NGS Corrects Q2 Financials as CVS and Walmart Expansion Gains Traction

Financial Corrections and Clarifications

Nutritional Growth Solutions (ASX, NGS) has issued a correction to its previously released Q2 FY25 Quarterly Activities Report and Appendix 4C Cashflow Statement. The adjustments include a revision of revenue receipts from $386k USD to $431k USD, reflecting timing differences in sales revenue recognition. Significant upward revisions were also made to product manufacturing and operating costs, now reported at $643k USD compared to the earlier $205k USD, largely due to increased investment in finished goods and related capital raise expenses. Administrative and corporate costs were corrected from $59k USD to $210k USD, highlighting timing differences in invoice recognition.

Retail Expansion Momentum

Despite these financial adjustments, NGS reported stable revenue performance for the quarter, maintaining $431k USD. The company marked a milestone in its US retail expansion by shipping Happy Tummies® products to approximately 5,500 CVS stores, with consumer sales expected to begin in August 2025 following shelf stocking completion. Additionally, NGS expanded its Walmart presence by adding a strawberry flavour to the KidzProtein® range, now comprising three products available in-store. These moves represent the company’s largest retail footprint expansion to date, positioning it for potential sales growth in the second half of 2025.

Cash Flow and Inventory Position

Operating cash flow showed a net cash use of $574k USD for the quarter, a notable increase from $77k USD in the prior period. This rise is primarily attributed to upfront inventory rebuild costs valued at approximately $300k USD and timing effects in corporate expenses. NGS now holds inventory valued at $300k USD, sufficient to support around five months of sales through CVS retail programs. The company’s cash balance stood at $99k USD at quarter-end, reflecting timing of revenue receipts, particularly from Amazon.

Financing and Outlook

NGS secured a new unsecured loan facility of $120,000 USD with Amazon during the quarter and completed a convertible note capital raise. The company is actively pursuing additional capital to support its retail expansion, working capital needs, and liquidity enhancement. CEO Stephen Turner expressed confidence in nearing profitability and highlighted the company’s commitment to delivering long-term shareholder value. He anticipates improved operating cash flows in the second half of 2025 as inventory challenges are resolved and retail sales ramp up.

Looking Ahead

While the corrections to financial reporting introduce some near-term uncertainty, the strategic retail expansions and ongoing capital raising efforts suggest a company positioning itself for growth. Investors will be watching closely to see if the anticipated sales momentum at CVS and Walmart materializes and how effectively NGS manages its cash burn moving forward.