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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Aleafia Health Inc | TSX:AH | Toronto | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.02 | 0.01 | 0.01 | 0 | 00:00:00 |
From Nov 2022 to Nov 2024
During the fourth quarter of the 2023 fiscal year, ending March 31, 2023, there was a total revenue increase of 9% to $11.7 million from $10.7 in the quarter ending March 31, 2022 while net revenue in Q4 FY2023 increased by 33%, to $9.4 million from $7.0 million in the comparable quarter last year.
Canadian Adult-Use Performance In the 12 months ended March 31, 2023, adult-use revenue increased 24% to $36.0 million, as compared to $29.1 million in the 12 months ended March 31, 2022. And adult-use net revenue increased 13% to $22.4 million, as compared to $19.8 million in the 12 months ended March 31, 2022. This performance was anchored around Divvy, the everyday brand, and complemented by product launches under the Company’s Sunday Market House of Brands. The Company reached a peak #12 market share ranking in its core markets in Q1 FY2023.4 Within the 2023 fiscal year the Company’s pre-rolls, operating in the fastest growing market segment, peaked at #2 in Ontario market share rankings, while milled flower products gained a #4 Ontario market share ranking.5 Divvy’s new rotating SKU, Divvy Buyer’s Club, entered the Alberta and Ontario markets, capturing a #7 flower SKU ranking in Ontario’s flow-through sales model in Q4 FY 2023.6 Based on Divvy’s strong acceptance in Ontario, the Company anticipates many opportunities for expanding Divvy’s brand portfolio, along with strategic growth in new adult-use markets.
In the three months ended March 31, 2023, adult-use net revenue of $3.7 million represented a decline of 32% as compared to the three months ended March 31, 2022, primarily due to overall seasonality in the marketplace, the Company’s liquidity constraints, challenges in making timely payments to high priority vendors, and the Company’s product mix, focused on pre-rolls, which tend to experience higher sales velocity in the spring and summer seasons.
Continued Strong Canadian Medical PerformanceAleafia’s Q4 FY2023 medical results were strong, showing 19% net revenue growth to $3.0 million from $2.5 million in the period ended March 31, 2022. The medical market continues to show steady improvements for the Company, by consistently driving growth in new high value patient groups and entering new geographic regions. Growth in the product portfolio and outreach for patient groups offset medical industry tailwinds as the Company experienced 7% growth year-over-year in net revenue to $12.1 million in the year ended March 31, 2023 compared with $11.3 million in the 12 month period ended March 31, 2022.
International Market GrowthAleafia posted another quarter of international sales with $0.4 million in Q4 FY2023 net revenue, contributing to a total of $2.1 million in the year ended March 31, 2023, representing 318% growth over $0.5 million in the 12 months ended March 31, 2022. In international markets, Aleafia continues to build a pipeline of opportunities in medical cannabis regions that have the potential to legalize recreational use in the near-term. International net revenue diversifies sales mix, enhances margins, and unlocks new, growing sales channels.
Other Fiscal Year 2023 Highlights included:
“The Aleafia team is thrilled about the proposed business transaction with RWB,” Symmes said. “The Canadian cannabis market is a rapidly changing industry, and we believe we will be well positioned with our new partner RWB to capitalize on value-added synergies. RWB has award-winning brands and IP and with Aleafia’s Divvy brand and proven cultivation, manufacturing, and distribution capabilities, we expect to create one of the most dynamic cross border companies in the industry.”
“This last fiscal year was a year of focused execution to drive profitable top-line growth, expand our margin profile by tightening up our supply chain, and cost rationalization to right size our fixed cost profile to fit our size and scale,” said Aleafia CFO, Matt Sale. “We are very proud to have achieved this while continuing to allocate capital expenditures prudently and achieving Adjusted EBITDA profitability for three consecutive quarters. The improved financial flexibility and capacity of the Combined Company will enhance the ability to execute on organic and acquisitive growth strategies.”
Adjusted EBITDA ProfitabilityFor the year ended March 31, 2023, the Company generated a loss of $0.2 million Adjusted EBITDA, representing a $18.7 million improvement over 12 months ended March 31, 2022. This increase was primarily driven by the Company’s strategic shift to a branded product portfolio anchored in the adult-use, medical and international sales channels; gross profit margin before fair value margin expansion; and aggressive cost containment and rationalization across all the Company’s facilities, operations and functions.
In the three months ended March 31, 2023, the Company generated Adjusted EBITDA of $0.2 million, representing the third consecutive quarter of Adjusted EBITDA profitability, as compared to an Adjusted EBITDA loss of -$4.4 million in the three months ended March 31, 2022. The profitability in Q4 FY2023 was primarily due to the $1.3 million bulk wholesale12 gross profit before fair value adjustments which represents two bulk wholesale customers. These input materials exceeded the Company’s near-term supply requirements for its own branded cannabis products and accordingly had previously taken a $1.1 million inventory provision.
