Entourage Health Corp., a Canadian producer and distributor of award-winning cannabis products, announced today its financial results for the three months ended March 31, 2022. The Company reported total revenue of $15.8 million (gross revenue of $17.4 million, before excise duties and discounts), up 17% sequentially over Q4 2021. The Company will host a conference call to discuss its financial and business highlights on Tuesday, May 31, 2022 at 10 a.m. Eastern Time.
“Our first quarter results reflect our strongest operating performance to-date – mainly from fulfilling some of the largest purchase orders in our Company’s history with exemplary delivery rates while consistently producing higher-grade cannabis at higher efficiencies. All of this contributed to notable increases in our adult-use and medical sales – up over 35% from last year,” said George Scorsis, CEO and Executive Chair, Entourage.
“Since implementing our strategic transformation initiatives, we have achieved sequential revenue growth and cost improvements. These initiatives continue to produce tangible benefits, including 22% gross margin expansion during the quarter. With our improved liquidity position and financial flexibility thanks to our expanded credit facilities and lenders’ support, we have the resources to continue creating long-term value for all our stakeholders.”
Summary of Results
| For the Quarter-Ended | Mar. 31, 2022 | Dec. 31, 2021 | |||||
| ($000’s) | ($000’s) | ||||||
| Total revenue | 15,770 | 13,539 | |||||
| *Net revenue (less Excise Tax) | 12,424 | 10,278 | |||||
| Gross profit (loss) before changes in fair value | 2,737 | 250 | |||||
| Gross margin % before changes in fair value | 22 | % | (-26% | ) | |||
| Loss and comprehensive loss | (8,764 | ) | (44,509 | ) | |||
| Adjusted EBITDA** | 563 | (55,610 | ) | ||||
| As at | Mar. 31, 2022 | Dec. 31, 2021 | |||||
| ($000’s) | ($000’s) | ||||||
| Cash and cash equivalents | 9,984 | 21,416 | |||||
| Inventory | 29,371 | 29,641 | |||||
| Biological assets | 792 | 607 | |||||
| Working Capital | (62,573 | ) | (54,967 | ) | |||
“Our focus on driving sales for top-performing products while rigorously adhering to our enhanced financial discipline will support our future growth even as we continue to strengthen our balance sheet,” said Vaani Maharaj, CFO, Entourage. “Revenue from all our sales channels is consistently growing, driven by expanded product availability across retail outlets, broader distribution channels, consistent flow-through of higher-margin products and customer-patient acquisition initiatives. By continuing to improve our operating efficiencies in 2022, we fully expect to see expanded margins while we continue to propel revenue growth through increased sales and market share gains.”
Revenue Highlights
| Q1 2022 | Q4 2021 | Q1 2021 | Change YOY | |||
| ($000’s) | ($000’s) | ($000’s) | % | |||
| Net Revenue by Channel | ||||||
| Medical | 6,223 | 3,362 | 5,185 | 20 | % | |
| Adult-Use | 5,982 | 6,343 | 4,806 | 24 | % | |
| Bulk | 218 | 896 | 287 | -24 | % | |
| Total Net Revenue | 12,424 | 10,601 | 10,278 | 21 | % | |
First Quarter 2022 Financial Highlights
- For the quarter ended March 31, 2022, Entourage recorded gross revenue of $17.4 million, and net revenue of $15.8 million less excise tax for total net revenues of $12.4 million compared to $10.6 million for the quarter ended December 31, 2021, a 17% sequential increase and 21% year-over-year improvement.
- Gross profit before changes in fair value was $2.7 million for Q1 2022, representing an increase in profit of $2.5 million or 992% due to improved efficiencies and partly due to lower inventory write-downs in Q1 2022.
- Gross margins of 22% in Q1 2022 compared to (-8%) for Q4 2021 and 2.4% in Q1 2021, the improvement over the prior periods a result of lower cost to produce higher grade products, sold at higher margins across expanded distribution channels.
