Adam Jackson
Lifeist Wellness Inc. (TSXV: LFST) (OTC: NXTTF), which owns cannabis brand Roilty, reported a dip in net revenue for the third quarter ended Aug. 31, yet saw improvement in its profit margin compared to the same period last year.
According to CEO Meni Morim, the company’s strategy to pivot towards higher-margin businesses and improve operational efficiency is paying dividends despite net revenue decreasing to $4.8 million in this year’s third quarter from $6.8 million in the previous year’s.
“Our steadfast commitment to transforming Lifeist into a diversified wellness company with high-margin business units remains on track,” Morim said in a statement Friday. “Our third-quarter performance, while presenting unique challenges, underscores our unwavering dedication to continuous improvement and efficiency.”
Lifeist’s gross margin improved significantly to 30% in the third quarter of 2023, up from 20% in the same period last year.
The Toronto-based health-tech firm also reported a modest increase in gross profit before inventory adjustment to $1.4 million. Meanwhile, operating costs and professional fees were trimmed by 21.4%, falling to $3.1 million from $3.8 million in the comparative quarter of the previous year.
“We have shifted our primary focus to gross profit enhancement, rather than simply revenue growth, and together with cost efficiency measures in Q3 2023, such actions yielded promising results,” Morim added. “With this strategic shift in focus, we will be better positioned to weather industry fluctuations, foster profitability, and deliver sustainable growth.”
Lifeist disclosed that supply chain difficulties negatively impacted CannMart’s cannabis revenue, contributing to the lower net revenue in the quarter.
Adjusted EBITDA loss widened to $2.1 million in the current quarter, up from a loss of $1.2 million the previous year, and the company posted a net loss from continuing operations of $2.4 million, equivalent to $0.005 per diluted share.
This year’s figures were unfavorably compared to a net loss of $1.9 million last year. The increase in loss was largely attributed to a one-time gain from the termination of a distribution agreement recorded in the third quarter of 2022.
As for the balance sheet, cash and cash equivalents stood at $1.4 million at the end of August, a decrease from $3.8 million at the end of November last year. Inventory levels rose to $5.6 million from $4.5 million. The company’s working capital was reported at $3.7 million.
Net cash used in operations was down to $1.5 million in this year’s third quarter from $3.2 million in the same quarter of the previous year, partially due to decreased revenues from CannMart and reductions in overall operating expenses.