Operational and Financial Highlights
| ($,000s) | Three monthsended | Twelve monthsended | ||||||||||
| 31-Mar-23 | 31-Mar-22 | 31-Mar-23 | 31-Mar-22 | |||||||||
| Operating Results | ||||||||||||
| Adult-Use Market Share %(1) | 1.9% | 2.2% | 2.1% | 1.5% | ||||||||
| Adult-Use Market Share Ranking | 15 | 14 | 13 | 15 | ||||||||
| Medical Use Orders | 14,557 | 17,048 | 61,086 | 75,044 | ||||||||
| Medical Use Avg Order Value | $169 | $152 | $164 | $145 | ||||||||
| Financial Results | ||||||||||||
| Revenue | 11,696 | 10,734 | 57,361 | 46,303 | ||||||||
| Branded Cannabis Net Revenue | 7,173 | 8,047 | 36,557 | 31,567 | ||||||||
| Wholesale Net Revenue | 2,216 | (1,008) | 6,225 | 4,489 | ||||||||
| Net revenue(1) | 9,389 | 7,039 | 42,847 | 36,056 | ||||||||
| Branded Cannabis profit $ | 2,690 | 2,851 | 12,664 | 10,179 | ||||||||
| Branded Cannabis profit % | 38% | 35% | 35% | 32% | ||||||||
| Bulk Wholesale profit $ | 1,262 | (1,918) | 1,533 | (5,882) | ||||||||
| Bulk Wholesale profit % | 57% | 0% | 25% | -131% | ||||||||
| Gross profit before fair value adjustments | 3,953 | 933 | 14,196 | 4,297 | ||||||||
| Total Gross profit % | 42% | 13% | 33% | 12% | ||||||||
| Adjusted SG&A | 4,533 | 7,262 | 17,575 | 32,264 | ||||||||
| % of total net revenue | 48% | 103% | 41% | 89% | ||||||||
| Adjusted EBITDA(2)(3) | 229 | (4,412) | (180) | (18,936) | ||||||||
| Adjusted EBITDA margin (2) | 2% | -63% | 0% | -53% | ||||||||
| 1. Based on HiFyre retail sales pull through data in BC, AB, SK, and ON | ||||||||||||
| 2. See “Cautionary Statements Regarding Certain non-IFRS Measures” section for term definition | ||||||||||||
| 3. See "Adjusted EBITDA" section for reconciliation to IFRS equivalent. | ||||||||||||
Cautionary Statement Regarding Non-IFRS Measures
Total Cannabis Sales, Adjusted EBITDA, Adjusted SG&A, International Net Revenue, Wholesale Net Revenue, Branded Cannabis profit, Bulk Wholesale, Bulk wholesale profit, Adjusted EBITDA margin, Gross Profit before Fair Value Adjustments, Adult-Use Cannabis Net Revenue, Branded Cannabis Net Revenue, 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 of each measure and a reconciliation of Adjusted EBITDA and Adjusted SG&A against the comparable IFRS measure can be found below. For additional information including the purpose of the non-IFRS measure, see “Cautionary Statement Regarding Non-IFRS Measures” in the Company’s Management’s Discussion and Analysis for the period ended March 31, 2023 found on SEDAR at www.sedar.com.
Adjusted SG&A
Adjusted selling, general and administrative (“Adjusted SG&A”) is defined as SG&A expenses adjusted to exclude non-recurring costs. These non-recurring items may relate to certain transaction costs, one time subsidies, and severances. Adjusted SG&A is not recognized or defined under IFRS, and as a result, it may not be comparable to the data presented by competitors.
| ($,000s) | Three months ended | Twelve months ended | |||||
| 31-Mar-23 | 31-Mar-22 | 31-Mar-23 | 31-Mar-22 | ||||
| SG&A | 5,160 | 4,887 | 18,221 | 27,231 | |||
| Business transaction costs | 74 | 696 | 502 | 3,572 | |||
| Wage Subsidies, severance | (105 | ) | 1,142 | (552 | ) | (598 | ) |
| Grimsby costs | (459 | ) | - | (459 | ) | - | |
| Paris property taxes | (137 | ) | - | (137 | ) | - | |
| Medical Clinic Supply Services | - | 557 | - | 2,059 | |||
| Adjusted SG&A | 4,533 | 7,282 | 17,575 | 32,264 | |||
Adjusted EBITDA
The Company considers Adjusted EBITDA a key metric for measuring operating performance and cash flow, to manage working capital, debt repayments and capital expenditures. Adjusted EBITDA is calculated as net income (loss), excluding (i) amortization and depreciation, (ii) fair value changes in biological assets and changes in inventory sold, (iii) share-based payments, (iv) bad debt expense, (v) business transaction costs, (vi) non-operating expenses (income), (vii) taxes, (viii) interest expenses, (ix) one-time sale of assets, and (x) unrealized gain (loss) on marketable securities and (xi) other non-recurring expenses (income). Adjusted EBITDA is not recognized or defined under IFRS, and as a result, it may not be comparable to the data presented by competitors.
