A $2.2 million drop in sales for microalgae-based nutrition and health products producer Cyanotech Corp. contributed to a fiscal third-quarter net loss for the Big Island-based company.
Cyanotech announced Thursday that it lost $250,000 in the three months ending Dec. 31 compared with a $463,000 profit in the same period a year earlier.
The company said the negative swing resulted largely from not producing enough of its base product, astaxanthin, for bulk sales. Cyanotech also said that sales in the year-ago quarter were inflated by about $850,000 due to the timing of when the company can recognize revenue.
In February 2015 Cyanotech touted record revenue for its fiscal third quarter that ended Dec. 31, 2014, driven by strong sales in its line of consumer products following a test run at Costco stores in San Diego that prompted an expansion into more mainland Costco outlets.
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THIRD-QUARTER LOSS
$250,000
YEAR-EARLIER NET
$463,000
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On Wednesday, Cyanotech said its BioAstin-branded astaxanthin was introduced in 43 Los Angeles Costco stores in November, bringing the number of Costco stores carrying the product to 110.
Total revenue, however, slipped to $7.5 million in the recent quarter from $9.7 million a year earlier.
Brent Bailey, Cyanotech president and CEO, said in a statement that the company is addressing the issue of limited production with an astaxanthin capacity expansion project, the first phase of which he said was completed at the end of November.
Bailey said financial results in the recent quarter reflect impacts from what he called a strategic refocusing of the company from a bulk ingredient supplier to a consumer-focused brand that can achieve a higher profit margin on sales.
“While these efforts have negatively impacted our short-term profits, we expect them to increase our margins and profitability in the future,” he said. “The areas where we have strategically focused are healthy and growing.”
Shares of Cyanotech stock dropped 21 percent, or by $1.04, Thursday to close at $3.89, a 52-week low, after the earnings announcement, and then partially rebounded Friday by rising 23 cents to $4.12. The 52-week high for Cyanotech shares was $10.25 on June 26.
