On Monday Canadian cannabis company Entourage Health Corp. (TSX-V: ENTG) (OTCQX: ETRGF) announced its financial results for the first quarter ending March 31, 2022. Entourage reported total revenue of $15.8 million, up 17% sequentially over the fourth quarter of 2021. The reported loss was trimmed to $8.7 million.
“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 a 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.”
The company did note that the weighted average cost per gram from clone to harvest of plants on hand was $0.52 in the first quarter compared to $0.63 in the fourth quarter. The weighted average cost per gram of inventory on hand decreased to $0.51 in the first quarter of 2022 compared to $0.66 in the fourth quarter of 2021 mainly due to the reduced cost of operations.
Balance Sheet Moves
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. 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. The non-dilutive funding will be used for general working purposes to drive further commercial growth. 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 debenture holders scheduled for June 20, 2022.
“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.”