Numinus Wellness Q2 2024 Revenue Declines Amid Clinic Reshuffling And Expected Industry Trends

Psychedelics healthcare company Numinus Wellness NUMIF shared its unaudited, condensed and consolidated interim financial results for the three and six months ended February 29, 2024. 

Q2 showed:

• Cash position of $4.8 (CA$6.6) million by February 29, 2024, compared to the $14.33 million held by February 28, 2023.
• Three and six months revenue of $3.66 million and $7.98 million respectively, compared to $3.89 million and $8.0 million during the same comparable periods in 2023.
• After costs, three and six months gross profit was $1.2 million and $2.77 million respectively, while $1.53 million and $3.26 million during the same periods in 2023.
• Three and six months G&A (general and administrative) expenses totaled $4.23 million and $8.16 million, as compared to $5.47 million and $10.78 million during the same comparable periods in 2023.
• Three and six month expenses totaled $4.88 million and $9.47 million respectively, as compared to $6.69 million and $13.3 million in the same periods in 2023.
• Three and six month net loss totaled $4.33 million and $7.53 million, while $5.33 million and $9.9 million during the comparable 2023 periods.
• Deficit of $92.5 million by February 29, 2024.

Breakdown

Revenues declined 15.4% in Q2 2024 vs. Q2 2023, reportedly due to the company’s further optimization of operations to focus on "profitability and seasonality effects."

Gross margin also sequentially declined 310 basis points in Q2 2024, to 33.0% from 36.1% in Q1 2024, reflecting the decrease in revenue compared to the prior quarter. 

The company reports that, in the quarter, it continued its "cost-containment initiatives" to refocus support on revenue-producing activities and profitability (see below.)

In terms of operations, the period's highlights include a doubled enrollment in Numinus training programs from Q1 to Q2 (1,400+ learners vs. 700+); 15 clinical trials managed at its Cedar Clinical Research (CCR); and 17,661 client appointments provided in its clinics (average of 299.3 appointments per operating day.)

• Wellness clinics were responsible for $3.1 million of the total quarterly revenue, a 9.5% decrease compared to the $3.4 million during Q2 2023 -owing to the Phoenix location cessation of operations plus a drop in the number of scheduled appointments (cost containment procedures and focus on "appointment profitability.")
• Clinical research quarterly revenues (conducted at CCR) were around $500,000, a 27.1% decrease Q1 2024 yet a 21.0% increase compared to Q2 2023. The sequential quarter decrease owes to completed high-value clinical trials and the operations cease at the Phoenix research center. 
• CCR is currently conducting two psychedelic drug candidate clinical trials, with four further expected to commence in Q3 2024, plus other non-psychedelic studies. Since Q3 2023, CCR has managed 26 clinical trials. Recently, Numinus announced its submission of a Canadian clinical trial application to assess the feasibility of a group model in MDMA-assisted psychotherapy, enrolling trainee practitioners as participants.
• Last, Numinus' Canadian and U.S.-accredited clinical training includes a certification program for practitioners on ketamine, MDMA and psilocybin-assisted therapy. The company has been working on the Oregon Health Authority (OHA) audit to meet requirements for psychedelic facilitators and has further diversified its training toward training clinical research teams.
• Introduction of the free "Introduction to Psychedelics" training course is according to CEO Payton Nyquvest "proving to be a pathway" to the paid courses, with some 30+ learners already taking more advanced training offered by Numinus.

Closing Quarter & Near-Term Outlook

The Numinus model aims to help people heal and be well through developing and delivering innovative mental healthcare and access to safe, evidence-based psychedelic-assisted therapies (PAT) for depression, anxiety, trauma, pain and substance use.

Positioning itself as "an integrated mental healthcare provider," Numinus is building the needed infrastructure of clinical research support, practitioner training and patient therapy to serve the expected demand for PAT: with currently 90+ potential psychedelic drugs in the preclinical-to- final-clinical-development-stages, the FDA could eventually accept MDMA as a new drug application with a Prescription Drug User Fee Act (PDUFA) target action date of August 11, 2024.

In preparation for the above, Numinus launched two "critical" initiatives: one, cost containment; and two, strategic realignment. These involve:

• A focus on profitable operations in the U.S., where psychedelic treatment is expected to be approved first. Numinus discontinued its unprofitable clinic in Phoenix, Arizona and consolidated operations at its successful Utah clinics toward optimizing patient experience and care model, improving efficiencies and establishing best practices for future expansion.
• Reducing headcount by 60% since Q2 2023, eliminating non-revenue roles and aligning remaining employees "on growth-oriented initiatives and activities."

Review Process

In January 2024, the Numinus Board of Directors conducted a review process to "explore, review and evaluate a broad range of strategic alternatives" for the company to unlock shareholder value, with Stifel Canada as its sole financial and strategic advisor.

The review is officially complete, with Numinus deciding to explore opportunities to redefine, divest and/or discontinue its Canadian clinical operations.

The company will now focus on growth opportunities in the U.S. "while shifting to a resource-efficient, capital-light model" to continue supporting Canadian organizations, therapists and healthcare professionals in the field.

"This is consistent with our ongoing efforts to maximize shareholder returns based on our current financial and management resources," says management.

The company's U.S. operations reportedly generated 88% of its revenue in FY2023, with U.S. wellness clinics having "an optimized business model with full-time practitioners and near-term profitable EBITDA,” CEO Nyquvest detailed.

The Canadian reorganization includes a non-binding Letter of Intent (LOI) with the Canadian Centre for Psychedelic Healing (CCPH), which currently operates seven clinics across the country under the “Field Trip” brand.

Toward continuing to support healthcare providers and reinforce the company's commitment to advancing novel psychedelic-assisted therapies in Canada, a new pilot membership program under the Numinus Network initiative would allow therapists and healthcare professionals to retain access to the latest Numinus therapeutic protocols, including ketamine and psychedelic-assisted therapies.

The agreement has not been reached and the Canadian Reorganization has yet to take place.

Numinus has organized a Q2 2024 results conference call and webcast for April 15 at 5:30 p.m. ET, while the annual general meeting will be held on May 31.

Photo: Benzinga edit with images by Zita and canadastock on Shutterstock.