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Entourage Health reports FY23 financial results and posts $54M total revenues

Grow Opportunity, Media Partners

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(Globe Newswire) Toronto — Entourage Health Corp., a Canadian producer and distributor of award-winning cannabis products, announced today its financial results for the fiscal year that ended December 31, 2023. The company reported a total revenue of $54.1 million, mirroring the previous year’s performance, demonstrating resilience in a competitive market.

“In 2023, Entourage made significant strides, advancing production and diversifying our market presence with innovative products,” notes George Scorsis, CEO and executive chair. “Dime Bag’s success is a prime example—quickly rising to become one of Ontario’s fastest-growing pre-roll brands and maintaining its market leadership for two consecutive quarters. Driven by surging demand for our products and the effectiveness of our enhanced business model, we’re achieving growth while improving cost efficiency, firmly establishing ourselves in a favourable financial position.”

Summary of results

For the Year-Ended Dec. 31, 2023 Dec. 31, 2022
($000’s) ($000’s)
Total revenue 54,115 54,535
Net revenue (less Excise Tax) 40,713 40,892
Gross (loss) before changes in fair value 2,390 (9,189)
Gross margin % before changes in fair value 5.9% (22.5%)
Loss and comprehensive loss (46,168) (123,146)
EBITDA* (21,320) (99,717)
As at Dec. 31, 2023 Dec. 31, 2022
($000’s) ($000’s)
Cash and cash equivalents 11,154 9,075
Inventory 10,010 14,089
Biological assets (–) 696
Working Capital (146,909) (101,794)

“In the past year, we have achieved positive results that are a solid reflection of the discipline we have put into our business and the committed work of our team members,” shared Vaani Maharaj, CFO. “We’ve fine-tuned our production methodologies, identified efficiencies, and significantly reduced expenditures, collectively forging a robust cost-saving framework. We have also adopted a data-centric strategy, giving insights into our consumer’s evolving preferences and behaviours. The impact is twofold: we are strengthening customer satisfaction and driving loyalty while achieving a more agile business.”


Full year 2023 financial highlights

  • For the twelve months ended December 31, 2023, Entourage recorded total revenue of $54.1 million, compared to $54.5 million for the fiscal year ended December 31, 2022. This shows stability despite significant reductions in operating expenses.
  • Cost of Goods Sold (COGS) was ($38.3 million) representing a decrease of 23% compared to the previous year. Improved inventory management practices, strategic sourcing, and process optimization contributed to the reduction in COGS.
  • For the twelve months ended December 31, 2023, gross profit before changes in fair value increased 126% to $2.4 million from ($9.2 million) in the previous year. The reduction is attributed to the integration of automation, premium product offerings, and decreased production costs. Moreover, the Company has strategically aligned its market strategies to better adapt to consumer demands, instilling confidence in its ability to navigate changing market conditions.
  • Selling, General, and Administrative (SG&A) expenses for 2023 totalled $26.1 million, compared to $30.3 million in 2022. This significant decrease was primarily due to the successful implementation of an organization-wide restructuring plan. This plan, aimed at enhancing efficiency and streamlining operations, not only contributed to a decrease in selling expenses, but led to a substantial cut in overhead costs.
  • For the twelve-month period ended December 31, 2023, the Company’s EBITDA improved by 79% to ($21.3 million) largely due to the discontinuation of cultivation activities.

Corporate highlights year end Dec. 31, 2023

2023 financial restructuring

  • In January 2023, the company secured the second tranche of its Credit Facility, valued at $15 million, with an affiliate of the LiUNA Pension Fund of Central and Eastern Canada (“LPF”), as previously disclosed on October 31, 2022.
  • Subsequently, in May 2023, the company completed the divestiture of its Strathroy facility. The transaction’s net proceeds were allocated towards reducing the balance of the company’s existing senior secured credit facility with Bank of Montreal (“BMO”). Following this transaction, the outstanding debt, amounting to approximately $14.6 million, was assumed by LPF, allowing for the full repayment of BMO.
  • The company was in breach of certain financial covenants and other obligations under each of its Senior Credit Agreement and Subordinated Credit Agreement with LPF as of December 31, 2023. The company began working collaboratively with LPF to reach an agreement on refined debt terms. To this end, the company received a forbearance letter on November 17, 2023, waiving the company’s breaches until December 8, 2023, subject to the satisfaction or waiver of certain conditions. Subsequent to 2023, the company continued to work with its secured lender on debt terms and the forbearance letter was renewed on January 15, 2024, March 8, 2024, and April 5, 2024, and the extant forbearance letter expires on May 3, 2024.

Strengthened Operations

  • The company’s streamlined operations have resulted in annualized savings of $14.8 million, fuelled by a focused effort to boost operational performance and continuous improvement.
  • The company’s investment in pre-roll automation has significantly increased production capacity to nearly two million pre-rolls per month.
  • Entourage’s move to a third-party supplier was a strategic decision to enhance financial stability and invest additional capital in operations, brand awareness, and innovation.
  • The company broadened its international reach, successfully distributing medicinal cannabis to Australia in partnership with Lyphe Australia Pty Ltd., part of Lyphe Group Ltd.

Product Innovation and Strategic Expansion

  • In 2023, the company expanded its portfolio by launching over 18 innovative SKUs across the three adult-use brands, including infused pre-rolls and new cultivars, to meet consumer demand and provide the marketplace with various product offerings.
  • In June 2023, the company launched the dynamic brand Dime Bag®, which swiftly rose to become Ontario’s third fastest-growing pre-roll brand for the last two consecutive quarters.i The Company plans to roll out nationwide throughout 2024.
  • In 2023, Color Cannabis strengthened its market presence by ranking among the top ten pre-roll brands in Canada, achieving the 6th position. Additionally, it established itself as the second-leading brand in the pre-roll category in British Columbia, capturing an 8.5% market share.
  • In 2023, the company demonstrated its strong market presence, securing the top 8 position in national pre-roll sales, and has emerged as the 16th largest Licensed Producer by retail sales.

Leadership in medical

  • Committed to advancing patient well-being with quality medical cannabis innovations via Starseed, the company launched an exclusive soft gel line in partnership with Irwin Naturals Cannabis and introduced a controlled delivery inhaler in collaboration with Remidose, offering medical patients innovative consumption methods.
  • In 2023, Union Benefits expanded the company’s reach, integrating a new union group into the proprietary medical cannabis program. This expansion solidified Starseed’s commitment to accessible healthcare, bringing the company’s partnerships to 10 union groups, five insurance providers, and 24 clinics that endorse the company’s medical cannabis program.

Company outlook 2024

The key to Entourage’s success in 2024 lies in the strategic alignment of its brands, the diverse range of its products, and the dedication of its teams. Navigating the dynamic cannabis landscape is central to the company’s aim of achieving year-over-year growth. A key factor in this growth is Entourage’s strategic partnerships with external suppliers. These partners are meticulously chosen for their commitment to excellence, efficiency, and their alignment with the company’s core values.

The transformative changes implemented in 2023 positively impacted Entourage’s business fundamentals as it improved cost savings, invested in manufacturing, and developed a data-driven approach, solidifying the company for sustainable growth. Entourage carefully analyzes profitability metrics to guide financial success, ensuring every decision enhances overall financial health and operational effectiveness.

Despite the challenges of the Canadian cannabis industry and regulatory complexities, Entourage’s resolve remains optimistic. Through proactive engagement and strategic foresight, the company is poised to overcome these hurdles and capitalize on emerging opportunities, unlocking new avenues for growth and expansion in the years ahead.

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