- 31% increase in branded cannabis net revenue1 to
$10.0 million from$7.6 million in the prior year - #12 ranking for market share in core markets2 for Q1 FY2023
- In the
Ontario value category, Divvy has attained #5 market share in pre-roll and #7 in flower - Secured new international partnership representing approximately
$4.6 million sales commitment - 12% increase in medical cannabis net revenue3 over the prior quarter
- 7.5% market share in overall Canadian medical market
- Reaffirmed guidance of
$53.0 to$63.0 million in net revenue in FY20234 - Trending towards breakeven Adjusted EBITDA5 profitability with -
$0.9 million in Q1 FY2023; reaffirmed guidance of achieving run-rate breakeven Adjusted EBITDA in FY20236 - Nitecaps, a breakthrough melatonin-CBD product launch in current quarter
Branded cannabis net revenue, quarter over quarter, increased 25%:
“Our pivot to a branded cannabis strategy is the success story driving the three pillars of company revenue: adult-use branded cannabis, a ‘sticky’ recurring medical cannabis revenue stream and growing higher margin international sales,” said
“Due to our successful branded growth strategy, the Company continues to target a top 10 standing9 in our key markets and reaffirms our expectation to reach breakeven Adjusted EBITDA profitability during the second half of FY2023,”10 said Aleafia Health CFO
Divvy Brand Leadership: “In each of the three largest revenue categories - flower, pre-rolls and vapes - the Company is gaining in market share and continuing to deliver excellent growth rates,” Symmes said. “In the
Medical: The Company reported a 4% increase in medical cannabis net revenue to
“Anchored by our Emblem brand, we continue to view medical as a core part of our diversified sales mix, and is synergistic with our branded adult-use channel given the ability to sell products into both segments,” said Sale.
International Revenue Growth: “International revenue is a competitive advantage and a differentiating factor for Aleafia, as we leverage our high quality, diversified flower supply and export it to the higher margin international sales markets,” Symmes said. “Current international agreements have led to more than
“The newly signed agreement improves revenue and cash flow visibility, locks in attractive margins, and improves our overall cash conversion cycle and net working capital performance,” said Sale.
Continued Cost Rationalization: “We are striving to achieve breakeven Adjusted EBITDA profitability by the end of FY2023,” Sale said. “Firstly, we are increasing revenue by capturing market share. SKU optimization has furthered revenue growth, which aligns the portfolio with the highest selling product formats with strongest margins, coupled with moderate and strategic price increases. Second, we are relentlessly focused on cost rationalization. In addition to difficult headcount reductions and other initiatives, the Company has engaged in vendor consolidation to reduce complexity across sites while negotiating trusted vendor price improvements due to economies of scale. With all of these efforts combined, the Company has extracted
“On the cultivation side of the business, all processes in our
New Nitecaps: “In Q1 FY2023, the Company completed development on a breakthrough product that has just been brought to the
“We are highly strategic and thoughtful about our new product roll-outs. In this case, Nitecaps can be leveraged in the adult-use and medical channels as sleep is top-of-mind for many patients, addressing an unmet consumer need,” said Sale.
“Aleafia Health today is a vastly different Company than it was one year ago,” said Symmes. “With an extraordinary team of people at all levels, we are now positioned to reach new heights, supported by cost containment, a transforming balance sheet, and new equity financing. We are now rooted in a new era, with a relentless drive toward profitability and increased market share capture.”
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About
The Company is a federally licensed Canadian cannabis company offering cannabis products in Canadian adult-use and medical markets and in select international markets, including
The Company owns three licensed cannabis production facilities and operates a strategically located distribution centre all in the province of
Forward Looking Information
Certain statements herein relating to the Company constitute “forward looking information”, within the meaning of applicable securities laws, including without limitation, statements regarding future estimates, business plans and/or objectives, sales programs, forecasts and projections, assumptions, expectations, and/or beliefs of future performance, are “forward-looking information”. Such forward-looking statements involve unknown risks and uncertainties that could cause actual and future events to differ materially from those anticipated in such statements. Forward looking statements include, but are not limited to, statements with respect to our market share, net revenue, branded cannabis net revenue, Adjusted EBITDA, and other financial outlook projections for fiscal year 2023, our commercial operations, including production and / or sales of cannabis, quantities of future cannabis production, anticipated revenue in connection with such sales, and other Information that is based on forecasts