NextPlat Corp — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed April 11, 2024. This is an annual report, not a standalone fourth-quarter report. Unless otherwise noted, figures below are in U.S. dollars and rounded to millions.
Business context and reporting period
NextPlat operates e-commerce and healthcare businesses. E-commerce includes satellite communications products and services sold through company websites and third-party marketplaces. Healthcare includes pharmacies, prescription dispensing, 340B contract services, and healthcare data and administration services.
Progressive Care became a consolidated subsidiary on July 1, 2023, after NextPlat and its CEO and director obtained voting control. Accordingly, FY2023 includes Progressive Care’s results only from July 1 through year-end; FY2022 does not include it in consolidated revenue.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $37.756m | $11.710m |
| Gross profit / margin | $11.311m / 30.0% | $2.489m / 21.3% |
| Operating expenses | $34.539m | $9.692m |
| Consolidated net loss | $12.407m | $9.161m |
| Net loss attributable to NextPlat | $3.778m | $9.161m |
| Basic and diluted loss per share | $0.22 | $0.96 |
| Cash from operating activities | $(3.596)m | $(3.602)m |
Revenue rose 222%, primarily from $26.779m of healthcare revenue consolidated for the second half of 2023. E-commerce revenue declined 6.3% to $10.977m. The filing attributes the decrease to the absence of approximately $1.2m of Ukraine-related revenue recorded in 2022 and approximately $1.5m of German sales delays from regulations, partly offset by approximately $2.0m of growth in other markets.
Operating expenses included a $13.895m non-cash goodwill impairment charge related to Pharmacy Operations. A $11.352m non-cash gain from remeasuring NextPlat’s previously held Progressive Care interest helped reduce the reported consolidated net loss. The $8.629m net loss allocated to noncontrolling interests explains why the loss attributable to NextPlat was substantially less than the consolidated loss.
At year-end, cash was $26.307m, working capital was approximately $29.4m, and total current assets and current liabilities were $43.638m and $14.237m, respectively. Notes payable totaled $1.523m; operating and finance lease liabilities totaled $1.484m. Operating cash use remained approximately $3.6m. Investing cash flow was positive $5.199m, including $7.352m of cash acquired with Progressive Care; financing provided $5.860m, principally from the April 2023 equity raise.
Material changes, outlook, and risks
- Progressive Care contributed $26.8m of revenue and a $14.7m net loss for the six months consolidated. Its acquisition accounting included $14.626m of initial goodwill; nearly all was impaired by year-end, leaving $0.731m. Identifiable intangible assets were $14.423m.
- Management states that cash and borrowing availability are sufficient for planned operations for at least 12 months after issuance of the financial statements. However, the MD&A forward-looking-statement discussion also refers to a belief that cash and borrowing capacity may not be sufficient for working-capital needs. The filing text does not reconcile these statements.
- No quantified financial guidance is provided. Management’s stated priorities include expanding e-commerce offerings and markets, pursuing government sales and acquisitions, and growing healthcare data services and pharmacy operations.
- Concentration risks include Amazon, which represented 51.6% of total sales in 2023, and Progressive Care’s primary supplier, which accounted for approximately 98% of its pharmaceutical purchases for the six months ended December 31, 2023. Three PBMs accounted for 31%, 29%, and 14% of Progressive Care reimbursements in that period.
- A lawsuit with former CFO Thomas Seifert remained pending; a jury trial was scheduled to begin August 21, 2024. The company says it believes it has adequate defenses. After year-end, NextPlat acquired Outfitter Satellite for stated consideration of $760,000, subject to adjustment; the acquisition closed April 1, 2024.
- The independent auditor issued an unqualified opinion on the financial statements. Management reported effective disclosure controls and internal control over financial reporting, but Progressive Care—which represented approximately 63% of consolidated assets and 71% of revenue—was excluded from management’s internal-control assessment under the acquisition transition guidance. The auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- How much of the reported revenue growth and gross-margin improvement reflects the Progressive Care consolidation, and how are both segments performing on a comparable basis?
- What assumptions drove the Progressive Care goodwill impairment and the valuation of its remaining intangible assets?
- Which liquidity statement best reflects management’s outlook, and what are the timing and availability of borrowing resources?
- What are the status and potential financial exposure of the Seifert litigation, and the terms and integration impact of the Outfitter acquisition?
- How exposed are sales and pharmacy operations to Amazon, key drug suppliers, PBMs, and government reimbursement programs?