Adam Jackson
Lifeist Wellness Inc. (TSXV: LFST) (OTCMKTS: NXTTF) managed to stave off a running cash burn while boosting its profits, as the Canadian wellness company downsizes noncore divisions of its business.
The company reported its financial results third quarter ending Aug. 31.
Net revenue rose 27% to C$6.8 million in the third quarter versus C$5.4 million in the same period last year. Net losses totaled $1.94 million, a 65% improvement versus C$5.65 million in last year’s third quarter, according to regulatory filings
“Our strategic emphasis on high-margin opportunities is well underway, and progress is clear in our improved profitability,” CEO Meni Morim said. “This is most evident in our cannabis business, which is becoming one of the preeminent distributors of Cannabis 2.0 products across Canada and is successfully leveraging its sales license for its award-winning in-house Roilty brand.”
Revenue from Roilty concentrates doubled from last quarter to $3 million, representing nearly 60% of CannMart revenue, “which in turn drove continued gross margin expansion,” Morim added. Recreational cannabis continues to be the company’s largest driver of performance, accounting for 74% of its quarterly net revenue.
“We are increasingly bullish on CannMart’s prospects given the recent expansion of production capacity at CannMart Labs, as well as ongoing distribution gains and the expansion of the Roilty product portfolio into new categories, which will soon include shatter and THCa diamonds. Roilty’s growing success has enabled CannMart to transition away from its historical dependency on the Phyto brand sooner than expected, which in turn should further benefit profitability.”
Gross profit before inventory adjustment rose 50% to $1.4 million versus $900,000 last year’s third quarter, with margins ticking up from 17% to 20%.
The CEO said that daily supplement maker Mikra Cellular Sciences Inc. has been another growth factor for the company.
“Mikra’s KPIs are all headed in the right direction, highlighted by active subscriptions for CELLF increasing 173% compared to last quarter. This early success gives us confidence to continue to fuel its growth with additional initiatives,” Morim said. “We are investing in product innovation, deploying additional marketing dollars, expanding manufacturing capacity, and lining up additional distribution.”
Lifeist reported that adjusted EBITDA loss narrowed to $1.2 million from $5.0 million the same time last year .
The company had a working capital position of $11.5 million at the end of the quarter.
“With positive trends from CannMart and Mikra, and an improved business mix after a year of sunsetting of noncore divisions, Lifeist is well-positioned to drive increasingly toward profitability,” Morim added.