| Three months ended | Twelve months ended | |||||||
| ($,000s) | 31-Mar-23 | 31-Mar-22 | 31-Mar-23 | 31-Mar-22 | ||||
| Net loss | (12,053 | ) | (4,152 | ) | (34,610 | ) | (156,049 | ) |
| Add back: | ||||||||
| Depreciation and amortization (1) | 888 | 2,149 | 6,147 | 10,050 | ||||
| Interest expense, net | 2,310 | 2,626 | 9,357 | 8,549 | ||||
| Income tax expense (recovery) | - | - | - | (2,854 | ) | |||
| EBITDA | (8,856 | ) | 623 | (19,107 | ) | (140,305 | ) | |
| Inventory write down | - | - | 6,795 | 19,648 | ||||
| FV changes in biological assets and changes in inventory sold | 5,935 | 906 | 1,401 | 563 | ||||
| Share-based payments | 10 | 68 | 2,221 | 2,320 | ||||
| Bad debt expense | 218 | (8,088 | ) | 218 | (1,290 | ) | ||
| Business transaction costs | 74 | 696 | 501 | 3,613 | ||||
| Restructuring costs | 106 | - | 397 | - | ||||
| Gain on sale of assets | - | - | (112 | ) | (12,092 | ) | ||
| Gain on sale of marketable securities | (21 | ) | - | (21 | ) | - | ||
| Fair value through profit and loss adjustments | - | 1,120 | 1,133 | 15,505 | ||||
| Impairment of intangible assets | - | - | - | 53,093 | ||||
| Impairment of goodwill | - | - | - | 11,314 | ||||
| Impairment of property, plant & equipment | 2,000 | - | 5,578 | 28,800 | ||||
| Grimsby costs | 563 | - | 563 | - | ||||
| Paris property taxes | 137 | - | 137 | - | ||||
| Non-operating expense (income) | 62 | 263 | 115 | (106 | ) | |||
| Adjusted EBITDA (2) | 229 | (4,412 | ) | (181 | ) | (18,937 | ) | |
| 1. Includes non-cash depreciation expensed to cost of sales. | ||||||||
| 2. See "Cautionary Statements Regarding Certain Non-IFRS Measures" section for term definitions | ||||||||
For Investor & Media Relations
Matthew Sale, CFOIR@AleafiaHealth.comLEARN MORE: www.AleafiaHealth.com
About Aleafia Health
The Company is a federally licensed Canadian cannabis company offering cannabis products in Canada and destined for international markets, including Australia and Germany. The Company operates a virtual medical cannabis clinic staffed by physicians and nurse practitioners which provide health and wellness services across Canada.
The Company operates three licensed cannabis production facilities all in the province of Ontario, including the largest, outdoor cannabis cultivation facility in Canada. The Company produces a diverse portfolio of cannabis and cannabis derivative products including pre-roll, milled, dried flower, vapes, oils, capsules, edibles, sublingual strips, and topicals, for sale in Canada in the medical and adult-use markets, and in select international jurisdictions.
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 long term profitability, product strategy, brand performance, market share, revenue, margins, net revenue, international net revenue, adult-use revenue, strategic growth in new adult-use markets, growth in medical market and new high value patient groups, the estimated value of contracts, new market entries, Adjusted EBITDA, and other financial outlook projections for fiscal year 2024, our commercial operations, including production and / or sales of cannabis, potential for legalization of cannabis in international markets, quantities of future cannabis production, anticipated revenue in connection with such sales, potential benefits and synergies arising from the proposed transaction with RWB, cultivation, manufacturing, and distribution capabilities of a potential business combination with RWB, and other Information that is based on forecasts of future results, estimates of production yet determinable, and other key management assumptions. The following material factors or assumptions were used to develop the forward looking information: stable currency exchange, parties will perform contracts in accordance with their terms, parties to contracts will purchase the minimum quantities required to retain any exclusivity rights under the contract, ability to obtain listing agreements in new markets, 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: currency conversion, ability to source flower and supplies of sufficient quantity, quality and price point, performance of competitors, laws and government policies, 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 June 13, 2023. The Company assumes no responsibility to update or revise forward-looking information to reflect new events or circumstances unless required by law. The forward looking information is provided for information purposes only and readers are cautioned that it may not be appropriate for other purposes. This presentation is provided for general information purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security in any jurisdiction.
___________________
1 Based on OCS Sale of Data wholesale channel results by category for the period FY 20232 This is a non-IFRS measure. Please see cautionary statement on non-IFRS measures below3 This is a non-IFRS measure. Please see cautionary statement on non-IFRS measures below4 Based on HiFyre retail sales pull through data in BC, AB, SK, MB and ON for the period FY2023 and excludes beverage and cultivation5 Based on OCS Sale of Data wholesale channel results by category for the period FY 20236 Based on OCS Sale of Data wholesale channel results by category for the period Q4 FY 20237 This is forward looking information. Please see cautionary statement below8 Based on the twelve months ended December 31, 20229 This is a non-IFRS measure. Please see cautionary statement on non-IFRS measures below10 This is a non-IFRS measure. Please see cautionary statement on non-IFRS measures below11 This is a non-IFRS measure. Please see cautionary statement on non-IFRS measures below12 This is a non-IFRS measure. Please see cautionary statement on non-IFRS measures below
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