Sonoma Pharmaceuticals, Inc.

Total revenue was $4.9 million, a record high, up 14% versus the same period last year and up 13% versus the June quarter. EBITDA was a negative $1.95 million, improving by $313,000 year over year and by $1.1 million, or 37%, versus the prior quarter. Operating expenses, excluding noncash items, were $4.5 million, up $231,000, or 5%, year over year and down $447,000, or 9%, sequentially. Cash at September 30, 2018 was $4 million, down from $7.7 million at June 30, 2018. Looking ahead, management said Epicyn would be loaded into major wholesalers in the next few weeks and available to pharmacies in December, with U.S. dermatology detailing to begin in January; in Brazil, Gramacyn is being launched now and Sonoma expects continued growth from the seven-product rollout. Management also said cash operating expenses are expected to remain flat to down, which they believe should support revenue growth and further reduce EBITDA loss.

Jim Schutz framed the quarter as evidence that Sonoma’s dermatology business is “back on track,” pointing to record revenue, strong prescription growth, and a better mix of channels. He emphasized that the new acne products are not just launches, but a strategic extension of Sonoma’s hypochlorous-acid portfolio into a larger therapeutic market. His tone was upbeat but pragmatic, repeatedly tying growth to profitability through scale, channel diversification, and expense control.

Bob Miller focused on the numbers behind the improvement: revenue of $4.9 million, international revenue of $2.8 million up 18% year over year, and U.S. product net revenue of $2.4 million up 7%. He said operating expenses excluding noncash items were $4.5 million and EBITDA loss was $1.95 million, with the decline driven by higher gross profitability and lower operating expenses. On cash, he explained the drop to $4 million by pointing to the EBITDA loss plus $1.4 million of working capital increases, including higher receivables, inventory, and prepaid expenses, and said those items should convert back to cash in the December quarter. He also said cash operating expenses are expected to stay flat to down under the company’s cost-reduction program.

Analyst Bruce Jackson asked about the mail-order pharmacy shift, rebate stability, and whether Brazilian sales would accelerate. Management said mail-order unit volume rose from about 20% last quarter to a little over 40% in the September quarter, which helped control rebate costs, and they said rebate costs have been stable. On Brazil, they said the company had shipped $248,000 to its Brazilian partner and expects more growth as the seven-product launch expands, including the acne and scar products. Management added that the Brazilian partner had already exceeded the original contractual expectations.