Second Quarter Ended June 30, 2017 Financial Results
For the quarter ended June 30, 2017, net revenue was $2.1 million as compared to $2.5 million for the same three-month period in 2016. The 2016 period included $160,000 in non-recurring royalty revenue. The 9% year-over-year decline in product sales was largely attributable to supply constraints of key products across the Company’s portfolio.
Gross profit totaled $402,000, or 19.2% of net revenue for the second quarter of 2017, compared with 8.8% of net revenue in the same period of 2016, and 10.6% of net revenue in the first quarter of 2017. Year-over year, gross margin benefitted from better utilization of production staff and consistent margins across product categories. Improvement in gross margin on a sequential basis was attributable to the sell-through of product that was produced by third-party processors in Q1 and expensed during that period.
Operating expenses for the second quarter of 2017 were $3.0 million compared with $2.5 million in the same period of 2016. The increase was largely attributable to higher legal expenses related to the Company’s M&A activities during the second quarter, as well as a write down of improvements abandoned at the Eugene facility. The Company has identified opportunities to streamline the business, which resulted in a reduction in the workforce subsequent to the quarter end, which is expected to have a positive impact on reported payroll expense in the third quarter of 2017.