Entourage Health Corp. (formerly WeedMD Inc.)
(
TSX-V:ENTG) (
OTCQX:ETRGF)
(
FSE:4WE) (“
Entourage” or the
“
Company”), a Canadian producer and distributor of
award-winning cannabis products, announced today its financial
results for the fiscal year ended December 31, 2021. The Company
also announced preliminary unaudited first quarter 2022 total
revenue of $17.4 million(1), which represents a direct-to-consumer
and patient record increase of approximately 35% on a
year-over-year basis. The Company expects to report its first
quarter 2022 financial results on or before May 31, 2022.
“Entourage achieved impressive growth in 2021
including expanded market share and increased retail brand
recognition with Color Cannabis as a top 10 performer for the year,
which drove 56% growth in revenues. Strong consumer sales in our
main product categories included notable increases in premium
flower & pre-roll market segments, with a 535%(2) sales
increase over the prior year,” said George Scorsis, CEO and
Executive Chair, Entourage. “This was also a breakout year for our
medical business, with 20% patient growth and an expanded product
portfolio of over 40 SKUs. Our preliminary Q1 results are noting
another record increase with $17.4(1) million in total revenue
representing a milestone achievement for Entourage. Based on our
strong early-year momentum, we expect these favourable trends will
continue through 2022 even as we realize the benefits of expanding
our tissue culture business with the acquisition of CannTx Life
Sciences.”
Summary of
Results
For the Year-Ended |
|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
|
($000’s) |
($000’s) |
Total
revenue |
|
55,229 |
35,484 |
Net revenue
(less Excise Tax) |
|
42,272 |
29,434 |
Gross (loss)
before changes in fair value |
|
(3,592 |
(21,991) |
Gross margin %
before changes in fair value |
|
(-8.0%) |
(-75%) |
Loss and
comprehensive loss |
|
(78,935 |
(89,607) |
Adjusted EBITDA* |
|
(9,293) |
7,658 |
|
|
|
|
As at |
|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
|
($000’s) |
($000’s) |
Cash and cash
equivalents |
|
21,416 |
22,322 |
Inventory |
|
29,641 |
30,665 |
Biological
assets |
|
607 |
1,956 |
Working Capital |
|
(54,967) |
44,575 |
*Adjusted EBITDA is not a recognized measurement
under International Financial Reporting Standards (“IFRS”) and this
data may not be comparable to data presented by other companies.
Management defines Adjusted EBITDA as EBITDA adjusted to exclude
interest, tax, and depreciation, stock compensation, fair value
changes and other non-cash items, and non-recurring items. This
data is furnished to provide additional information and does not
have any standardized meaning prescribed by IFRS. The Company uses
this non-IFRS measure to provide shareholders and others with
supplemental measures of its operating performance. The Company
also believes that securities analysts, investors and other
interested parties, frequently use this non-IFRS measure in the
evaluation of companies, many of which present similar metrics when
reporting their results. As other companies may calculate Adjusted
EBITDA differently than the Company, this metric may not be
comparable to similarly titled measures reported by other
companies. We caution readers that Adjusted EBITDA should not be
substituted for determining net loss as an indicator of operating
results, or as a substitute for cash flows from operating and
investing activities. See the Company’s management’s
discussion and analysis for the 12 months ended December 31, 2021
(the “2021 MD&A”) for a detailed reconciliation of Adjusted
EBITDA to Net Income / (Loss). The Company’s financial statements
for the 12 months ended December 31, 2021 and the 2021 MD&A are
available on SEDAR at www.sedar.com
Full Year 2021 Financial
Highlights
- For the fiscal year ended December 31, 2021, Entourage recorded
sales of $55.2 million, compared to approximately $35.4 million for
the fiscal year ended December 31, 2020, a 56% increase
year-over-year.
- The weighted average cost per gram from clone to harvest of
plants on hand was $0.68 in Q4 2021 compared to $0.89 in the
comparable 2020 period. Weighted average cost per gram of inventory
on hand increased to $0.61 in Q4 2021 compared to $0.46 in the
comparable 2020 period mainly due to inventory write-downs recorded
in 2021.
- Gross loss before changes in fair value was $3.6 million for
full year 2021 versus gross loss of $22.0 million for full year
2020. The improvements were mainly due to lower cost to produce
higher grade products, sold at higher margins across expanded
distribution channels.
- Gross margins of (-8%) improved 66% over prior year also a
result of lower cost to produce higher grade products, sold at
higher margins. The preliminary number of 7% initially reported was
adjusted as a result of an inventory provision in Q4 2021.
