Hydration Pharmaceuticals Company (ASX: HPC), known as Hydralyte USA, has announced it will raise up to $1.25 million through a strategic placement and rights issue. The company has secured firm commitments for a $650,000 placement, issuing 65 million new shares at $0.01 per share. Joseph Constable, formerly an Executive Director at Hancock & Gore, will subscribe for 60 million of these shares ($600,000) and join Hydralyte USA’s Board as a Non-Executive Director. Another investor will take the remaining 5 million shares.
In addition to the placement, Hydralyte USA will conduct a 1-for-5 rights issue, aiming to raise an additional $610,000 at $0.01 per share. PURE Asset Management, Hydralyte USA’s largest shareholder, has committed to subscribe for its full entitlement, contributing approximately $122,000.
The funds will support Hydralyte USA’s sales momentum in the US, particularly with the launch of new high-margin products and the consolidation of recent growth through e-commerce channels. Year-to-date (YTD) net sales from continuing US operations for January and February 2025 reached US$489,000 (~A$780,000), a 19% increase compared to the same period last year. Gross margin as a percentage of net revenue has also improved to 64%, up from 62% in CY2024. The company completed its transition services agreement with Prestige Consumer Healthcare Inc. on February 15, 2025, focusing solely on US operations.
Significant operational expenditure reductions are expected from mid-March 2025, with management anticipating further improvements in gross margin and reduced overheads due to contract work completion and relocation of CFO duties to Australia. The company’s CEO, Oliver Baker, expressed confidence that the capital raising will provide important financial flexibility for their US growth strategy. Mr. Baker also highlighted the strengthening of the board with the addition of Mr. Constable, signaling confidence in the company’s growth trajectory. PURE has agreed to amend the terms of its Tranche 2 Warrants such that the anti-dilution price adjustment mechanism will be removed. Shareholder approval for the amendment will be sought at the 2025 Annual General Meeting.
