Covalon Technologies Ltd.

Revenue was $8.4 million in Q3, up more than 10% sequentially versus Q2 and down 9% versus last year’s Q3. Adjusted EBITDA was almost $1 million, more than 50% higher sequentially, but down $1.5 million from Q3 last year. Gross profit and gross margin were pressured by more than $800,000 of charges for obsolete or slow-moving inventory and product that did not meet quality standards; excluding those costs, adjusted gross margin was more than 55%, higher than last quarter. Year-to-date revenue was up 8%, adjusted EBITDA was $3 million, and trailing 12-month revenue was up 13% with adjusted EBITDA more than double the prior period. Management expects sequential quarter-on-quarter revenue growth in Q4 versus Q3 and said it remains bullish on continued growth heading into next year.

Brent Ashton framed the quarter as evidence that Covalon is building momentum across clinical evidence, commercialization, and innovation. He emphasized the patient impact of products like IV Clear and highlighted the VALGuard study, the new CovaClear use case, DTC eligibility, and international expansion as markers of a stronger long-term growth story. His tone was notably upbeat and confident, repeatedly describing the outlook as bullish and saying the company is in a “multiyear growth journey.”

The interim CFO commentary focused on the quarter’s financial shape: revenue of $8.4 million, adjusted EBITDA of almost $1 million, and a gross margin hit from more than $800,000 of inventory-related charges. Excluding those one-time costs, adjusted gross margin was more than 55%, better than last quarter. She also highlighted cash of just over $18 million, up almost $9 million year over year, and said cash had increased for five straight quarters, giving the company flexibility for capex, acquisitions, dividends, or buybacks.

Management said it has had “a ton of progress” with Origin Merchant Partners as strategic adviser, but no transaction or outcome was announced yet. On outlook, Brent Ashton said the company remains on track for strong second-half performance and expects Q4 revenue to grow sequentially versus Q3. In response to questions about EBITDA and margins, he said the Q3 pressure was driven by one-time events and that margins should stabilize, while also pointing to strong cash and future operating leverage.