NextPlat Corp

Good morning, ladies and gentlemen, and welcome to the next Platcorp 2025 Third Quarter Earnings Conference Call. Certain statements made during this conference call constitute forward-looking statements. These statements include the capabilities and success of the company's business and any of its product services or solutions. The words believe, forecast, project, intend, expect, plan, should, would, and similar expressions and old statements, which are not historical facts, are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risk, uncertainties, and other factors, any of which could cause the company to not achieve some of all of its goals or the company's previously reported actual results, performance, financial, or operating, including those expressed or implied by such forward-looking statements. More detailed information about the company and the risk factors that may affect the realization of forward-looking statements is set forth in the company's filings with the Securities and Exchange Commission, the SEC, copies of which may be obtained from the SEC's website at www.sec.gov. The company assumes no and hereby disclaims any obligation to update the forward-looking statements made during this call. Joining us on the call today are David Phipps, Chief Executive Officer and President, Amanda Ferriero, Chief Financial Officer, and Bayrut Nurkut, Vice President of Healthcare Operations. I'll now turn over the meeting to David Phipps for his opening remarks.

Good morning, and welcome to the next GLATS third quarter 2025 earnings call.

Thank you for joining us. Our objective today is to highlight many of the changes that we've undertaken in the third quarter, many of which will be more fully realized on a sequential basis starting in the fourth quarter of 2025 and throughout fiscal year 2026. Although our results of operations for the third quarter 2025 are not what we would have liked, we believe that our efforts resulted in favorable reductions in operating expenses and cash outflows and improvement in our pharmacy and e-commerce revenue and profitability. Operationally, improvements were evident late in the third quarter and have continued into the fourth quarter, a positive trend we expect to continue. After I recap the developments in the third quarter, Berute and Nkute will discuss activities in our healthcare segment. Amanda Ferriero, our CFO, will review our financial results, and then I will provide some concluding high-level remarks on our long-term objectives and developments, which we believe will positively drive the business forward. After that, we will then conclude the conference call by responding to questions that were submitted by our shareholders. Before I start, I would like to comment on our latest leadership updates. First, I wish to thank Cecile Monick for her efforts as CFO, leading our financial team, and for her support during our transition to our new CFO, Amanda Ferriero. I also wish to welcome Boruse Mokute as Vice President of Healthcare Operations, who is joining us on this call today. Now, in terms of the business, as we discussed with you during our last earnings conference call and in our recent CEO shareholder updates, our team has been busy implementing a series of actions designed to improve operations, reduce costs and grow the business. As I stated earlier, although overall results of the third quarter do not reflect the full impact of our efforts, We did see meaningful improvements to operating metrics in September, and we believe they will be more fully clear in our results for the fourth quarter and into next year. For those of you that are new investors in our company, I'd like to review Nixplat's business model. This is built around three core segments. Healthcare services through our PharmCo RX pharmacies, communications products and services through our global Telesat, Orbital Satcom, and Outfitter satellite subsidiaries, and our e-commerce development program supporting the sales of U.S.-produced products into the Chinese market. We provided an extensive review of these segments in our recent shareholder lesson released on October the 8th. You can find this on our website. I'd like to now provide a further update on our progress since that date, most of which is reported in more detail in our quarterly interim financial report on Form 10Q, which we have just released. In our healthcare segment, we're continuing to see improvements resulting from our cost reduction efforts and additional investments in business development. To illustrate these improvements, Amanda will provide a third quarter to second quarter review of the financial results. Overall, we're realizing significant revenue and profitability improvements from our business development initiatives started in the second quarter. This is highlighted by new contracts with a state prime contract holder, and expanded business within the 340B space. Our leadership team has been successful in re-engaging with a number of important customers who have, for various reasons, produced business with us over the last few quarters. These efforts have already contributed to improved description volumes late in the third quarter and into the early part of the fourth quarter. Borutse will provide more insight into our health operations in a moment. In our e-commerce and communications segment, these are the most recent highlights. During the quarter, our e-commerce segment continued to see robust sales for satellite-based connectivity and IoT products through our various e-commerce sites, as well as high-margin recurring revenue, which continues to run at record levels. We are continuing to expand our portfolio of cutting-edge connectivity products, and we've grown our customer, consumer, and enterprise base with new and existing relationships. Recent highlights here are the selection of GTC as the exclusive distributor for personal messaging and tracking products by a leading global satellite network operator for countries in the Nordic region, and the initial sales of Starlink products in the U.S. through our Outfit for Satellite unit. Sales of Opco Healthcare branded human health and wellness products in China continue to show good sell-through despite lingering challenges of limited inventory levels. We are currently experiencing record sales volumes of Opco products during the current 11.11 event, the world's largest sales event. In September, we also launched our Florida Sunshine range of nutraceutical products in the UK and the EU, and we began processing orders via Amazon and Shopify e-commerce storefronts. Launching a new brand in new markets always takes time, and therefore initial sales are very modest as expected. but we are excited to be preparing the launch of an AI-driven marketing campaign for Florida Sunshine in partnership with an experienced healthcare brand, marketing firm, and to advancing our storefront on Alibaba's T-Mall store in China. Now we've been approved to sell in the country. I would now like to turn the call over to Barute for her update.

