Velan Inc. Reports Solid Performance in the Third Quarter of Fiscal 2026

Executive Summary

• Velan Inc. reported a turnaround in Q3 FY 2025, posting net income of $3.0 M ($0.14/share) versus a net loss of $47.8 M a year earlier.
• Backlog grew to $296.8 M (up 8 % YoY); bookings rose 32 % YoY to $77.9 M in the quarter.
• The company announced a pending sale of its controlling shareholder’s 72.1 % stake to Birch Hill Equity Partners for C$203.9 M, expected to close H1 2026.

Key Details

• Revenue & Profitability
• Sales: $71.7 M (‑2.4 % YoY)
• Gross profit: $27.2 M (37.9 % margin)
• Operating income: $5.9 M (vs. operating loss of $62.4 M a year prior)

• Net income: $3.0 M, or $0.14 per share (vs. net loss of $47.8 M)

• Non‑IFRS Measures

• Adjusted net income: $4.0 M (down from $8.5 M YoY)

• Adjusted EBITDA: $9.5 M (down from $14.3 M YoY)

• Backlog & Bookings

• Backlog at quarter‑end: $296.8 M (up $21.9 M YoY) – 80.4 % deliverable within 12 months.

• Quarter bookings: $77.9 M vs. $59.1 M a year earlier; driven by nuclear, oil & gas, and international operations.

• Liquidity

• Total liquidity: ≈$86 M (cash + credit facilities)

• Net cash position: $20.2 M

• Significant Transaction – VH Transaction

• Controlling shareholder to sell 15,566,567 multiple‑voting shares (+1 subordinate share) (~72.1 % of outstanding shares, 91.9 % voting rights).
• Sale price: C$13.10 per share → gross proceeds C$203.9 M.
• Closing expected in H1 2026, subject to regulatory approvals; no financing condition.

• Transaction‑related fees estimated at ≈US$12 M plus change‑of‑control costs ≈US$5 M (US$4 M already paid/accrued).

• Dividend Suspension

• Dividend payments suspended until the VH Transaction closes; normal dividends to resume thereafter.

• Other Notable Items

• Completed sale of French subsidiaries in March 2025 for $208.2 M (net $183.1 M), generating a $95.8 M gain recorded in Q1 FY 2026.
• Settlement of U.S. asbestos litigation funded partially by proceeds from the French asset sale ($143.0 M paid April 3 2025).
• Conference call scheduled for Jan 15 2026, 8:00 a.m. EST (details provided).

Notable Quotes

• James A. Mannebach, Chairman & CEO – “Velan delivered solid performance… our backlog sustained its momentum… the proposed sale to Birch Hill will provide a dynamic, results‑oriented environment…”
• Rishi Sharma, CFO – “Higher late‑stage inventory raised working capital requirements for a second consecutive quarter, but our balance sheet remains strong.”