Mr. Serge Verreault reports

CRESCITA REPORTS FIRST QUARTER 2023 RESULTS

Crescita Therapeutics Inc. today released its financial results for the first quarter ended March 31, 2023 (Q1 2023).

Financial highlights

Q1 2023 versus Q1 2022

• Revenue was $4,602 compared with $4,951, down $349;
• Gross profit was $2,736 compared with $2,712, up $24;
• Operating expenses were $2,972 compared with $3,088, down $116;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $161 compared with $66, up $95;
• Ending cash was $10,275, up $2,037 for the quarter.

"We generated 62-per-cent year-over-year growth in commercial skin care sales this quarter. The team worked together to deliver our strongest segment performance through product launches, brand innovation and effective sales strategies. In our manufacturing and services segment, we experienced a reduction in sales versus last year, due to a delay in shipments to a major customer as a result of a supply chain issue," commented Serge Verreault, president and chief executive officer of Crescita.

"Supported by a strong balance sheet, we remain committed to executing our four-pillar growth strategy and to seek recurring revenue opportunities to generate sustainable growth in the long-term," concluded Mr. Verreault.

Q1 2023 corporate developments

Relaunch of Alyria as a direct-to-consumer brand

• Following a complete rebranding and various product reformulations, the company relaunched Alyria as a direct-to-consumer medical-grade dermocosmetic brand in the Canadian skin care market. Alyria is primarily targeted at millennials and marketed and sold exclusively on-line in Canada through Amazon and Alyria's website. The relaunch of Alyria strengthens the company's e-commerce channel expansion and provides the opportunity to engage with a new consumer group.

The launch of ART FILLER

• The company launched the ART FILLER injectables in the Canadian medical aesthetic market through its new dedicated sales force. The ART FILLER collection is an exclusive range of dermal fillers made of hyaluronic acid (HA), designed to smooth and fill in wrinkles, and create/restore the volumes and contours of the face. The company distributes the fillers under an exclusive Canadian distribution and promotion agreement with Laboratoires FILLMED. The fillers were approved by Health Canada in Q2 2022.

Q1 2023 financial results

Note: The management's discussion and analysis (MD&A), the condensed consolidated interim financial statements and accompanying notes for the three months ended March 31, 2023, are available on the company website and have been filed with SEDAR.

Revenue

The company has three reportable segments: 1) commercial skin care, which manufactures and sells branded non-prescription skin care products for the Canadian and international markets, and also commercializes Pliaglis, NCTF, ART FILLER and Obagi Medical in Canada; 2) licensing and royalties, which primarily generates revenue from licensing the company's intellectual property related to Pliaglis or the company's transdermal delivery technologies; and 3) manufacturing and services, which generates revenue from contract manufacturing and product development services.

For the three months ended March 31, 2023, total revenue was $4,602 compared with $4,941 for the three months ended March 31, 2022, representing a decrease of $349. Manufacturing revenue decreased by $1,326 year over year, mainly due to a delay in shipments to a major customer as a result of a supply chain issue. The company's skin care segment posted an increase of $956 mainly due to higher product sales from the company's core brands across all channels and geographies, as a result of new product launches and promotions and, to a lesser extent, the timing differences of order fulfilments year over year. Licensing revenue of $21 in Q1 2023 represented guaranteed royalties above the annual contractual minimum under the company's agreement with Cantabria Labs Inc.

Gross profit

For the three months ended March 31, 2023, gross profit was $2,736, representing a gross margin of 59.5 per cent, compared with $2,712 and 54.8 per cent, respectively, for the three months ended March 31, 2022. The net increase in gross profit and gross margin of $24 and $4.7 per cent, respectively, were primarily a result of the growth in the company's skin care sales and the favourable impact of cost-efficiencies, product and channel mix, as well as foreign exchange rates, partly offset by the decrease in manufacturing revenue.

Operating expenses

For the three months ended March 31, 2023, total operating expenses were $2,972 compared with $3,088 for the three months ended March 31, 2022, representing a net decrease of $116. The decrease was mainly driven by lower SG&A (selling, general and administrative) expenses of $158, primarily due to lower headcount-related and share-based compensation expenses.

Deferred income tax expense

For the three months ended March 31, 2023, the company recognized $166 in deferred income tax expense related to taxable income generated in the Crescita Skin Sciences Inc. legal entity.

Cash and cash equivalents

Cash and cash equivalents were $10,275 at March 31, 2023, reflecting a net increase of $2,037 for the quarter, mainly due to the decrease in accounts receivable and contract assets.

About Crescita Therapeutics Inc.

Crescita is a growth-oriented, innovation-driven Canadian commercial dermatology company with in-house R&D (research and development) and manufacturing capabilities. The company offers a portfolio of high-quality, science-based non-prescription skin care products and early to commercial stage prescription products. The company also owns multiple proprietary transdermal delivery platforms that support the development of patented formulations to facilitate the delivery of active ingredients into or through the skin.