Barute, over to you.

Thank you, David. As David noted in his opening remarks, our third quarter financial results reflects continued weakness across several areas. That said, we began to see a meaningful turnaround during the quarter, most notably in our 340B line of business. This momentum has continued through October, and we expect it to carry into the fourth quarter. Through today, we have reduced our employee headcount by 50 since the start of the year, resulting in approximately $200,000 in monthly payroll savings inclusive of new hires added during the year. We expect payroll expenses to continue to decrease throughout the remainder of the year. Our 340B business has delivered a strong and sustainable rebound, driven by targeted service improvements and stronger customer engagement. Former clients have returned, new covered entities have joined us, and together these factors have produced meaningful gains in both volume and revenue. In October, we dispensed more than 1,600 340B prescriptions, a significant increase, resulting in over 140% rise in monthly 340B contract revenue when compared to our lowest months earlier in the year. Our retail prescription business is also gaining momentum, with volumes up 27% from the lows experienced earlier in 2025, supported by the new government pharmacy service contract and more consistent operational performance. These improvements have strengthened confidence among both existing and new clients as delivery times have shortened and customer response rates have improved significantly. Collectively, these advances have enhanced efficiency, customer satisfaction, and overall reliability, positioning us well for continued growth through the fourth quarter. Looking ahead, our focus will be on optimizing inventory levels and purchasing intervals to improve working capital efficiency. We also implemented key personnel changes in logistics to enhance performance and reduce delivery costs. These actions are expected to generate more than $1.5 million in one-time cash savings through the return of excess inventory to our suppliers. While there is still work ahead, we are encouraged by the progress achieved and the solid foundation we're building for our future growth. The initiatives now underway are creating opportunities to further enhance efficiency, expand our capabilities, and strengthen long-term financial and operational performance. That concludes my remarks. Back to you, David.

Thank you for your time.

At this point, I will turn the call over to Amanda to discuss our financial results for the three and nine months ended September 30th, 2025. Over to you, Amanda.

Thank you, David. Good morning, everyone. It's a privilege to join you today for my first earnings call as Chief Financial Officer. I will now walk through our consolidated financial results. For the third quarter ended September 30th, 2025, we reported total revenue of $13.8 million compared to 15.4 million in the prior year quarter, representing an 11% decrease. The decline was primarily driven by lower contribution from our healthcare operations segment, which experienced a decline of approximately $1.5 million, while our e-commerce segment experienced a modest decrease of about $100,000. Within our healthcare operations segment, Pharmacy prescription revenues increased by approximately $400,000, or 5%, to 9.5 million for the third quarter of 2025 when compared to the prior year period. This improvement was driven by higher reimbursement rates per prescription, which offset the decline in total prescriptions filled, about 96,000 this quarter versus 128,000 a year ago. However, comparing the third quarter of 2025 to the second quarter of 2025, Prescription volume increased by roughly 5,000 prescriptions, resulting in a revenue increase of $1.3 million, or 16%. Our 340B contract revenue for the third quarter of 2025 decreased to $600,000 from $2.5 million in the prior year quarter. This was due to transitions of certain covered entities to other pharmacy partners and their exit from the program or in-house sourcing. When comparing Q3 to Q2 of 2025, 340B contract revenue declined by approximately $400,000. In e-commerce, revenue totaled $3.7 million compared to $3.8 million in the prior year quarter, a modest 4% decline. The decrease was mainly related to lower hardware sales, which were partially offset by favorable foreign currency impact. Gross profit margin for the quarter was $2.7 million compared to 3.6 million in the prior year quarter. That represents a gross margin of 19.9% down from 23.2%. The decline reflects softer performance in both segments, primarily due to reduced 340B contract revenue and healthcare operations and increased airtime costs in our e-commerce business following the expiration of a legacy service provider contract at the end of 2024. As we described earlier in this call, operational changes instituted during the third quarter have led to efficiencies and improvements that resulted in significant cost reductions. Total operating expenses decreased by nearly 40% to $4.7 million compared to approximately $7.8 million in the third quarter of 2024, which is excluding a non-recurring impairment charge of $3.7 million in the prior year. Salaries and wages declined by approximately $800,000 due to lower stock-based compensation, reduced executive compensation, and a leaner workforce. Professional fees also decreased by about $1.8 million, reflecting lower legal and consulting costs. During the third quarter of 2025, we began repurchasing our common shares under the Authorized Share Repurchase Program. A total of 130,549 shares were repurchased and are being held as Treasury stocks. We ended the quarter with $13.9 million in cash and working capital of $18.9 million. While we continue to experience net cash outflow during the quarter, we expect to significantly reduce our cash firm going forward as a result of the operational improvements mentioned earlier. In summary, while the quarter reflected some top line pressure, our results demonstrate continued progress in streamlining our cost structure, improving efficiency, and preserving liquidity. As we look ahead to the fourth quarter, our focus remains on disciplined expense management. As David and Berita mentioned, we're advancing several initiatives aimed at achieving lasting cost savings. We all remain fully committed to improving operational efficiency and strengthening our financial foundation. I encourage you to review our financial statement as contained in our quarterly report on Form 10Q filed with the Securities and Exchange Commission. That concludes my remarks on the financial results of the business. Back to you, David.

