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Entourage Health Reports First Quarter 2023

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Entourage Health Reports First Quarter 2023 Financial Results

Published: May 31, 202

Entourage Health Corp., a Canadian producer and distributor of award-winning cannabis products, announced today its financial results for the three months ended March 31, 2023. The Company reported total revenue of $15.1 million (net revenue of $11.8 million, before excise duties and discounts), up 24% sequentially from Q4 2022.  The Company will host a conference call to discuss its financial and business highlights on Tuesday, May 30, 2023, at 10 a.m. Eastern Time.

“Over the first quarter, we noted significant growth in our medical stream representing a 61% increase compared to the previous quarter. This aligns with the escalating demand, fueled by the introduction of innovative products, a rise in new patient acquisitions, and substantial renewal rates,” CEO and Executive Chairman George Scorsis affirmed. “Additionally, our pre-rolls sales in the adult-use segment witnessed a notable rise, with Color capturing approximately 5% of the pre-roll market. Our revenue growth and the successful implementation of our strategic transformation initiatives and cost improvements propel our business toward enhanced profitability. This allows us to accomplish our financial objectives and paves the way to expand our market reach and diversify our product offerings. Through this calculated approach, we are establishing a solid foundation for sustainable growth and long-term success in the cannabis market.

Financial Highlights

  • For the quarter that ended March 31, 2023, Entourage recorded total revenue of $15.1 million compared to $12.1 million for the fourth quarter ended December 31, 2022, representing a 24% increase.
  • Gross profit before changes in fair value was $3.0 million for Q1 2023, representing an increase in gross profit of $10.5 million compared to Q4 2022 due to improved operational efficiencies and partly due to lower inventory write-down in Q1 2023.
  • Gross margins were 25% in Q1 2023 compared to (86%) for Q4 2022 and 22% in Q1 2022. The improvement in Q1 2023 over Q4 2022, resulted from increased automation in the production process of finished and semi-finished goods, resulting in lower direct labour costs.
  • The cost of goods sold was reduced by $7.4 million for the three months ended March 31, 2023, compared to Q4 2022. This reduction was achieved by continued efforts to optimize our operational platform and further automation initiatives.
  • Adjusted EBITDA improved by $5,890,211 to $(3,374,484) in Q1, 2023, compared with $(9,264,695) in Q4, 2022, primarily driven by strategic transformation initiatives to lower costs and partly due to generating higher-margin revenue.

Corporate Highlights During and Subsequent to First Quarter 2023

  • In January, the Company signed an amendment to its senior secured amended and restated credit facility entered into on October 28, 2022 (the “Credit Facility”). The amendment provides a waiver to the breach of certain financial covenants for the period that ended September 30, 2022, and modifies certain financial covenants set out in the Credit Facility.
  • Also in January, the Company announced the closing of the second $15 million tranche of its upsized Credit Facility with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (LPF), as announced on October 31, 2022.
  • In March, Entourage announced it had added a new union group to its full-service, proprietary medical cannabis program in partnership with leading benefits provider Union Benefits – the administrator of union group benefits to over 12,000 members. With these additions, Entourage confirms it has ten union groups, five insurance providers and 24 clinics under agreement for preferred medical cannabis coverage.
  • In April, the Company announced the issuance of deferred share units and entered into shares-for-debt agreements, effectively promoting share ownership and incentive for management.
  • In April, the Company entered into a firm agreement to sell the Strathroy facility to a third party for $9,400,000, less customary transaction costs, land transfer tax, and brokerage fees. The facility is collateral for the senior credit facility payable to BMO. The sale of the Strathroy facility closed on May 18, 2023.

Commercial Highlights

  • In April, Entourage, in partnership with the Boston Beer Company (BBC), expanded distribution of cannabis-infused iced tea beverage, known as TeaPot, into the Quebec market.
  • The Company has expanded its Color and Saturday adult-use product portfolio, introducing several noteworthy additions, including Mint Cookie Kush and Baked Grape Pie, bringing unique flavours to the market. Furthermore, the Company has unveiled infused pre-rolls, launching Night Sweet & Sour Berry. The Company remains dedicated to consistently offering diverse products and formats that cater to consumers’ varied preferences.
  • Starseed Medicinal’s active patient base experienced a notable 11% growth. The Company also reported an increase of 20% in patient renewals. These substantial increases highlight the Company’s ability to attract and retain a growing customer base.
  • Additionally, Starseed has been consistently enhancing its product portfolio. Among these notable additions, the Company recently announced the launch of CBD Chewing Gum. This expansion not only broadens the selection available to medical cannabis patients but also showcases Starseed’s continuous efforts to offer innovative products.
  • Recently, Irwin Naturals Cannabis, a reputable nutraceuticals and herbal supplement formulator, partnered with Entourage to introduce an exclusive range of softgel products for medical patients through Starseed.

About Entourage Health Corp.
Entourage Health Corp. is the publicly traded parent Company of Entourage Brands Corp. 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 fully licensed 26,000 sq. ft. Aylmer, ON processing facility. 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. With the launch of Syndicate, Entourage now hosts another unique medical marketplace that offers patients a collective of Canadian micro-cultivators’ products, along with Entourage’s family of brands. Entourage’s elite adult-use product portfolio includes Color Cannabis and Saturday Cannabis – sold across eight provincial distribution agencies.


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