- EBITDA improved by $1.8 million to $(39.8) million for full
year 2021 from $(41.6) million for full year 2020, also primarily
driven by business transformation initiatives to lower costs and
partly due to generating higher-margin revenue and spending lower
selling, general and administrative expenses.
Preliminary Q1 2022 Revenue(1)
Entourage also announced preliminary unaudited
revenue highlights for the three months ended March 31, 2022. First
quarter 2022 record total revenues of $17.4 million represent 35%
growth year-over-year, reflecting continued increased sales of
higher-margin, direct-to-consumer and direct-to-patient products.
Revenue from adult-use and medical channels increased substantially
quarter-over-quarter, driven by expanded product availability
across retail outlets, broader distribution channels and customer
acquisition initiatives.
Revenue Highlights
|
|
Q1 2022(1) |
Q1 2021 |
Change |
|
|
($000’s) |
($000’s) |
% |
Net Revenue by Channel |
|
|
|
|
Medical |
|
8,538 |
5,779 |
47% |
Adult-Use |
|
8,606 |
7,110 |
21% |
Bulk |
|
217 |
|
100% |
Total Revenue |
|
17,361(1) |
12,889 |
35% |
Corporate Highlights During and Subsequent to
2021
Leadership Appointments and Corporate News
- In 2021, the Company announced a
corporate name change and rebranding from “WeedMD Inc.” to
“Entourage Health Corp.” The Company’s common shares are publicly
traded on the TSX Venture Exchange under the new ticker symbol
“ENTG” and U.S.-based OTC market under “ETRGF”.
- Appointed Executive Chairman,
George Scorsis, as interim Chief Executive Officer in January 2021,
and subsequently named permanent CEO in 2022.
- Also in January 2021, Jason
Alexander was appointed to the Company’s Board of Directors and
named Chair of Governance Committee and SVP of Legal Affairs
Vincent Doré named Corporate Secretary.
- In November 2021, the Company
announced the appointments of: Joseph Mele to Chief Commercial
Officer; James Afara (formerly Chief Operation Officer of CannTx
Life Sciences) to SVP of Strategic Sourcing and Quality Assurance;
and Pat Scanlon (co-founder of CannTx Life Sciences) as Head of
Cultivation.
- Following the closing of the CannTx
acquisition, Entourage announced on November 1, 2021 the
appointments of new Board directors Andrew Bulmer and S. Randall
Smallbone.
- In December 2021, the Company
confirmed its certification as an Ontario Living Wage Employer,
becoming one of only three cannabis cultivators with this
distinction.
- In April 2022, Entourage announced
the appointment of veteran finance executive Vaani Maharaj as CFO,
succeeding Beth Carreon, effective May 4, 2022.
Business Transformation Initiatives and CannTx
Life Sciences Acquisition
- In early 2021, the Company
relocated its medical packaging, labelling and distribution
activities from Bowmanville, to its Aylmer, Ontario facility which
also houses the Company’s extraction hub. The move improved
operational efficiencies and aligned its cost structure, following
the subsequent news in June 2021 that Entourage sold its fully
licensed Bowmanville operating assets to Final Bell Canada
Inc.
- Entourage announced in July 2021,
it had signed an acquisition agreement to purchase Guelph-based
craft cultivator CannTx Life Sciences Inc. The acquisition closed
on November 1, 2021.
Financing and Credit Facilities
- In March 2021, Entourage announced
and closed its oversubscribed $17.25 million bought deal equity
financing.
- In December 2021, Entourage and
LiUNA Pension Fund announced the upsizing of its previously
announced credit facility with an additional $20 million of
non-dilutive financing. The funding will be used for general
working purposes and to upgrade and standardize its cultivation
practices for high-margin products expected to drive commercial
growth in 2022. Subsequent to that, on April 29, 2022, Entourage
and LiUNA Pension Fund further upsized the existing credit facility
with an additional $15 million in funding availability.
- The Company announced in March 2022
that it secured an extension of the maturity date of the credit
facility from March 28, 2022 to May 31, 2022, and a deferral of
certain of its financial covenants to May 31, 2022, subject to
certain conditions.
Sales, Marketing and Business Development
Highlights
- The Company announced the expansion
of its Color Cannabis products into Quebec in early 2021 and
subsequently, added the province of New Brunswick, making Color
accessible to over 95 percent of Canada’s retail market from coast
to coast.
- Consumers in Quebec, one of
Canada’s largest markets, may purchase Color products via the
Société québécoise du cannabis (SQDC) in partnership with local
producer ROSE LifeScience, subsequently adding Saturday Cannabis to
the local portfolio.
- In May 2021, Entourage released
celebrated CannTx cultivars “Rockstar Tuna” and “Royal Goddess” for
its Starseed Medicinal patients.
