Mr. Payton Nyquvest reports

NUMINUS WELLNESS INC. ANNOUNCES SECOND QUARTER FISCAL 2024 RESULTS

Numinus Wellness Inc. has released its financial results for the three months ended Feb. 29, 2024 (Q2 2024).

Q2 fiscal 2024 highlights:

• Cash position of $6.6-million as of Feb. 29, 2024;
• Gross profit of $500,000, a 22.7-per-cent decline over Q1 2024;
• Revenue of $5.0-million, a 15.4-per-cent decline over Q1 2024;
• Enrolment in Numinus training programs doubled to over 1,400 learners, compared with over 700 in Q1 2024;
• Managed 15 clinical trials at Cedar Clinical Research (CCR);
• Provided 17,661 client appointments in Numinus Wellness clinics.

Subsequent to quarter-end:

• On March 20, 2024, the company announced that it had submitted a clinical trial application to Health Canada to examine the feasibility of a group model in MDMA-assisted (3,4-methyl enedioxy methamphetamine) psychotherapy, enrolling trainee practitioners as participants.

All financial results are reported in Canadian dollars unless otherwise stated.

"Over the past two quarters, Numinus has steadfastly focused on fortifying our operations to ensure we are well positioned for sustainable growth and profitability in the quarters to come," said Payton Nyquvest, Numinus founder and chief executive officer. "This included reducing head count across the organization, concentrating on higher-margin procedures at our clinics and eliminating our unproductive location in Arizona. While these initiatives have generated one-time impacts in the quarter, they are also enabling us to optimize our patient experience and care model, improve efficiencies, and establish best practices.

"We are also pleased with the success of our Numinus training program. As well as a doubling of the learners enrolled in the program, our introduction to psychedelics course is proving to be a pathway to our paid courses and we recently introduced training for practitioners working with drug developers to facilitate clinical trial research," added Mr. Nyquvest.

Revenue

Revenues declined 15.4 per cent from the prior quarter to $5.0-million in Q2 2024 due to the company's further optimization of operations to focus on profitability and seasonality effects.

Gross margin

Sequentially, gross margin declined 310 basis points in Q2 2024 to 33.0 per cent from 36.1 per cent in Q1 2024, reflecting the decrease in revenue compared with the previous quarter.

Operating expenditures

Operating expenditures were $6.4-million in Q2 2024, compared with $6.3-million the previous quarter, a 1.5-per-cent increase after excluding a one-time non-cash charge of $300,000 during Q2 2024 relating to the recognition of deferred financing costs from the ATM (at-the-market) program. Included in operating expenditures in Q2 2024 were $500,000 in non-recurring consulting fees related to the company's cost containment measures. Operating expenses decreased 27.0 per cent during Q2 2024 compared with $9.2-million during Q2 2023. In the quarter, the company continued its cost containment initiatives to refocus support on revenue-producing activities and profitability.

Operational highlights

Numinus Wellness clinic network

Wellness clinics generated revenue of $4.3-million during Q2 2024, a 9.5-per-cent decrease compared with $4.7-million during Q2 2023. The decline in clinic network revenues during Q2 2024 is due to the winding down of operations at the company's Phoenix, Ariz., location and the contraction of the number of appointments scheduled during the same comparative periods from cost containment procedures while focusing on appointment profitability across wellness clinics:

• 17,661 clinical appointments in Q2 2024, compared with 19,961 in Q1 2024;
• Average of 299.3 appointments per operating day in Q2 2024, compared with 316.8 in Q1 2024;
• 5.8 per cent of appointments during Q2 2024 were made by new clients;
• 18.3 per cent of appointments during Q2 2024 were KAT (ketamine-assisted therapy) or ketamine/Spravato medicine related;
• 6.4 per cent of appointments during Q2 2024 were for TMS services.

Numinus clinical research

Revenues from CCR during Q2 2024 were $700,000, a decrease of 27.1 per cent from $1.0-million during Q1 2024 and a 21.0-per-cent increase compared with Q2 2023. The sequential quarter decrease is due to a reduction in high-value clinical trials being completed and the winding down of its research centre in Phoenix, Ariz. CCR is currently conducting two psychedelic drug candidate clinical trials, with four further expected to commence in Q3 2024, as well as other non-psychedelic studies. Since Q3 2023, CCR has facilitated 26 clinical trials.

Numinus clinical training

The company has built a fulsome certification program to train practitioners in ketamine, MDMA and psilocybin-assisted therapy (Numinus training program) that leverages its expertise in clinic-based treatment and clinical research. The program is accredited by major regulatory bodies in Canada and the United States, and is provided in a blended learning format to optimize adult learning:

• As of March, 2024, over 1,400 learners have enrolled in Numinus training programs.
• Since the introduction of its free introduction to psychedelics training course, over 30 learners have gone on to take more advanced training with Numinus.
• Numinus has diversified its offering to support leading research institutions to train research providers in evidence-based practices for supporting clients in psychedelic clinical trials.
• Numinus has been working diligently on the Oregon Health Authority audit to meet the legislative and competency requirements for psychedelic facilitators in that state.

Corporate updates

On Feb. 14, 2024, Rick Doblin, PhD, the founder and president of the Multidisciplinary Association for Psychedelic Studies (MAPS), was appointed as an unpaid, non-exclusive strategic adviser of Numinus.

On March 12, 2024, the company announced Edwin Garner's retirement from its board of directors and the appointment of Donna Wilson and Donna Wong as directors. Both directors bring decades of experience in corporate strategy, corporate finance, corporate governance and people management.

