Adam Jackson
Product expansion has proven to be a winning strategy for Canadian health-tech company Lifeist Wellness Inc. (TSXV: LFST) (OTCMKTS: NXTTF), which owns cannabis brand Roilty.
Roilty’s unit sales rose by more than 30% since the fourth quarter of 2022, with the expansion of its product line being a main contributing factor. Since launching with three products in July 2022, Roilty has secured approval for four more products and is set to have 16 SKUs available in Ontario by the end of the third quarter.
Roilty’s success can be attributed to its popularity in various categories such as shatter and live resin. Its King’s Kush live resin is the sixth best-selling live resin in the concentrate subcategory and is available in 13% of Ontario stores, the company said.
Additionally, Roilty has a 7% market share in the shatter category, with both of its shatter SKUs in the top 20 products over the last three months.
Driven by Demographics
CannMart CEO Daniel Stern believes Roilty’s success in the market is due in part to the brand’s gender-neutral appeal. Women are the fastest-growing cannabis segment across all age ranges and product categories, particularly in concentrates.
To capitalize on the trend, Stern said that the company has developed marketing initiatives aimed at engaging budtenders and retailers “against the very masculine-brand heavy competitive set.”
“In short, Roilty’s growing adoption and larger market presence in Ontario is helping CannMart deliver on one of our key strategic priorities – profitable growth,” Stern said.
Financial Results
Lifeist reported that it generated a positive cash flow during the fourth quarter of 2022 and said that it expects to improve its operating cash flow and profitability over the coming quarters as the overall business grows.
Lifeist’s net revenue rose by 4.6% to $6.2 million versus the same period last year, mainly due to the decision to curtail CannMart’s licensing of the Phyto brand and focus on the higher-margin in-house Roilty products. As a result, sales of Phyto brand products represented a lower percentage of revenue over the quarter.
The company’s gross profit before inventory adjustment rose by 212% to $1.8 million in the fourth quarter, which is the highest quarterly gross profit in the company’s history. The rise in gross profit was mainly due to the higher margins achieved on its in-house Roilty products, which offset lower margins on the Phyto brand products in Q4 2021.
For the full year 2022, Lifeist had a net revenue increase of 4.4% to $22.1 million, and gross profit before inventory adjustment rose by 139% to $4.7 million. The company’s gross margin also ticked up from 9% in 2021 to 21% in 2022.
The company’s adjusted EBITDA loss improved in 2022, decreasing from $21.9 million in 2021 to $13.7 million in 2022. The improvement was due to higher gross profit and significantly lower operating costs.
The company had less cash and inventory on hand at the end of 2022 versus the end of 2021. The net cash used in operations was $15.3 million in fiscal 2022, which is lower than the $18.3 million used in 2021.
The company ended the year with a working capital position of $7.4 million, which shows that the company has enough current assets to meet its financial obligations in the short term.
