POMPANO BEACH, Fla., April 4, 2014 (GLOBE NEWSWIRE) — DS Healthcare Group, Inc. (DSKX), a leading developer of personal care products, today announced financial results for the three and twelve months ended December 31, 2013.
2013 Year-End Highlights:
- Record net revenues of $13,652,000, up 22% over 2012
- Gross margin increases to 50% in 2013 from 40% in 2012
- Gross profits increase to $6,709,000, up 50% over 2012
- Net loss narrows 11% from 2012 to $(3,225,000)
- Adjusted EBITDA, a non-GAAP financial measure, in 2013 was a loss of $(1,170,000)
- Files first patent for its proprietary hair loss formula
- Begins preparation to file Investigational New Drug application with FDA for prescription hair loss product
- Continues global expansion with launch of products in Brazil and China, two of the world’s largest beauty markets, and integrates acquired Mexican distributor
- $3.144 million fund raise in December 2013 and January 2014 strengthens balance sheet
- Cash on hand of $2,873,000 as of December 31, 2013
Fourth Quarter (Q4) 2013 Highlights:
- Q4 net revenues up 10% year-over-year to $3,059,000
- Gross margin increases to 49% in Q4 resulting in a gross profit of $1,570,000
- Net loss narrows 66% from Q4 of 2012 to $(945,000)
- Adjusted EBITDA, a non-GAAP financial measure, in Q4 was a loss of $(110,000)
“In 2013 we continued to solidify our position as the leader in innovative over-the-counter hair thinning products as evidenced by our fifth consecutive year of record top line growth. Revenue growth was driven primarily by sales of our Revita Shampoo and Spectral treatment lines that are recognized around the world for their efficacy in hair re-growth. During the year we also made a very strategic start into the prescription hair loss market, where there is a clear and underserved need for effective solutions without side effects,” stated DS Healthcare President and CEO Daniel Khesin.
Mr. Khesin continued, “We are increasing market share for our over-the-counter branded products which are now sold through over 10,000 outlets in the U.S. and internationally. In 2013 48% of our sales were from outside of the U.S. We made key market moves into Brazil, the second largest beauty market in the world, and we fully integrated our former Mexican distributor, which we acquired at the end of 2012. Sales in Mexico made a significant contribution to our revenue growth in 2013 and we believe Brazil could do the same in 2014 and beyond. Notable milestones achieved in 2013 include our efforts that led to a 5-year agreement we executed in February of 2014 with one of the world’s largest healthcare companies. Through this agreement, we will provide one of our proprietary formulations, ingredients and technology to this Fortune 500 global healthcare company for use in a topical product to be launched and distributed by them. This kind of agreement validates the recognized uniqueness and value of our innovative formulations in the market.”
“During 2014 we plan to begin the clinical development of our pharmaceutical hair loss product, which we believe addresses a $10 billion market in need of a product that works. We laid the foundations in 2013 by filing for a U.S. patent for this prescription grade formulation, retaining Aptiv Solutions as our clinical research organization, and by preparing to file our investigational new drug application with the Food and Drug Administration. If approved, we believe our product would be only the third prescription grade hair loss product and the second topical prescription grade hair loss product to receive FDA approval in the U.S.,” Khesin concluded.
For the year ended December 31, 2013, DS Healthcare’s net revenues increased to a record $13,651,661, up $2,427,237 or 22%, from $11,224,424 in 2012. Revenue increase was driven by the Company’s Mexican subsidiary acquired at the end of 2012 and the fulfillment of backlog orders from the fourth quarter of 2012. The Company’s Revita and Revita COR hair re-growth stimulating shampoos and conditioners were the primary contributors to revenues, representing 40% of total sales.
Gross margin increased to 49% in 2013 from 40% in 2012, as a direct result of the Company’s ongoing effort to reduce chemical, packaging and labor costs, while continuing to deliver effective and cutting edge products worldwide. Gross profits in 2013 grew by 50% to $6,708,619 over $4,474,767 in 2012.
Selling and marketing costs decreased by 2% to $3,747,213 in 2013 from $3,836,540 in 2012. General and administrative costs increased 47% to $6,254,170 in 2013 from $4,249,470 in 2012, driven by an increase in costs from the Company’s acquired Mexican subsidiary, non-cash depreciation charges, and cash and non-cash professional fees for accounting and financial services, which were partially offset by a 56% reduction in bad debts as a result of improved collection results.
DS Healthcare’s net loss narrowed by 11% to $(3,225,289) or $(0.25) per basic and diluted share in 2013 from $(3,623,109) or $(0.33) per basic and diluted share in 2012, driven by record revenues and higher gross margins, partially offset by higher general and administrative costs.
On December 31, 2013 the Company had cash and cash equivalents of $2,872,946 and working capital of $4,049,402. Total stockholders’ equity on December 31, 2013 was $5,632,830 up 36% over December 31, 2012.
For the three months ended December 31, 2013, DS Healthcare’s net revenues were $3,058,626, an 11% increase over net revenues of $2,768,573 in the fourth quarter of 2012. The revenue increase was driven by increased demand for DS Healthcare’s products and the acquisition of the Company’s Mexican subsidiary.
Gross margin increased to 49% in the fourth quarter of 2013 from 7% in the same period of 2012, when the Company sustained a number of one-time charges that had downward pressure on the margins for that quarter. Fourth quarter 2013 margin also benefitted from increased efficiency, better formulations and improved packaging sources. Gross profits grew by 761% to $1,570,423 in the fourth quarter of 2013 from $182,304 in the same period of 2012.
Selling and marketing costs decreased by 30% to $913,951 in the fourth quarter of 2013 from $1,300,342 in the same period of 2012. General and administrative costs declined by 5% to $1,723,994 in the fourth quarter of 2013 from $1,639,480 in the same period of the prior year.
For the fourth quarter of 2013, DS Healthcare’s net loss narrowed by 67% to $(944,860) or $(0.07) per basic and diluted share from $(2,774,323) or $(0.23) per basic and diluted share in fourth quarter of 2012, driven by increased sales, improved gross profit margins and an overall restructuring of expenses.