On March 12, 2024, the company announced the appointment of Melony Valleau as its interim chief financial officer, effective March 28, 2024, upon the resignation of Nikhil Handa. Ms. Valleau brings U.S. corporate finance and capital markets experience to Numinus, which aligns with the company's plans to increase its presence with U.S.-based patients and investors.

On April 11, 2024, the company announced that Dr. Reid Robison, the company's chief clinical officer, will leave his position to focus on his role as lead principal investigator at Numinus and return to private practice. Dr. Paul Thielking, Numinus's chief science officer overseeing the company's research activities, has also assumed the leadership of the company's clinical function as chief medical officer.

The company's annual general meeting will be held on May 31, 2024.

Balance sheet and liquidity

Numinus ended the quarter with a total cash balance of $6.6-million and working capital of $6.4-million.

Numinus's unaudited condensed consolidated interim financial statements for the three months ended Feb. 29, 2024, and the related management's discussion and analysis are available on Numinus's investor relations website and under the company's profile on SEDAR+. These documents were prepared in accordance with IFRS (international financial reporting standards).

Outlook

As an integrated mental health care provider, Numinus is building the critical infrastructure of clinical research support, practitioner training and patient therapy to serve the expected demand for psychedelic-assisted therapy (PAT). To take advantage of what it sees as a significant growth opportunity, the company has focused on optimizing its operations and controlling costs since the third quarter of fiscal 2023.

The company expects significant growth from the sector as acceptance of PAT as an effective treatment for serious mental health conditions increases and psychedelic drug candidates advance through the drug approval process. According to the newsletter Psychedelic Alpha (1), there are currently over 90 potential psychedelic drugs in the preclinical to phase 3 clinical trial stages of drug development. This includes the U.S. Food and Drug Administration's (FDA) acceptance of MDMA as a new drug application with a Prescription Drug User Fee Act (PDUFA) target action date of Aug. 11, 2024.

It is the company's view that these trends indicate the beginning of a period when psychedelic treatments for serious mental health conditions may become increasingly available to the public and provide opportunities for continued growth across the three areas of its sector focus:

1. As a leading provider of clinical research support, Numinus's CCR anticipates that it will continue working directly with drug developers to provide research sites for drug candidates in phase 2 and 3 trial stages. In the last 12 months, CCR has facilitated 26 clinical trials and has established relationships with both psychedelic and non-psychedelic drug developers, positioning it to secure further contracts.
2. A component of many psychedelic drug treatments is therapy to guide patients through their transformation. Numinus hopes to leverage its clinic footprint, treatment expertise in multiple psychedelics and first-mover advantage in PAT to become the provider of choice.
3. To meet the demand for trained practitioners to administer therapies for approved treatments, Numinus has established a comprehensive program. Accreditation is available through major regulatory bodies in Canada and the U.S. after completing the course, which has proven to attract learners and serve as validation for their future clients. The program has demonstrated scalability, doubling enrolment over the past six months. The company is also in the early stages of launching therapist training programs for drug developers to facilitate clinical research trials.

To prepare the company for the growth expected from the psychedelic sector, Numinus launched two critical initiatives -- cost containment and strategic realignment:

• A focus on profitable operations in the U.S.: With psychedelic therapy treatment expected to be approved in the U.S. before other jurisdictions, the company chose to discontinue its unprofitable clinic in Phoenix, Ariz. With the consolidation of operations at its successful Utah clinics, Numinus is optimizing its patient experience and care model, improving efficiencies, and establishing best practices to be deployed in future expansion.
• Reducing head count: Since Q2 2023, Numinus has reduced its head count by 60 per cent by eliminating non-revenue roles and aligned all remaining employees on growth-oriented initiatives and activities. The resulting leaner and more efficient organization will drive profitable growth.

With the initiatives in place and positive trends in the psychedelic sector, the company believes it is well positioned for growth in the quarters to come.

(1) Psychedelic Alpha, psychedelics drug development tracker, accessed April 11, 2024.

Strategic review

To best position the company for continued growth, Numinus's board of directors initiated a review process to explore, review and evaluate a broad range of strategic alternatives that may be available to the company to unlock shareholder value. The board retained Stifel Canada as its financial and strategic adviser.

Conference call and webcast details

Interested parties are invited to participate in the company's Q2 2024 results conference call and webcast occurring on April 15, 2024, at 5:30 p.m. Eastern Time (2:30 p.m. Pacific Time). During the call, Numinus executives will review the company's performance and recent initiatives and answer questions from analysts and previously provided investor questions.

To listen to the live webcast, please register on-line.

The webcast will also be archived on the events and presentations page of Numinus's investor relations website.

To participate in the live conference call, please use the following dial-in information:

• 1-888-330-3632 (toll-free in North America);
• 1-646-960-0837 (international).

Please ask to participate in Numinus's q2 2024 results call.

To avoid any delays in joining the call, please dial in at least five minutes prior to the call start time. If prompted, please provide the conference passcode 3547386.

About Numinus Wellness Inc.

Numinus helps people to heal and be well through the development and delivery of innovative mental health care and access to safe, evidence-based psychedelic-assisted therapies. The Numinus model -- including psychedelic research and clinic care -- is at the forefront of a transformation aimed at healing rather than managing symptoms for depression, anxiety, trauma, pain and substance use. Numinus is leading the integration of psychedelic-assisted therapies into mainstream clinical practice and building the foundation for a healthier society.

We seek Safe Harbor.