Aleafia Announces Record Revenues in 2022
- 151% increase in branded cannabis net revenue[1] to $36.8 million in 15-month fiscal year 2022 ended March 31, 2022 (new fiscal year end) from $14.6 million in the prior 12-month year
- $8 million in branded cannabis net revenue for Q5, a growth of 55% calendar year over calendar year
- 3rd highest increase in overall market share rankings over the course of the fiscal year among top 20 Canadian LPs[2]
- 168% increase in international sales over the prior 12-month year with distribution agreements in place enabling delivery into three attractive countries
- $5.6 million private placement equity financing completed to fund growth
- Closing of Debenture Amendments expected to be completed this week
- Extracted $10 million in annualized SG&A savings
- A record $11.0 million in adult-use purchase orders in the current quarter to date
- Reaffirmed guidance of delivering between $53 and $63 million in total net revenue in fiscal year 2023
Aleafia Health Inc. (TSX: AH, OTCQX: ALEAF) is pleased to report its financial results for the three and 15 months ended March 31, 2022. The Company’s fiscal year 2022 audited, consolidated financial statements and management discussion and analysis for the fifth quarter and 15-month periods, due to changing the year end to March 31, will be available in the Investors section of the Company’s website at aleafiahealth.com and will be filed on SEDAR and available at sedar.com.
Branded cannabis net revenue increases 151%: Aleafia Health’s branded cannabis net revenue increased 151% to $36.8 million in fiscal year 2022, from $14.6 million in the prior year. Total branded cannabis revenue for the period was $47.5 million.[3] Branded cannabis net revenue rose 55% to $8.0 million in the three months ended March 31, 2022, compared to $5.2 million in the three months ended March 31, 2021.
“For the fiscal year ended March 31, 2022, the Aleafia Health team once again demonstrated its relentless drive toward steadily increasing market share in branded adult-use and medical cannabis along with strong international sales growth,” said Aleafia Health CEO Tricia Symmes. “We continued our decisive quarter over quarter upward sales trajectory from Q4 to Q5 with adult-use market share rankings rising an additional two positions from 15th to 13th. The Company is now positioned to become a Top 10 Licensed Producer. Aleafia Health had exceptionally strong growth year over year in retail adult-use market share, as part of a successful end to a transformative fiscal year. The Company delivered a top 3 market share rank increase among the 20 largest Canadian Licensed Producers, from 28th in Q1 2021 when the Company launched the Sunday Market House of Brands, to 13th in the most recently completed quarter.”
Transformation towards higher margin cannabis: The Company completed a dramatic shift to become a branded cannabis producer in fiscal year 2022, from a largely wholesale business-to-business supplier in fiscal year 2020. This move resulted in an increase in average net realized price per gram and an improvement in the branded cannabis gross profit margin. Branded cannabis represented 85% of total net revenue in the fiscal year ending March 31, 2022, compared to only 40% in the prior fiscal year. The quality of the Company’s revenue base increased significantly driven by the growth in sticky, highly recurring medical sales, adult-use market share capture which drives continued end user demand for the Company’s branded consumer products, and the continued build-out of its international sales platform.
Medical cannabis leadership: The Company is also maintaining leadership in the medical cannabis market, with 7.0% market share[4]. “While others have declined in the current business climate, we are not only holding our own but expanding,” Symmes said. “Currently in the medical segment, our run-rate net revenue is a strong $10 million[5] as we are increasing our presence in key high value markets like Quebec, and providing enhanced wellness to veterans while third-party channel revenue was up 20% in revenue in Q5.”
International sales a strategic focus for the company: “International sales, a strategic focus for the company, grew 168% over the prior year, with a run rate of approximately $1.0 million[6] and growing.” Symmes said. “Starting with only one country in fiscal year 2020, the Company’s cannabis in fiscal year 2022 was successfully exported into three: Germany, the U.K., and Australia. We have established strong distribution partners in each of these countries with significant upside potential,” said Symmes. “Contracted strain specific sales are expected to drive sustainable higher margin business.” process of
“We continue to see the international markets as strategically important as they can potentially enhance Aleafia Health’s margins and provide increased visibility into near and long-term revenue and cash flows,” said Aleafia Health CFO Matt Sale.
Closing of Debenture Amendments: “During the current quarter the Company successfully negotiated a major breakthrough that will enhance our financial future,” commented Sale. “On May 12, 2022 an agreement in principle was announced to amend the $37.35 million 8.5% convertible debentures due June 27, 2022. The Debenture Amendments improve the Company’s balance sheet tremendously as they facilitate over $11.6 million of additional potential liquidity through the equity financing and full-access to our receivables revolving facility, improve our cash flow dynamic with no mandatory cash interest payments for at least 24 months, and balance our refinancing profile with staggered maturities over 2, 4 and 6 years. We expect the Debenture Amendments to close this week.”
$5.6 Million Equity Financing Completed: “On June 24, 2022 we closed our $5.6 million equity financing that we announced earlier in May. The net proceeds from this Private Placement will be used to fund working capital, capital expenditures and general corporate purposes. The net proceeds from this financing will provide liquidity to pursue immediately accretive growth initiatives that accelerate top-line revenue, improve our margin profile, and enhance our cash flow generation,” said Sale.
Cost rationalizations and contaminant initiatives: “The Company underwent a complete top-to-bottom organizational realignment which saw a 30% reduction in the workforce, integrated the medical business to deliver a cohesive and consistent patient experience, turned around its Grimsby greenhouse to focus on high-potency usable flower, and wound down many of the legacy consultants, contracts and non-recurring costs related to the Sunday Market House of Brand build-out,” said Aleafia Health CFO, Matt Sale. “With significant cost rationalizations enacted over the fiscal year, and continued cost containment initiatives underway, the Company is on track towards Adjusted EBITDA[7] profitability in the second half of fiscal year 2023.
Reaffirm net revenue guidance for fiscal year 2023: “Our current annual run-rate net revenue of approximately $43 million is primarily underpinned by $28[8] million in adult-use branded cannabis and $11[9] million in medical and international revenue. In the current quarter, I am pleased to announce that we have significantly increased our sales generation sequentially, as the Company has $11.0 million in purchase orders from its four provincial authorities to which it supplies cannabis products, an increase of 22% or $2.0 million over the quarter ended March 31, 2022. In the year ahead one of our goals is to add to our provincial supply relationships and deepen our product lines within our existing store partners which are expected to increase overall net revenue and total gross profits. With our strategic growth projects underway we remain confident we can deliver on our previously issued guidance of between $53 and $63 million in total net revenue in fiscal year 2023.[10]”
Portfolio optimization: “In Q5, the Company completed a detailed portfolio optimization exercise which resulted in focusing on flower, vapes and pre-rolls, the largest flower categories with the highest overall gross profit potential where we are best-positioned to continue winning consumer traction and share of purchases,” Symmes said. “In 2021, the Company launched five adult-use brands, and 37 new SKUs across multiple markets – from the everyday Divvy brand, consistently among the top searched brands at the Ontario Cannabis Store since its launch – to the Company’s CBD-forward wellness brand Noon & Night.”
Aleafia Announces Record Revenues in 2022
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