Lifeist Wellness Inc. (OTCMKTS: NXTTF) is still reeling from a natural disaster that threatened profits in the second quarter. The company announced its third-quarter financial and operating results for the three and nine-month periods ending May 31, 2022.
Net revenue decreased 15% to $4.1 million in the second quarter versus $4.9 million posted the same time last year. The $800,000 loss in net revenue in the second quarter was due to a $1 million decrease in Australian Vaporizers hardware revenue caused by a flood-related operational shutdown in March and April.
In addition to that, Lifeist saw a $600,000 decline from the planned wind-down of hardware sales in Europe through Lifeist Bahamas, which more than offset gains in Canadian recreational cannabis and the initial contribution of Mikra and CannMart Labs revenue.
Revenue would have increased if not for these afflictions, the company said. Lifeist’s said its metrics for Australian Vaporizers posted pre-shutdown levels after severe and unprecedented storm flooding in Queensland and New South Wales halted production for 53 days “after waking up to two feet of water in the warehouse,” said CEO Meni Morim.
“The Australian floods dampened what was otherwise a solid quarter for Lifeist,” he said. “While it’s been a difficult period for the broader cannabis industry, we’re generating measurable success and establishing a path to profitability for our recreational cannabis distribution platform.”
Canadian cannabis revenue increased by $800,000, or 29%, compared to this quarter last year. Recreational cannabis continues to be Lifeist’s largest driver of performance accounting for 86% of the company’s second-quarter net revenue.
Gross profit before inventory adjustment increased to $700,000 compared to $400,000 in last year’s second quarter, with margins growing to 16% from 7%.
Adjusted EBITDA loss was $4.5 million in the second quarter compared to a loss of $5.4 million in the same quarter last year. The $9000,000 improvement, or 17%, was driven by a $2.0 million improvement at CannMart and an $800,000 reduction in corporate and other costs, which more than offset a $1.1 million decline at Australian Vaporizers due to the impact of the flood, $700,000 at Mikra due to start-up costs, and $200,000 decline at Lifeist Bahamas.
The company said it has $13 million worth of working capital.