- Signed the sixth LiUNA local with
the addition of Manitoba Local 1258 to Company’s medical cannabis
program operated by Starseed Medicinal.
- Entered into agreements with BBCCC,
Inc., a subsidiary of The Boston Beer Company, Inc. and
Ontario-based Peak Processing Solutions to launch a new portfolio
of non-alcoholic cannabis-infused beverages in Canada in 2022.
- The Company announced in fall 2021
that it regenerated some of its prized cultivars and genetics
unique to Entourage’s brands: Color Cannabis, Saturday Cannabis,
Royal City Cannabis Co., and Starseed Medicinal with the goal of
meeting evolving consumer preferences for premium product.
Adult-Use Highlights
- "Top Selling Vape
Cart" in Ontario with Saturday Cannabis terpene-infused, one-gram
carts in Sour Pineapple and Lemon Haze (data: Ontario Cannabis
Store “OCS”).
- Released one-gram,
strain-specific Saturday pre-rolls in Ghost Train Haze (GTH); Color
Cannabis dried flower in 15-gram pouches.
- Color Cannabis, Live
Resin vape carts in Pedro Sweet Sativa reached #2 top selling unit
sales in Ontario (data: OCS Q2).
- Introduced Color's
strain-specific single-session pre-roll products in Mango Haze, GTH
and Pedro's Sweet Sativa; and Color Cannabis GTH pre-roll
multi-packs landed #4 top-seller in BC Q3 (data: BC Liquor
Distribution Branch).
- Introduction of
Saturday Cannabis 28-gram, large format in Quebec and British
Columbia resulted in 500% sales increase of the format over first
quarter; and Ghost Train Haze landed as #4 top-selling pre-roll in
British Columbia in Q3.
- Pre-roll products in
Mango Haze and Pedro Sweet Sativa continue to be top-sellers in BC
with 10-pack pre-roll products a top seller in Q3 with new
cultivars Black Sugar Rose and Blueberry Seagal introduced in
2022.
- Launched Pedro’s
Sweet Sativa Live Sugar and new cultivar Space Cake in 2022.
- Color Cannabis brand
refresh debuted in March 2022 centered around Color Theory meant to
educate consumers on the correlation between the colour associated
with a particular strain and its potential effect on moods.
- The Company partnered with Cannabis
Amnesty in March 2022 to launch “Joints for Justice” retail
campaign to raise awareness and funds with $1 of every Royal City
Cannabis Co. pre-roll sold going to the advancement of Cannabis
Amnesty’s initiatives.
Medical Highlights and Products Releases:
- Mary's Medicinals
Topical Balms in 1:1 (CBD/THC) and CBD compounds.
- Aurum 4 Indica in
Juicy-Fruit strain; Strain-specific PAX Vapor Pods in Pedro Sweet
Sativa, Mango Haze and Black Sugar Rose.
- CBD Softgel capsules
in 1:1, THC and CBD formats; and new strains Lemon Z and Hybrid
Reserve whole flower.
- Mary's Medicinals
Transdermal Patches - as the exclusive manufacturer and licensed
distributor for Mary's suite of products in Canada, Entourage
launched patches in CBD, THC and 1:1 formulation.
- Fire &
Flower-branded CBD softgel product line.
- Launched a suite of
premium CBD and THC soft chew products.
- New cultivars that
included Mandarin Cookies, Gelato33, Royal Goddess (Crown),
Rockstar Tuna, Hybrid Reserve.
- Starseed added three
partner clinics to its medical cannabis program, which now totals
24 clinics.
- In May 2022,
Entourage announced it has entered into an agreement with Pineapple
Express – a wholly owned subsidiary of Fire & Flower – to
launch same-day/next-day medical cannabis delivery services to the
Company’s Starseed Medicinal patients.
To read Entourage’s recent Shareholder
Newsletter 2022, visit our website here. To access our corporate
video, visit us here and to access our latest investor presentation
and corporate deck here.
About Entourage Health
Corp.
Entourage Health Corp. is the publicly traded
parent company of Entourage Brands Corp. (formerly WeedMD RX Inc.)
and CannTx Life Sciences Inc., licence holders producing and
distributing cannabis products for both the medical and adult-use
markets. The Company owns and operates a state-of-the-art hybrid
greenhouse and processing facility located on 158-acres in
Strathroy, ON; a fully licensed 26,000 sq. ft. Aylmer, ON
processing facility, specializing in cannabis extraction; and a
micropropagation, tissue culture and genetics centre-of-excellence
in Guelph, Ontario. With its Starseed Medicinal medical-centric
brand, Entourage has expanded its multi-channeled distribution
strategy. Starseed’s industry-first, exclusive partnership with
LiUNA, the largest construction union in Canada, along with
employers and union groups complements Entourage’s direct sales to
medical patients. Entourage’s elite adult-use product portfolio
includes Color Cannabis, Saturday Cannabis and Royal City Cannabis
Co. – sold across eight provincial distribution agencies. The
Company also maintains strategic relationships in the seniors’
market and supply agreements with Shoppers Drug Mart. It is the
exclusive Canadian producer and distributor of award-winning
U.S.-based wellness brand Mary’s Medicinals sold in both medical
and adult-use channels. Under a collaboration with The Boston Beer
Company subsidiary, Entourage is also the exclusive distributor of
cannabis-infused beverages in Canada, expected to launch in
2022.
