Aleafia Health Inc. (TSX: AH) (OTCQB: ALEAF) touted its profitability as the Canadian licensed producer managed to grow its different revenue channels, despite having to shore up costs and lay off 20% of its full-time payroll.
The company published its financial results for its third quarter ending Dec. 31, 2022.
Total revenue for both medical and adult-use sales came out to $14.8 million versus $11.9 in the previous year period. Net loss rolled in at $25 million versus $71 million in the same period the year before.
Still, the company on Monday boasted its second consecutive quarter of positive adjusted EBITDA, which was $400,000, representing a 4% margin.
“With ongoing and completed cost rationalizations and the continued growth and popularity of our branded adult-use portfolio, anchored by Divvy, we remain confident the company can reach our goals of scalable profitability while attaining a top 10 standing in our markets in the next fiscal year,” said CEO Tricia Symmes.
Aleafia saw a 9% growth in adult-use revenue over the previous quarter, “despite an industry-wide market retraction.” The company said that Divvy continued to drive the majority of its $10 million of revenue in this channel.
Aleafia made $600,000 in international net revenue, representing 155% year over year growth in the channel. During the quarter, the first shipments to a previously announced international partner were also executed towards an estimated $4.6 million, two-year sales commitment. In January, a second European partner was announced, representing a one-year, estimated $1 million initial contract.
“While there was a modest decline in international revenue quarter-over-quarter due to timing of shipments, product is now in the European market and with the completion of expansion plans, the company’s Paris, Ontario indoor cultivation facility will increase grow capacity by 20% for international destinations,” Symmes said.
Aleafia reported a 40% increase in medical net revenue over the prior year and a 7% increase over the last quarter. In a contracting market, medical net revenue, excluding clinics, rose to $2.7 million during the quarter, versus $2 million in the same period last year.
“There were 12 specific new medical programs introduced to patients targeting individual patient segments with new formats and expanding the Aleafia Health flower and edible portfolio,” the company said.
Adjusted SG&A totaled $3.8 million in the quarter, representing a 51% decline over the prior year and a 16% decline versus the previous quarter.
“Significant and aggressive cost rationalizations in the company’s adjusted SG&A have dramatically reduced the company’s cash expenditures,” said CFO Matt Sale. “We are operating with a current adjusted SG&A profile that is flexible and scalable to facilitate continued net revenue growth across all three of our core-branded cannabis sales channels.
“Going forward, we are focusing on further deepening our relationships with key vendors, aligning the company with those matching our size and scale, creating further competitiveness, and enabling volume-based discounts,” he said.
Since the last quarter, the company achieved an additional $2.8 million in annualized adjusted SG&A cost savings, “primarily relating to efficiencies in its IT systems, enhanced procurement processes, and an ongoing vendor consolidation.”
More than $16 million in annualized cost savings have been extracted from adjusted SG&A over the last four quarterly periods, bringing adjusted SG&A down from 89% of total net revenue a year ago, to 36% in the reported quarter.