Nova Cannabis Inc. (TSX: NOVC) posted positive results, releasing its financial report card for the third quarter ending September 30.
Total revenue was $58.9 million, up 52% versus $38.7 million in the third quarter last year.
Nova recorded a net loss of $1.5 million versus $6.2 million loss last year; slightly up from a $1.4 million loss in the previous quarter. The company attributed the reduction in loss over the year primarily a result of the increase in sales and gross margin. The increase in net loss sequentially related to changes in certain non-cash fair value adjustments recognized in the prior quarter.
“Our team continues to execute against our plan, and this shows in our third quarter results, which feature record sales for the quarter,” said Nova CEO Marcie Kiziak. “Our encouraging results come despite hyper-competitive cannabis retail markets across the country along with inflationary pressures and capital markets disruption.”
“We are excited about our private label launch and believe that, along with our expanded data agreement program, our gross margin should continue to increase in the quarters to come. We see significant market share in the province of Alberta where Value Buds has captured 21.5% of market share with a 58-store footprint, and we are noticing an increase in market share in Ontario with 2.9% in August of 2022 with only 23 stores.”
Gross margin in the third quarter was $11.1 million, up 70.8% from $6.5 million in the same time last year. The company noted that gross margin as a percent of sales from retail remained “relatively flat” due to the conversion of most retail locations into Value Buds discount banners. It said it continues to evaluate how to shape prices at it stores to stay competitive.
The company’s total liquidity totaled at $11.6 million, which includes cash and a credit facility with SNDL of $9.8 million in principal and accrued interest outstanding.
Nova said it wants to “disrupt and strengthen the cannabis retail market by promoting a wide range of cannabis products at everyday best-value prices, while encouraging greater migration from the illicit cannabis market.”
The company partnered with SNDL (NASDAQ: SNDL) for Value Buds’ private label strategy expected to launch this month, it said, while remaining aggressive with its pricing strategy with its white label strategy to capture further market share.
Nova said its starting to raise pricing across all categories in Alberta to test elasticity and understand consumer buying trends and expects higher margin results in the fourth quarter.
It also expects to add three more stores in Alberta and Ontario in the remainder of this year and early next.