Nova Cannabis Inc. (OTC: NVACF) reported a significant jump in revenue and profits, driven by strategic pricing and an expanded range of products.
The Edmonton-based company recorded a 15% year-over-year rise in revenue to $C67.7 million for the third quarter ending Sept. 30. The company increased its gross margin to 25.1% of revenue, up from 18.9% in the previous year’s quarter, signaling improved profitability.
Nova’s transition from a net loss to net earnings is noteworthy, with third quarter earnings reaching $C2.1 million, or four cents per share. Adjusted EBITDA stood at $C6.8 million, up from $C2.5 million in the prior year.
CEO Marcie Kiziak mentioned the company’s continued push for value creation for shareholders, pointing to the second consecutive quarter of positive free cash flow.
“I’m extremely proud of our team’s achievements in expanding private label and proprietary data licensing sales, which have significantly improved our operations,” Kiziak said in a statement. “We are confident that our long-term strategic plan to expand our footprint nationwide will offer a wealth of new opportunities and further solidify our leadership position in the Canadian cannabis retail market.”
The retailer’s strategic partnership with SNDL (Nasdaq: SNDL) has been fruitful, allowing Nova to tap into SNDL’s resources, which enabled cost-effective expansion and management of operational services.
Amid the growth, Nova Cannabis also reported an increase in its market share, estimated at 19.1% in Alberta and 3.5% in Ontario. The company noted that its aggressive pricing strategy and a focus on quality store locations have contributed to this uptick.
Cash flow from operating activities rose to $C5.6 million for the quarter, and the company utilized its full $C15 million revolving credit facility with SNDL to reinforce its position overall.
The company awaits final regulatory approval for its reorganization with SNDL. The deadline for closing the reorganization was extended to Nov. 30, pending the approval.