Toronto-based cannabis operator Shiny Health & Wellness Corp. (TSXV: SNYB) experienced a notable dip in revenue and a rise in net loss, according to its financial statements for the third quarter ending Oct. 31, 2023.
The company’s revenue fell 42.7% in the three-month period, to C$4.28 million, compared to the same period last year. That decline was partly due to the the closure of certain nonperforming stores and the sale of some larger stores.
The results also come on the heels of the company’s agreement to acquire Stash & Co., a marijuana retail chain based in Ontario. The deal includes 10 retail locations in exchange for payment of C$800,000 in cash and C$200,000 in common shares of SNYB.
Gross profit also decreased, dropping to C$1.46 million in the three-month period, a 48.1% decline from the previous year. The company attributed the decline to more competition in the market and changes in its retail operations.
In efforts to align its cost structure with reduced revenue, the company reported a fall in operating expenses, primarily through reductions in workforce-related costs.
“These positive cost-cutting initiatives will enable the company to refocus cash from asset sales and equity financings directly to dispensary operations’ level and assist the company in building a stronger cannabis brand,” Shiny Health said in a statement.
However, the company’s net comprehensive loss widened, moving from C$3.67 million in the nine-month period of 2022 to C$8.74 million for the same period in 2023. The company reported net comprehensive loss of C$5.94 million versus C$1.76 million in the same third-quarter period in 2022.
Sales from the company’s cannabis operations fell as a result of a reduced number of retail stores and market challenges. Conversely, the pharmacy operations segment reported a rise in sales, following the acquisition of a pharmacy in October 2022.
The financial statements also included impairment losses, particularly on retail store locations and goodwill in the cannabis segment, a reflection of adjustments in asset valuations due to the current market conditions.
“The company is systematically building a strong brand presence in Ontario. We are excited to complete the Stash & Co. acquisition and add 10 more stores and another well-recognized brand,” said newly-minted CEO Meris Kott.