NextPlat Corp — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; financial statements are unaudited. NextPlat operates e-commerce and satellite communications businesses and, following its July 1, 2023 change of control, consolidates Progressive Care’s healthcare operations. Amounts below are in U.S. dollars; financial statement figures are generally in millions.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $17.493 million | $2.876 million; up 508% |
| Gross profit / margin | $4.810 million / 27.5% | $0.621 million / 21.6% |
| Operating expenses | $6.652 million | $1.859 million |
| Net loss | $1.701 million | $1.187 million |
| Net loss attributable to NextPlat | $1.481 million; $0.08 per share | $1.187 million; $0.08 per share |
| Cash used in operating activities | $2.685 million | $2.067 million |
| Cash and working capital | $23.526 million cash; approximately $29.4 million working capital | Cash was $26.307 million at December 31, 2023 |
| Debt | $1.398 million notes payable, including $0.233 million current | $1.523 million notes payable at December 31, 2023 |
| Total liabilities / assets | $17.968 million / $65.061 million | $16.382 million / $64.469 million at December 31, 2023 |
Revenue included $11.324 million of pharmacy prescription and other revenue, $3.304 million of pharmacy 340B contract revenue, and $2.865 million of e-commerce revenue. The filing attributes nearly all of the increase over Q1 2023 to Progressive Care, which was not consolidated in that comparison period. E-commerce revenue was essentially flat. The pharmacy filled approximately 134,000 prescriptions.
Operating expenses rose by $4.793 million, reflecting the healthcare business, including higher payroll, professional fees, and depreciation and amortization. The quarter also included $0.612 million of stock-based compensation, $0.698 million of intangible-asset amortization, and a $0.132 million impairment loss on operating right-of-use assets. Segment net losses were $1.330 million for e-commerce and $0.371 million for healthcare.
Operating cash outflow worsened by approximately $0.618 million year over year. Management cited working-capital use, particularly increased receivables and inventory; accounts receivable increased to $12.928 million from $8.923 million at year-end. Investing cash outflow was $0.063 million, principally property and equipment purchases; financing cash outflow was approximately $0.001 million. Cash declined $2.781 million during the quarter.
Changes, outlook, and risks
- Comparability: Progressive Care has been consolidated since July 1, 2023. Accordingly, Q1 2024 includes healthcare revenue and expenses, while Q1 2023 does not; the reported growth is not a like-for-like organic comparison.
- Liquidity outlook: Management says existing cash and borrowing availability are sufficient for planned operations for at least 12 months after issuance of the financial statements. No quantified revenue or earnings guidance is provided.
- Business plans: NextPlat is upgrading its e-commerce systems and developing a Web3 digital-assets platform, which remains in design and development. These plans are forward-looking and carry execution and market risks.
- Concentrations: Amazon accounted for 39.9% of reported company revenue in Q1 2024, compared with 57.2% in Q1 2023. One healthcare vendor represented 98% of Progressive Care’s vendor purchases. Three PBMs represented 33%, 21%, and 16% of healthcare prescription reimbursements, respectively.
- Contingency: A dispute with former CFO Thomas Seifert remains in litigation, with a jury trial scheduled for the trial calendar beginning August 21, 2024. The company says it believes it has adequate defenses; the filing does not quantify a potential loss.
- Subsequent events: NextPlat completed its acquisition of Outfitter Satellite on April 1, 2024 for $760,000, subject to adjustments; $100,000 remained payable upon delivery of audited 2022 and 2023 financial statements. On April 12, NextPlat entered into an agreement to merge Progressive Care into a wholly owned subsidiary, subject to closing conditions.
- Controls: Management concluded disclosure controls were effective as of March 31, 2024 and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Assess results on a comparable basis, separating the Progressive Care consolidation effect from underlying growth and performance.
- Monitor receivables, inventory, operating cash burn, and the ability to sustain liquidity as healthcare operations expand.
- Review the scale and terms of the Outfitter acquisition and the proposed Progressive Care merger, including closing status and any subsequent financing or dilution.
- Evaluate customer, vendor, and PBM concentration exposures, and the implications of the Seifert litigation and scheduled trial.
- Reconcile the share counts: the balance sheet reports 18,724,596 shares outstanding at March 31, while the cover page reports 18,773,146 shares outstanding as of May 10, 2024.