- The weighted average cost per gram from clone to harvest of plants on hand was $0.52 in Q1 2022 compared to $0.63 in Q4, 2021. Weighted average cost per gram of inventory on hand decreased to $0.51 in Q1 2022 compared to $0.66 in Q4, 2021 mainly due to the reduced cost of operations.
- Adjusted EBITDA improved by $1.0 million to $563,000 in Q1, 2022, compared with negative $(432,000) in Q4, 2021, also primarily driven by strategic transformation initiatives to lower costs and partly due to generating higher-margin revenue and spending lower selling, general and administrative expenses.
Corporate Highlights During and Subsequent to First Quarter 2022
- Executive appointments included naming Executive Chairman, George Scorsis, as permanent CEO in January 2022; and the appointment of veteran finance executive Vaani Maharaj as CFO in April 2022.
- The Company announced in March 2022 that it secured an extension of the maturity date of its credit facilities from March 28, 2022 to May 31, 2022, and a deferral of certain of its financial covenants to May 31, 2022.
- The Company announced that pre-roll products in cultivars Mango Haze and Pedro Sweet Sativa continue to be top-sellers in BC with 10-pack pre-roll products – leading to new cultivars Black Sugar Rose and Blueberry Seagal being introduced as 10-pack pre-roll products in 2022.
- Also in early 2022, Entourage launched Pedro’s Sweet Sativa Live Sugar and new cultivar Space Cake.
- Color Cannabis brand refresh debuted in March 2022 centered around Color Theory meant to educate consumers on the correlation between the colour associated with a particular strain and its potential effect on moods.
- The Company partnered with Cannabis Amnesty in March 2022 to launch “Joints for Justice” retail campaign to raise awareness and funds with $1 of every Royal City Cannabis Co. pre-roll sold going to the advancement of Cannabis Amnesty’s initiatives.
- On April 29, 2022, Entourage and LiUNA Pension Fund announced the further upsizing of its existing credit facility with an additional $15 million in funding availability. This non-dilutive funding will be used for general working purposes to drive further commercial growth.
- In May 2022, Entourage announced it has entered into an agreement with Pineapple Express – a wholly owned subsidiary of Fire & Flower Holdings Corp. – to launch same-day/next-day medical cannabis delivery services to the Company’s Starseed Medicinal patients.
- Also in May 2022, the Company entered into voting support agreements with certain holders of its 8.5% unsecured convertible debentures, and it announced proposed amendments to the same, to be voted on at a meeting of debentureholders scheduled for June 20, 2022.
- Later in May, Entourage announced the Canadian debut of The Boston Beer Company’s (BBC) new cannabis-infused iced tea beverages ‘TeaPot’. Entourage will be the exclusive distributor of TeaPot to local retailers in Canada. Launching in select provinces as of July 2022, TeaPot is the first non-alcoholic, infused beverage crafted in partnership with Boston Beer’s cannabis subsidiary BBCCC Inc., and Peak Processing, its bottling partner.
About Entourage Health Corp.
Entourage Health Corp. is the publicly traded parent company of Entourage Brands Corp. (formerly WeedMD RX Inc.) and CannTx Life Sciences Inc., licence holders producing and distributing cannabis products for both the medical and adult-use markets. The Company owns and operates a state-of-the-art hybrid greenhouse and processing facility located on 158-acres in Strathroy, ON; a fully licensed 26,000 sq. ft. Aylmer, ON processing facility, specializing in cannabis extraction; and a micropropagation, tissue culture and genetics centre-of-excellence in Guelph, Ontario. Entourage’s elite adult-use product portfolio includes Color Cannabis, Saturday Cannabis and Royal City Cannabis Co. – sold across eight provincial distribution agencies. The Company also maintains strategic relationships in the seniors’ market and supply agreements with Shoppers Drug Mart. For more information, please visit us at www.entouragehealthcorp.com
