussion and analysis of financial condition and results of operations for the year ended September 30, 2023, which is available on the Company's profile at www.sedarplus.ca , any of which could cause results, performance, or achievements to differ materially from the results discussed or implied in the forward-looking statements. Investors should not place undue reliance on any forward-looking statements. The forward-looking statements contained in this news release are made as of the date of this news release, and the Company assumes no obligation to update or alter any forward-looking statements, whether as a result of new information, further events, or otherwise, except as required by law.

Contact:

Tel: 1.877.711.6055 x 233

Email: investors@covalon.com

Web: https://covalon.com/

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