Entourage Health Corp. (TSX-V: ENTG) (OTCQX: ETRGF) reported a modest decrease in its quarterly revenue but improvements in profitability and efficiency for the third quarter quarter ending Sept. 30.
The Toronto-based company announced that its revenue for the period dropped to $13.2 million, a 7.4% decline from the $13.18 million reported in the same period last year. Net loss was $9.9 million for the period, an improvement versus a net loss of $17.4 million in last year’s third quarter, according to filings.
Despite the slumps, Entourage Health CEO George Scorsis noted the company’s successful initiatives in cost reduction and better profitability. Through strategic operational consolidation and the adoption of advanced automation technologies, the company has managed to significantly improve its gross profit margins, he said.
For the third quarter of 2023, the gross profit stood at $2.4 million, marking a notable rise from the previous year.
The company reported improvements in gross margins, which rose to 27% in the third quarter, a stark contrast to the negative margins experienced in the same quarter of the previous year. The improvement is attributed largely to the company’s efforts in reducing direct labor costs and enhancing production efficiency.
However, Entourage’s adjusted EBITDA showed a decline, indicating that the company is still navigating some financial challenges. The adjusted EBITDA fell to a loss of $4.5 million in the third quarter of 2023, down from a loss of $2.9 million in the third quarter.
The firm also amended its supply agreement with HEXO Corp., which is now under the wing of Tilray Brands, Inc. Additionally, the company faced a breach of certain financial covenants under its senior secured credit facilities, leading to a temporary forbearance agreement with its senior lender.
The company’s commercial efforts include the successful launch of new products under its Color Cannabis and Saturday Cannabis brands and meaningful sales achievements in Ontario for its Dimebag brand.
Moving forward, Entourage said it is focused on continuing its initiatives to reduce costs and improve operational efficiencies, aiming for stronger performances in the upcoming quarters.