CA - Else Nutrition shares plummet as mechanical malfunction mars Q3 results

Else Nutrition ( OTCQX:BABYF ) stock fell about 20% on Monday after flagging a mechanical malfunction that hurt its Q3 earnings report.

The Israeli-based, Canadian-listed plant-based childhood nutrition company posted C$2.2M in sales for the third quarter, marking a modest sequential pullback. According to the company, revenue declined 4% from the prior quarter only due to production issues that delayed the delivery of its products. Management estimates the revenue loss from the malfunction was roughly $300K to $500K in the quarter as production was paused for 6 weeks.

“In the third quarter we incurred unforeseen manufacturing challenges which resulted in product shortages that prohibited us from adequately supplying the strong and growing demand for our products. The shortfall of products was further caused by the strong demand in May and June, which depleted our inventory levels heading into 3Q,” CEO Hamutal Yitzhak said. “We are working closely with our manufacturing partner to increase production and resolve the inventory shortage issues as soon as possible. From a long-term standpoint, we are working diligently on securing additional manufacturing facilities in North America and Europe by the beginning of 2023, in order to better diversify our production capacity.”

Elsewhere, the company indicated it is working on “final preparations” for an infant growth clinical study for the FDA and European permits planned which are slated to start by early 2023 and conclude in early 2024.

Shares fell over 20% on the open before moderation losses slightly to about 17.36% after the first hour of the week’s trading.

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