of future results, estimates of production not yet determinable, and other key management assumptions. The following material factors or assumptions were used to develop the forward looking information: market size and growth of the Canadian adult-use and medical cannabis markets, retail store penetration, script trends, cultivation and processing capacity, costs of production, gross and net revenue per gram. Actual results may differ materially from those expressed or implied by such forward looking statements and involve risk and uncertainties relating to: future cultivation yield and quality, actual operating performance of facilities, product launches, facility licenses and amendments, average selling prices, cost of goods sold, operating expenses, Adjusted EBITDA, regulatory changes in the Canadian and international markets, and other uninsured risks. The forward looking information was approved by Management as of
Operational and Financial Highlights
($,000s) | Three months ended | |||||
Operating Results | ||||||
Kilograms Sold - Dried Flower | 8,497 | 7,811 | ||||
Avg Net Realized Price | 1.42 | 1.37 | ||||
Adult-Use Market Share %(1) | 2.5 | % | 0.8 | % | ||
Adult-Use Market Share Ranking | 12 | 19 | ||||
Medical Use Orders | 15,568 | 20,359 | ||||
Medical Use Avg Order Value | ||||||
Financial Results | ||||||
Revenue | 16,512 | 11,650 | ||||
Branded Cannabis Net Revenue | 9,953 | 7,573 | ||||
Wholesale Revenue | 2,075 | 3,099 | ||||
Net revenue(1) | 12,028 | 10,672 | ||||
Branded Cannabis profit $ | 2,519 | 2,955 | ||||
Branded Cannabis profit % | 25 | % | 39 | % | ||
Bulk Wholesale profit $ | 108 | 1,593 | ||||
Bulk Wholesale profit % | 5 | % | 51 | % | ||
Adjusted gross profit before fair value ("FV") adj's | 2,627 | 4,548 | ||||
Total Gross profit % | 22 | % | 43 | % | ||
Adjusted SG&A | 4,709 | 9,728 | ||||
% to net revenue | 39 | % | 91 | % | ||
Adjusted EBITDA(2)(3) | (938 | ) | (3,434 | ) | ||
(1,596 | ) | (10,834 | ) | |||
Cautionary Statement Regarding Non-IFRS Measures
Adjusted EBITDA, Adult-Use Cannabis Net Revenue, Branded Cannabis Net Revenue and Medical Cannabis Net Revenue are non-IFRS measures that do not have a standardized meaning and therefore may not be comparable to similar measures presented by other issuers. Definitions and a reconciliation of Adjusted EBITDA against the comparable IFRS measure can be found below. For additional information including the purpose of the non-IFRS measure, see “Cautionary Statement re Non-IFRS measures” in the Company’s Management’s Discussion and Analysis for the period ended
Adjusted EBITDA
Adjusted EBITDA is widely used by industry participants and analysts to measure company performance. The Company considers Adjusted EBITDA a key metric for measuring operating performance and cash flow, to manage working capital, debt repayments and capital expenditures. Adjusted EBITDA is calculated as net income (loss), excluding (i) amortization and depreciation, (ii) fair value changes in biological assets and changes in inventory sold, (iii) share-based payments, (iv) bad debt expense, (v) business transaction costs, (vi) non-operating expenses (income), (vii) taxes, (viii) interest expenses, (ix) one-time sale of assets, and (x) unrealized gain (loss) on marketable securities. Adjusted EBITDA is not recognized or defined under IFRS, and as a result, it may not be comparable to the data presented by competitors.
Three months ended | ||||
($,000s) | ||||
Net profit (loss) | (4,469 | ) | 5,231 | |
Add back: | ||||
Depreciation and amortization1 | 1,950 | 2,897 | ||
Interest expense, net | 2,760 | 1,755 | ||
EBITDA | 241 | 9,883 | ||
FV changes in biological assets and changes in inventory sold | (3,090 | ) | (3,572 | ) |
Share-based payments | 570 | 539 | ||
Bad debt expense | 0 | 1,894 | ||
Business transaction costs | 315 | 1,061 | ||
Gain on sale of assets | (3 | ) | (12,092 | ) |
Fair value through profit and loss adjustments | 977 | (700 | ) | |
Non-operating expense (income) | 52 | (447 | ) | |
Adjusted EBITDA(3) | (938 | ) | (3,434 | ) |
Adult-use Cannabis Net Revenue is net cannabis revenue for Canadian adult-use sales.
Cannabis net revenue is sale of cannabis revenue less excise taxes
Branded Cannabis Net Revenue is calculated as Adult-use Cannabis Net Revenue, Medical Cannabis Net Revenue and clinic revenue.
Medical Cannabis Net Revenue is net cannabis revenue for Canadian and international medical sales.
1 This is a non-IFRS measure. See cautionary statement re non-IFRS measures below.
2 Based on HiFyre retail sales pull through data in
3 This is a non-IFRS measure. See cautionary statement re non-IFRS measures below.
4 This is forward looking information. See cautionary statement below.
5 This is a non-IFRS measure. See cautionary statement re non-IFRS measures below.
6 This is forward looking information. See cautionary statement below.
7 This is a non-IFRS measure. See cautionary statement re non-IFRS measures below.
8 Based on HiFyre retail sales pull through data in
9 This is forward looking information. See cautionary statement below.
10 Based on HiFyre retail sales pull through data in
11 This is forward looking information. See cautionary statement below.
12 Based on OCS sales data of wholesale channel and non-premium segment.
13 Data on cannabis for medical purposes –
Source:
2022 GlobeNewswire, Inc., source