Covalon Reports Strong Sequential Quarter on Quarter and Trailing Twelve Months Performance

Executive Summary

• Covalon Technologies Ltd. reported its fiscal 2025 third quarter results for the period ended June 30, 2025, highlighting sequential quarter-on-quarter growth in revenue and adjusted EBITDA, alongside significant trailing twelve-month performance improvements.
• The company reported $8.4 million in Q3 revenue (a 10.4% sequential increase) and $0.9 million in adjusted EBITDA (a 52% sequential increase). On a trailing twelve-month basis, revenue grew 13% and adjusted EBITDA surged 116%.
• The company holds a strong balance sheet with over $18 million in cash and no debt, while also achieving Direct Registration System (DTS) eligibility for its stock to facilitate US investor access.

Key Details

• Q3 2025 Financial Performance (Three months ended June 30, 2025):
  • Total Revenue: $8,372,427 (down from $9,224,307 in the prior year period, but up 10.4% sequentially from Q2).
  • Gross Profit: $3,892,495.
  • Gross Margin: 47% (reported); 53.9% excluding inventory write-offs.
  • Adjusted Gross Margin: 55.6% (up 40 bps sequentially).
  • Operating Expenses: $3,971,157.
  • Net Income: $64,567.
  • Adjusted EBITDA: $0.9 Million (up 52% sequentially).
• Nine-Month 2025 Financial Performance (Nine months ended June 30, 2025):
  • Total Revenue: $24,124,375 (up from $22,300,974 in the prior year period).
  • Gross Profit: $13,026,467.
  • Gross Margin: 54% (reported); 56.6% excluding inventory write-offs.
  • Operating Expenses: $11,508,641 (down from $12,104,067 in the prior year period).
  • Net Income: $1,699,752.
  • Adjusted EBITDA: $3,014,215.
• Inventory and Provisions:
  • Inventory provisions recorded during the nine months ended June 30, 2025, totaled $579,149 (including write-downs and destruction of inventory), compared to $906,701 in the prior year.
  • The year-over-year decrease in gross margin for Q3 and the nine-month period was primarily driven by the final write-off and destruction of slow-moving and obsolete inventory.
• Segment Performance:
  • US Vascular Access and Surgical Consumables: Delivered a record high quarter. Year-to-date revenue up more than 35% vs. prior year, driven by growth in the VALGuard® Vascular Access Line Guard product.
  • US Advanced Wound Care: Sequential quarter-on-quarter growth exceeded 40%. Trailing twelve months revenue is up more than 85% compared to the same period two years ago.
  • International: Year-to-date revenue up more than 35% compared to a year ago, with key wins in the Middle East, Asia, and Latin America.
• Balance Sheet:
  • Cash on hand increased by $8.7 million to more than $18 million.
  • The company has no debt.
• Operational Highlights & Recent Achievements:
  • Clinical Research: A VALGuard® Line Guard study on reducing Central Line Associated Blood Stream Infections (CLABSIs) at Children's Hospital at Montefiore will publish in the Journal of the Association for Vascular Access in Fall 2025.
  • Conference Presentations: A scientific poster on the VALGuard study was elevated for podium presentation at the Association for Vascular Access annual meeting in September 2025 and will be showcased at the ANCC National Magnet Conference in October.
  • New Indication: Advanced a new use case for CovaClear IV® dressing as a secondary cover to protect IV sites from contamination; a poster demonstrating clinical and economic benefits was selected for presentation at the upcoming Association for Vascular Access annual meeting.
  • DTC Eligibility: Covalon secured Direct Registration System (DTS) eligibility, making it easier for US-based investors to invest in the company.
• Conference Call Details:
  • Scheduled for Thursday, August 21, 2025, at 8:30 am Eastern Time.
  • Dial-in numbers and webcast link provided in the release.

Notable Quotes

• Brent Ashton, CEO: “The Covalon team has made numerous advancements on our strategic priorities in the past few months. This solid progress is enabling customer wins, exciting new partnerships, and important market development activities that will drive increased use of Covalon’s life-saving products.”
• Brent Ashton, CEO: “Covalon’s strategic accomplishments, combined with our solid balance sheet with over $18 million of cash and no debt, puts us in a strong position to accelerate the adoption of our products to benefit a larger patient population and to unlock the significant value we believe is inherent in our Company.”