Thanks, Amanda. At this point, I would like to provide some closing thoughts. Our progress against our refocusing and cost-cutting efforts had only a slight impact on the third quarter. which still largely reflects the ongoing state of the business without the benefit of the many positive developments discussed today. As such, we review Q3 results of the low point in our business and believe that going forward, our efforts will begin to make more meaningful sequential impact across multiple operational metrics starting in the fourth quarter and continuing through next year as we advance towards our goal of achieving operational break-even in the second half of 2026. In the shorter term, our efforts include continued emphasis on growth of profitable business lines through commitment of capital to marketing and sales efforts. We continue to add new contracts in both our communication and healthcare segments that will come online during Q4 2025. Although we've seen continued progress in our 340B and long-term care business development efforts with new contracts coming online, we see opportunities for continued improvement here. Finally, we are further committed to investing in critical areas of the business. Some specifics here include adding to our sales team during the fourth quarter, enhancing our business development efforts, and as previously mentioned, recruiting a long-term care sales team so that we can capitalize on the opportunities we see in this part of the market. That concludes our formal remarks. We can now conduct the Q&A portion of today's call. We have again asked investors and shareholders to submit their questions in advance and we would like to thank all of you who did. Question number one, what are the current plans for the buyback? Do you intend to increase the level of activity and pace? At this point in time, the program is still available and as such we continue to monitor the market. Please note, as we have said, we intend to be prudent in terms of deploying our available cash the repurchase of shares, as we do have other critical investments we intend to make, as described earlier today. As is our policy, we will provide an update on this programme in our fourth quarter report. Question number two, how does the additional 180-day extension from NASDAQ change your plans to increase the stock price to regain compliance? We are pleased to get this extension, but in the very short term, it doesn't really change our plans as we remain focused on improving our financial results, which would be critical for investors' confidence in our company. We do believe, however, starting early in the new year, that we will have opportunities to be more proactive in engaging with new investors, and we're looking at a number of events and activities. Question number three. Have your views on China changed given the lingering uncertainties? As we have said previously, tariff-related challenges are something we are dealing with. However, for non-US-made products like OPCO, there are still opportunities. And when we get inventory into China, it sells quickly. So even when we factor in high marketing costs, we are still able to generate very attractive margins. In terms of expanding our efforts with the OPCO enemy products, the slow approval process is frustrating, but we continue to see strong demand overall for OPCO products, and we intend to still pursue these products as soon as we get approval. After Florida Sunshine, our TMO store has now been approved and we'll be shipping our first batch of products as soon as we clear some import certification requirements. Question number four. Can you comment on the status of the ongoing lawsuits? We cannot comment specifically on the ongoing litigation other than to say that as of today, We are resolved to the matters and are working with council to resolve the final matter as quickly as possible while protecting the long-term interests of our shareholders. That was the final question that we received from investors. Thank you all again for submitting them. Please remember that you can submit your questions at our investor relations email, which is investors at nextplat.com, or with our IR contact listed on our press releases. Michael Glickman at mike at mwgco.net. That concludes our earnings conference call. We look forward to continuing to share with you our progress in the weeks and months ahead.

Have a nice rest of your day. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation.

You may now disconnect.