Entourage Health Corp., a Canadian producer and distributor of award-winning cannabis products, today announced its financial results for the three months ended March 31, 2024. The Company reported total revenue of $16.4 million (net revenue of $12.7 million, before excise duties and discounts), up 9% year-over-year. The Company will host a conference call to discuss its financial and business highlights on Tuesday, May 28, 2024, at 10:00 a.m. Eastern Time.
“Entourage’s first quarter results are a testament to our robust financial health and strategic approach to business operations, positioning us for success throughout 2024,” said George Scorsis, Chair and CEO. “With defined infrastructure and supply agreements in place, we are well-positioned to continue delivering the accelerated growth we have already seen develop in Q1. Our team’s relentless focus on efficient execution has led to a solid performance, reflected in improved profitability and a significant increase in EBITDA, marking the first positive quarter. We are also seeing substantial growth in our adult-use business as we continue to announce and launch a range of innovative products across Canada set to generate ongoing interest and excitement among consumers.”
Financial Highlights
- For the quarter that ended March 31, 2024, Entourage recorded total revenue of $16.4 million compared to $15.1 million the previous year, a 9% increase, and a 23% increase from Q4 2023.
- Gross profit before changes in fair value was $5.8 million for Q1 2024, representing a $2.8 million increase compared to Q1 2023. This significant improvement is attributed to the cessation of cultivation activities and the closure of underperforming business units.
- Gross margins were 45% in Q1 2024, compared to 25% in Q1 2023. This improvement resulted from several factors, including increased production automation, lower biomass costs, improved freight management, and packaging optimizations.
- Cost of Goods Sold (COGS) declined by $1.9 million or 22% compared to Q1 2023. This reduction reflects the organization’s commitment to cost management and operational excellence, as outlined in the Company’s transformation plans.
- EBITDA increased by $4.4 million to $0.5 million in Q1 2024, a significant turnaround from ($3.9 million) in Q1 2023.** This 114% improvement highlights the success of the Company’s strategic transformation initiatives to lower costs and a shift to a higher-margin product mix.
Corporate Highlights During and After the First Quarter of 2024
- On April 30, 2024, the Company announced it was in breach of certain financial covenants and other obligations under each of its Senior Credit Agreement and Subordinated Credit agreements with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (“LPF”) and was working collaboratively with LPF to reach an agreement on amended debt terms. Consequently, the Company received a renewed forbearance letter on May 3, 2024, waiving the Company’s breaches until August 2, 2024, subject to the satisfaction or waiver of certain conditions.
- In Q1 2024, Entourage increased production capacity to nearly 2.2 million pre-rolls per month.
Commercial Highlights
- Entourage continues demonstrating its market strength and consumer appeal with a 10% year-over-year increase in adult-use revenue. This impressive growth reflects the Company’s strategic initiatives and ability to adapt to the evolving market landscape.
- In Q1 2024, the Company’s Dime Bag brand in Ontario was the 3rd fastest-growing pre-roll brand. Additionally, Dime Bag launched in Alberta, with plans for a nationwide rollout throughout 2024.
- In Q1 2024, 80% of stores in Ontario, Alberta, and British Columbia continued carrying at least one Entourage SKU, maintaining a strong presence from the previous year. Furthermore, 50% of these stores featured four or more Company SKUs.
- In Q1 2024, Entourage’s national pre-roll market share was 2%. Color Cannabis also ranked 12th highest pre-roll brand in national dollar sales. It secured the number 2 spot in the pre-roll category in British Columbia, the second-largest revenue-generating market in Canada after Ontario.
- The Company launched 11 new adult-use SKUs in Q1 2024, enhancing its product lineup across key markets. These SKUs included Color Cannabis “Pedro’s Sweet Sativa” and “Blueberry Seagal Live Resin Infused” pre-rolls in Ontario, and “Phantom Sunset” whole flower in Alberta.
- Additionally, Saturday unveiled “Passionfruit Lavender” and “Beached Mango” in 1 g 510 vape carts in Ontario, further diversifying offerings and catering to consumer demand.
- Starseed consistently broadens its product portfolio available to medical cannabis patients. This portfolio includes the introduction of new strains, advanced delivery methods, and specialized formulations, all designed to meet the diverse needs of the medical cannabis community.
About Entourage Health Corp.
Entourage Health Corp. is the publicly traded parent Company of Entourage Brands Corp., a licence holder producing and distributing cannabis products for the medical and adult-use markets. The Company owns and operates a fully licensed 26,000 sq. ft. Aylmer, ON processing facility. With its Starseed Medicinal medical-centric brand, Entourage has expanded its multi-channelled distribution strategy.
