International cannabis company Halo Collective Inc. (Cboe: HALO) (OTC Pink: HCANF) (FSE: A9K0) had a rough 2022, with revenues and sales down dramatically from 2021 and not much yet of a turnaround in 2023, the company reported Wednesday when it released its financials for both the fourth quarter of last year and the first quarter of this year.
In the final quarter of 2022, Halo’s revenues dropped nearly 50% year-over-year to $4.5 million from $8.3 million a year prior, which it blamed on “pricing challenges” in Oregon and California. Halo also holds marijuana business permits in Nevada, Canada, the United Kingdom, and Lesotho.
Sales volume plummeted 85% to 1.9 million grams of cannabis from 12.9 million grams the year prior.
Halo posted an $84.7 million net loss for 2022, including a $12.2 million loss in Q4, which was an improvement from its 2021 losses of $96.9 million. Revenue for last year hit $24.5 million, down 32% from 2021.
The company was officially broke as of New Year’s Eve, with “no unrestricted cash available.” But, Halo noted, its gross margin increased year-over-year to 21.1% from 12.3%.
Also in the fourth quarter, the company took on $1.4 million in debt financing, which helped cover $455,000 in lease obligations.
The first three months of 2023 didn’t fare much better for Halo, though the company did shrink its loss margins.
Halo reported a net loss of $6.1 million against only $4.6 million in revenue, which was a 39% decrease over last year’s revenue. Halo once again attributed the decline to “challenging market conditions” in both Oregon and California, including oversupply and declining prices.
Sales volume also remained depressed at 1.6 million grams of marijuana sold, which is down 32% from a year prior.
Also in Q1, Halo took on another $1.8 million in debt financing, which covered $457,000 in lease obligations. The company continued improving its gross profit margin, which hit 36.7% in Q1, up from 16.5% the same period a year prior.
CEO and Executive Chairman Katie Field said in a statement that the company takes the “supply-demand imbalances” in Oregon and California seriously, but expressed confidence in Halo’s moves to streamline operations and cut costs.
“I am pleased to report that our efforts to optimize our operations and product mix have yielded positive results,” Field said. “We’ve achieved a substantial improvement in gross profit and margins from the previous year, and Halo’s commitment to cost reduction initiatives has been instrumental in our performance. While the recent financial results showcase short-term challenges, we’re proactively managing our resources and expenses to drive long-term growth.”
“We will continue to implement strategic measures to navigate the evolving market dynamics and optimize our distribution channels,” Field added. “I am confident that our focus on operational efficiency and product excellence will drive improved financial performance in the quarters to come.”