For more information, please visit us at
www.entouragehealthcorp.com
Follow Entourage and its brands on LinkedIn
Twitter: Entourage, Color Cannabis, Saturday
Cannabis, Starseed & Royal City Cannabis Co.
Instagram: Entourage, Color Cannabis, Saturday
Cannabis, Starseed & Royal City Cannabis Co.
For further information, please
contact:
For Investor Enquiries:Valter
Pinto or Scott EcksteinKCSA Strategic
Communications1-212-896-1254entourage@kcsa.cominvestor@entouragecorp.com
For Media Enquiries:Marianella
delaBarreraSVP, Communications & Corporate
Affairs416-897-6644marianella@entouragecorp.com
(1) |
Preliminary and unaudited financial results are subject to
customary financial statement procedures by the Company and its
auditors. Actual results could be affected by subsequent events or
determinations. While the Company believes there is a reasonable
basis for these preliminary financial results, the results involve
known and unknown risks and uncertainties that may cause actual
results to differ materially. These preliminary fiscal results
represent forward-looking information. See "Forward Looking
Information" and “Financial Outlook”. |
(2) |
Ref: Hifyre Data as of Dec. 31, 2021, published Jan. 2022. |
Financial Outlook This news
release contains a financial outlook within the meaning of
applicable Canadian securities laws. The financial outlook has been
prepared by management of the Company to provide an outlook for the
Company’s forecasted revenue for the fiscal year ended December 31,
2021 and may not be appropriate for any other purpose. The
financial outlook has been prepared based on a number of
assumptions including the assumptions discussed under the heading
“Forward Looking Information” below. The actual results of the
Company’s operations for any period will likely vary from the
amounts set forth in these projections and such variations may be
material. The Company and its management believe that the financial
outlook has been prepared on a reasonable basis. However, because
this information is highly subjective and subject to numerous
risks, including the risks discussed under the heading "Forward
Looking Information" below, it should not be relied on as
necessarily indicative of future results.
Forward Looking Information
This press release contains "forward-looking information" within
the meaning of applicable Canadian securities legislation which are
based upon Entourage's current internal expectations, estimates,
projections, assumptions and beliefs and views of future events.
Forward-looking information can be identified by the use of
forward-looking terminology such as "expect", "likely", "may",
"will", "should", "intend", "anticipate", "potential", "proposed",
"estimate" and other similar words, including negative and
grammatical variations thereof, or statements that certain events
or conditions "may", "would" or "will" happen, or by discussions of
strategy. Forward-looking information included in this press
release includes, but is not limited to, statements in respect of
the Company’s forecasted revenue for the fiscal quarter ended March
31, 2022.
The forward-looking information in this news
release is based upon the expectations, estimates, projections,
assumptions and views of future events which management believes to
be reasonable in the circumstances. Forward-looking information
includes estimates, plans, expectations, opinions, forecasts,
projections, targets, guidance or other statements that are not
statements of fact. Forward-looking information necessarily involve
known and unknown risks, including, without limitation, risks
associated with general economic conditions; adverse industry
events; loss of markets; future legislative and regulatory
developments; inability to access sufficient capital from internal
and external sources, and/or inability to access sufficient capital
on favourable terms; the cannabis industry
in Canada generally; the ability of Entourage to
implement its business strategies; the COVID-19 pandemic;
competition; crop failure; and other risks.
Any forward-looking information speaks only as
of the date on which it is made, and, except as required by law,
Entourage does not undertake any obligation to update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise. New factors emerge from
time to time, and it is not possible for Entourage to predict all
such factors. When considering this forward-looking information,
readers should keep in mind the risk factors and other cautionary
statements in Entourage’s disclosure documents filed with the
applicable Canadian securities regulatory authorities on SEDAR at
www.sedar.com. The risk factors and other factors noted in the
disclosure documents could cause actual events or results to differ
materially from those described in any forward-looking
information.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS
REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE
POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR
THE ADEQUACY OR ACCURACY OF THIS RELEASE
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