PharmaCielo Ltd. (TSXV: PCLO) (OTCQX: PCLOF), the Canadian parent of Colombia’s premier cultivator and producer of dried flower and medicinal-grade cannabis extracts, PharmaCielo Colombia Holdings S.A.S., released its financial results for the fourth quarter and year ended December 31, 2022. The company reported $1.5 million in sales for the quarter versus last year’s $339k for the same time period. This was also much higher than the third quarter revenue of $475k. The net loss for the quarter was trimmed to $2.9 million versus last year’s net loss of $4.1 million for the same time period. All figures are in Canadian dollars.
For the full year, PharmaCielo had revenue of $5.3 million versus $1.9 million in 2021. The net loss for the year was also cut to $14.5 million versus 2021’s net loss of $26.6 million.
Bill Petron, Chairman and CEO of PharmaCielo, commented, “Against an environment in 2022 that was challenging for all cannabis companies, our team succeeded in growing revenue by almost three-times our 2021 results, while bringing Sales, General and Administrative expenses down by over 40% compared to last year. There were many positive developments during the year, including the opening of psychoactive flower export from Colombia, which we see as a massive opportunity for PharmaCielo. Our fully built-out facilities, ability to scale quickly and structural cost advantage position us as a formidable competitor to EU imports from Canada and other producing countries. We expect to continue shifting our sales mix toward dried flower and higher value Active Pharmaceutical Ingredients during 2023, while growing revenue as a whole. Likewise, we will maintain strict cost discipline and a focus on efficiency, in order to move the Company closer to generating profitability and cash flow. The opportunity ahead of us is large, and while the evolution of the market is still in its early stages, I am confident that we have the right team in place to build a very profitable business, while generating returns for shareholders.”
In 2022, the company reported it reduced its Adjusted EBITDA loss from $16.4 million in 2021 to $7.2 million. Management also said it continues to focus on reducing discretionary expenses to lower the Company’s use of cash and ensure a leaner organization with a lower cost base, while continuing to invest in the sales team, to drive top line growth. PharmaCielo has recently initiated additional steps in this ongoing efficiency plan, which it expects will result in a reduction of its annualized fixed costs by approximately 25% compared to 2022.
PharmaCielo had cash equivalents of $0.2 million on December 31, 2022 versus $5.3 million on December 31, 2021. On August 30, 2022, the company announced that its previously disclosed non-brokered private placement of debenture units was oversubscribed, with a total of $15.1 million raised or committed. In 2023, year-to-date, the company has raised $1,510,000 as part of the third tranche of the offering.
The company said that it has re-focused PharmaCielo’s product strategy to emphasize THC broad-spectrum products, as well as dried flower. These products are expected to have long-term high-margin profiles that are more sustainable than CBD isolate. The Company has had several recent wins, including a sales agreement with a Brazilian Phyto-therapeutic customer for a proprietary CBD derivative formulation; a shipment of CBD full spectrum oil and to another Brazilian customer; a shipment of 300kg of CBD Full Spectrum Oil to a Spanish pharmaceutical company; and an agreement to supply THC final products to be commercialized in Germany. Most recently, PharmaCielo received ICANN G.A.P & GACP Certifications, which open commercial access to the Israeli market. The company said it expects to begin shipping dried flower to Israel in the second half of 2023.